Choo-Choo? Boo-Boo!

I am not a train hater. From elementary school through high school I spent a lot of time on trains. For many years when we lived in Philadelphia and New York our Dad was a train commuter. We would take the train to see the Phillies or to Manhattan for the day. When we moved to Europe the summer vacation for high school kids was a backpack and a Eurail pass giving us the freedom to ride the rails throughout Europe. It is somewhat genetic as my grandmother, Sis as she was known throughout Sacramento, was always telling us stories of the West and the railroads. I might have been the first kid at Hillside Elementary in Berwyn, Pa. who knew what the Golden Spike was because of Sis. Her passion for the West and railroads culminated in her activism to get the California Railroad Museum built in Old Town Sacramento; in fact she died at a meeting for the committee building the museum. Trains are in our DNA.

That said our region, our state and our federal government have wasted billions and billions of dollars on trying to encourage Los Angelenos, Californians and Americans to ride the rails. One of the biggest government handouts nationwide goes to public transportation and the Oliver's of Rail are at the stew pot hands and bowls extended saying, "Please sir, I want some more."

Amtrack is the quasi-public private partnership that controls most of the passenger lines in the United States. It is a public private entity because the government owns the controlling preferred stock and is the sugar daddy that keeps the operation afloat. In 2008 Amtrack had approximately 28.7 passengers on its various rail routes. The bulk of these riders in the Northeast using Amtrack to commute as my Dad did in the 1970's. Also in 2008 Amtrack received $2.8 billion from Congress, which it will continue to receive for the next couple of years. It used to get a subsidy about about $1.5 billion but that was not enough as the cost of 19,000 employees and 21,000 miles of track were not supported by the train fares charged the passengers. So Amtrack operates at a loss of $90 per passenger that is made up by the taxpayers.

In California the voters in 2008 passed Proposition 1A which allowed the state to sell $9.95 Billion in bonds to partially fund a high speed train in California. The amount is woefully short of what is expected to be needed. Estimates of the cost for the high speed rail system in the state are up to $85 Billion....today. Using history as our guide for the future we can expect if and when this high speed rail is built to exceed $100 billion. As part of the high speed rail program the state is looking for "matching funds" to this effect our Governor Schwarzenegger this week asked the Federal Government for an donation to the high speed rail of $4.95 Billion.

For those keeping score that is $14.9 Billion of taxpayer funds for a high speed rail system that will connect the major cities. For what? Why does our state need a rail system that will get train travellers from Los Angeles to San Francisco in, according to the California High-Speed Rail Authority (we have authority!) in 2:38.

I can fly from Los Angeles to San Francisco in 1:00 and it costs $100 or less any day, with numerous flight options. Other than someone who has a major fear of flying or an intense love of the rails would ride a train for two and a half times what it takes to fly from point A to point B, especially if the cost is the same.

What will be the fare? The only comparison we can use is the Acela Express which is Amtrak's version of high speed rail in the Northeast, hitting 115 mph for a 35 mile stretch. It is a comparable distance from Boston to Washington D.C., there are stops in New York and Philadelphia, but the ride takes over 6 hours. The cost? About $200 per ticket. For "high-speed" rail. Still cheaper than the one hour flight (about $30o) but you save five hours.

"But Europe has such a great train system." That is an argument of many who favor continued and higher government subsidies of public transportation and rail projects. And it is true, Europe does have a great train system. The reason is because Europe grew around its rail system. Towns and cities placed the rail station in the middle of town and built from there. Major cities such as Paris and Brussels have multiple train stations serving passengers north, east, south and west. America has grown around its highway system. We are an auto-centric culture. Drive around the country and look where new towns and communities have been built--near major transportation corridors, transportation meaning highways.

Those pushing high-speed rail in California are creating huge amounts of public debt for future generations, not just the debt to build the system but the future debt to support and subsidize a system that must operate at a loss to have any passengers. They are operating on a belief that Californians will want to ride the rails instead of the roads or skies, a belief based on fantasy or romance of the clickety-clack.

Unless....the government forces ridership of the public railways and buses of public transportation. One reason public transportation is so prevalent in Europe is not only that cities were designed with public transportation in mind, but also because those who use their cars are taxed tremendously. Registration fees are very high and the taxes on gas and oil push the price per gallon in Europe to over $5. This is a model that has support in the United States to force Americans to use transportation, impose higher taxes on gasoline, auto registration, turn freeways into toll roads, and increase the taxes on air travel. If you make the alternatives expensive enough then the cost of rail travel in terms of fares and time begins to drop relative to driving our own cars or flying commercial air.

It is time for Californians to take a realistic look at the huge cost of high-speed rail. It does not make any sense to spend billions and billions of dollars to create a rail system that will be uncompetitive with other means of transportation and cost billions more in annual subsidies to keep afloat.

Build a better choo-choo? I say, "Boo."

.

"The Nanny" Starring California

nan-ny: noun, : a child's nurse or caregiver

We think of nannies as individuals charged to care for and protect the children of others--for a fee. I grew up with some two wonderful nannies: Maria and Mary Poppins, okay they both happened to be Julie Andrews. While my nannies were fictional my mom was real, a strong and intelligent woman who had a wonderful sense of humor and raised my sister, brother and I to be respectful, courteous, kind and thoughtful. Our dad travelled quite a bit for his career so many of the trials and tribulations of growing up led to mom, putting on band-aids, resovling disputes, helping with school projects, car pooling to football or ballet. For us nannies were fictional characters plopped into households with disinterested or distracted parents who did not have the time to raise their children so they paid someone to do it for them.

Starting today, July 1st, California has some new laws taking effect meant to protect us, the citizens of California. Most notable of these laws are those meant to protect me, and more importantly my children, from getting fat or obsese; taking the responsibility for good nutrition and dietary habits away from the family and giving it to the state and those who provide food for us. Starting today restaurants must post the calories of every serving--because I really had no idea that a dinner of a bacon-avocado cheeseburger, fries and chocolate-coconut cheesecake was probably higher in calories than the grilled chicken salad with vinagrette on the side. Starting today high schools will no longer be able to sell sodas to students--because they will not go off campus to get sodas anyway and the net result will be a loss in revenue for clubs and student organizations. Starting today all schools in the state can no longer use those nasty transfats--margarine, shortening or oils that contain trans-fats; since the schools are already providing free lunches to much of the population they want to make sure they are somewhat not unhealthy. Okay, I'll give them this one, while still overly intrusive to me--I think local districts should be working with parents and the local community to develop healthy breakfasts and lunches using non-fried foods, preservatives or colorings as much as possible. So one out of three new laws, actually not a bad record for our state goverment.

On top of previous laws passed, over one thousand per year in California the past several years, the state has intruded more and more into our lives and what should be our responsibilities. While you cannot legislate against stupidity you can legislate stupidly and that is what California's lawmakers have tried to do and done the past decade or more. Law after law after law is passed that is intendend to "protect" the people of California, as if the Legislature can supercede God and prevent death. One tragic accident happens and someone dies as a result and the lawmakers go into full nanny mode and legislation begins to pour out of Sacramento to prevent such a tragedy again. From what we can do in our cars, to where people can smoke, to building standards against the one in a thousand years earthquake, California lawmakers have spent hours and days and weeks crafting legislation that is meant to save us from ourselves.

A child's nurse or caregiver, for a fee. While California lawmakers have played nanny to the citizens of the state, their main charges as nannies have not been the ordinary citizens of their districts however, the main role of protection and nurturing and care giving has been those who pay the fees for their services. If the Legislature is the Nanny, the citizens are the step-children in the relationship and the real children are the public employees--by far the biggest benefactors in the nanny state. As the annual budget deficits and debates occur in Sacramento the biggest piece of our budget--salaries and benefits--are rarely a part of any discussions. Until now.

The nannies in the Democratic majority in the Assembly and Senate are circling their prams as it is evident that their charges are going to have to pay some of the price to achieve a balanced budget. This week Governor Schwarzenegger stated he wants a two-tiered pension system for public employees, the existing tier affect the 200,000 plus employees and a new tier for everyone hired from today forward. The nannies are in an uproar trying to protect employees who have not yet been hired yet. Why? Because they are in office almost exclusively because of the funding their campaigns have received from the public employee unions. Changing benefits and retirement for future employees changes the funds flowing through the unions, and that is not good for future campaign donations.

For the past decade the nannies have pushed through budgets, with some Republicans signing off on them and Republican Governor(s) signing the budgets, that have increased the number of state employees--increasing the size of the public employee unions, increasing their dues revenue, increasing their political contributions and increasing the campaign donations given to elect and re-elect the lawmakers. A very nice relationship that has been incredibly beneficial to both sides has resulted in a Legislature with too much time spent passing laws impacting the rest of the state and protecting the workers for the state.

Gabriella Holt, who ran for Assembly in Long Beach and lost to a Democrat with full backing from state employee union, has started a group that is on the right track. Citizens for California Reform is committed to changing the structure of California's government, mainly by returning our Legislature to a part-time position. Holt argues, rightfully I feel, that our state elected officials are over-paid and by being full time have too much time when they are not governing and therefore are able to meddle. A full time legislature that year after year cannot follow the state constitution, missing annual budget deadlines every year. So what are they doing all year if they are not addressing and working on the number one issue in the state? Banning sodas, counting your calories, increasing taxes, hiring more workers and adding to the expenses for the state today and for decades to come.

A nanny is paid to take care of someone else's children. If California is a Nanny State, who are the children that are the primary focus of the nannies' care, you or the state workers? With the economic situation the way it is, let's cut back expenses and cut our nanny to part-time.

How Cities Should Manage the Next Foreclosure Wave

In February Governor Arnold Schwarzenegger signed into law a 90 day moratorium on foreclosures in the State of California. There were some loopholes, naturally, but the effect of the law was to keep tens of thousands of foreclosures from happening from the end of February through the end of this month, May 2009.

Since February we have seen an increase in the number of "short-sale" transactions (seller owes more in mortgages against the property than the sales price necessitating mortgagor(s) to discount principal owed to facilitate closing) as many homeowners have sold their properties ahead of filings of notices of default and foreclosure. As well California has seen a flattening of the median sales price through the first quarter of 2009, indicating a firming up of the housing markets through much of the state--particularly coastal counties and communities--from the bottom up. In some areas there has been an increase in median prices, particularly condominiums in some zip codes.

In part the flattening of the median prices and increase in the number of short sales versus bank owned foreclosures on the market in California are the result of the Governor's moratorium on foreclosures. With only a few weeks left before the moratorium expires what preparations have various California cities and counties and lenders undertaken for what will occur when that happens? My guess is nothing.

While the moratorium has allowed many lenders to off load poor performing mortgages through short sale transactions initiated by their borrowers, what the moratorium has not done is reduce the flow of borrowers into default on their mortgages. As a result lenders in California have a very significant number of mortgages on which they are about to initiate foreclosure proceedings. Three months of unpaid mortgages are going to start being processed by the banks and if not handled properly California housing markets will be hit with a flood of foreclosure sales due to the moratorium. The primary argument against the moratorium was what it would do to housing markets when the moratorium expires--we are about to find out.

Supply and demand function in any market, and left without interference will seek a market price for any good or service. Everyone with a basic concept of economics knows that scarcity of supply raises prices, scarcity of demand lowers prices, abundance of supply lowers prices and abundance of demand raises prices. For the past several months we have seen a growing abundance of demand in the lower price ranges and a flattening of supply, leading to stabilizing of home prices for the first time buyer markets. What happens to those markets when flooded with pent up supply due to banks being able to foreclosure again on delinquent borrowers? Abundant supply creates lower prices.

There is a possible solution to the flooding of the market with lender REO's (an industry acronym for Real Estate Owned, bank owned foreclosures) and the subsequent fallout in housing prices. Banks and local governments can work together to allow the banks to receive revenue from their REO properties while slowly placing their inventory on the market over period of a year or more and cities and counties can increase the supply of rental housing or moderate income housing for first time buyers.

Using Bank of America and the City of Long Beach as an example. Long Beach can approach Bank of America and determine how many properties they have in Long Beach that are REOs, in delinquency and about to be foreclosed upon. Understanding that BofA will need to remove the "toxic assets" off their books, BofA will continue with its normal foreclosure processes on delinquent borrowers. Understanding that the City of Long Beach is concerned with property values in its communities and the loss of tax revenues BofA will agree to work with the City to slowly sell its REO inventory over a period of twelve, eighteen or twenty-four months; slowly bleeding inventory on the market instead of dumping it all at once. For the properties that are not yet placed on the open market the City of Long Beach housing department can work with the BofA REO department to fill the properties with tenants paying fair market rent, perhaps subsidized (I cannot believe I wrote that word!) with funds from the housing department, to allow BofA to maintain funds for property taxes, insurance and general operating revenue (such as paying personnel in the REO department). Some of the properties can become eligible for funds from the housing department set aside for first time buyer programs that are currently not used due to inefficiency and requirements imposed on everyone involved.

Housing and government do not get along very well. Government imposition of requirements for low to moderate income families purchasing or renting housing creates hundreds of pages of restrictions and regulations and bottlenecks any funding to the point that no funding occurs. In the City of Long Beach there are millions of dollars in housing funds left unspent due to the requirements imposed on those funds being too stringent for the market to comply. If someone with sense in government, at the local, state and federal levels, were to look at the looming foreclosure flood about the hit the market in California he/she can see the problems that will occur. Yet under the guidelines imposed on housing funds there is nothing a city can do to manage the flood of inventory about to the open market in their communities. By re-negotiating the restrictions placed on housing funds from the state and federal governments cities can free up millions of dollars to use in working with banks so the inventory of REOs can be managed in a manner that helps both the banks and the communities where the properties are located.

From the bank's perspective the ability to forge a partnership with local governments to manage the removal of REOs from their balance sheets over time will add stability to their balance sheets, revenue to their income statements and groundwork for future partnerships that benefit both parties. Instead of having hundreds or thousands of properties on the market with declining values, they can have a few hundred properties at a time selling in a more stable market environment.

I do not expect this proposal to work as there is little chance the bureaucracy of the government housing departments can move nearly fast enough to free up the necessary funds from their current regulations that prevent their use. Cities across the country are flush with funds to promote home ownership and community development through rehabilitation of distressed properties--unfortunately the policies, procedures and regulations governing the funds make them useless. It is time for local governments to push back on Sacramento and Washington and renegotiate the terms under which those millions of dollars are being restricted.

California Math: Double Spending = Cutting Funding

After writing my post earlier this week on the inability of school districts to remove bad teachers I began to think of the lack of control our local school districts really have. It seems the closer one is to the student the less control there is in the education and the decisions relating to it. The control and direction of funds is upside in my view. The on-site administrator, the principal, has almost no budget control; the local school superintendent is pushing money into boxes established by the State Department of Education; and the State funding and spending is also dependent on the Federal Department of Education. The person closest to the student has the least say in what programs may be needed at a school and what programs are not needed.

This has evolved because of several factors, primarily because our education system has evolved into one size fits all. This results in mandates and programs that must be implemented for students in rural Turlock as for urban San Francisco. Not trusting school districts to properly care for the children in their own communities, the state mandates how funds are to be spent restricting the maneuverability local school boards and superintendents need to fit their students in their district.

In the background of this is of course the budget, which is actually in the foreground. I am having a very hard time understanding how our State Legislature has passed budgets that have doubled spending from Sacramento in the past ten years, yet my local district is cutting programs that existed ten years ago. How bad is your government when it doubles in size across the state in a decade, but the programs available to your children ten years ago have to be eliminated because of lack of funding from the state? It speaks to the corrupt culture that is so pervasive in our election and budget process that those public employees' organizations who have donated so many millions across the past decade to elect the majority of our legislators have received raises and increased benefits in budget after budget, yet at our local school we are raising money to retain a computer lab instructor.

I will beat this drum again, and again, and probably several more times, the California voter has no idea what he or she is voting for when punching a ballot. Every single summer we go through the same budget crisis and some time in July or August or even September a few Republicans will cross the line and vote for another budget that increases spending in California--but not in the classrooms. Raises will be given to prison guards, state sanitation workers will be given higher retirement benefits and a guaranteed no lay off clause, Assembly aides will be promoted and paid well into six figures, and no voter will bat an eye to vote for the same person in the next election. All of this abetted by first Gray Davis and now Arnold Schwarzenegger.

In Long Beach the district has had to cut the science camp trip for fifth graders, a rite of passage in the culture of the district, as I said our campus is raising $50,000 to retain a full time computer lab teacher, other friends say they are losing Spanish instructors, or physical education (we already lost ours), or what music or art instruction they may have. Program after program is being cut from a budget that is getting less and less funding from Sacramento despite the doubling of the budget in the past ten years.

The new math in California: double spending while cutting funding. And we can expect it to continue because the public employee organizations will poor millions more into the coffers of our elected officials, primarily Democrats--or I should say exclusively--who will pass more budget items favoring the employees over the citizens, favoring their salaries and job security over children's education.

Our system is truly broken and needs to be fixed. For education my proposal is to release the mandated spending from the state and give funds to the districts. Then let the districts determine how best to put the funds into the classroom. Release control of education back to the local community. If a district is failing and it is evident the funds are not being spent in a way that is educating the children of its community then the State can step in with a program to rehabilitate the district. But do not make every district suffer because of the few who may mismanage their funds. We already have classes that tend to teach to the lowest common denominator, let's not have funding on the same principle. If Turlock feels more funding is needed in language arts and less in music let them spend their funds to support this, if Capistrano wants higher math scores and less funding for language arts let them spend their money how that community sees best for its students and its needs.

With the placing of Propositions 1A-F on the ballot the Governor and Legislature have shown the California people they have no clue how broken the system is, what is very scary is they have shown the people they have no clue how to fix the system either. The only way to force it to be fixed is to break it further--and the start to the fix must be returning control of funds for education to the local school boards, to the communities that paid the taxes should go the control on how they are spent. Take control away from the special interests in Sacramento and bring it back to parents and communities.

Politicians Say The Darnedest Things

Attorney General Eric Holder, State Senator Alan Lowenthal, Governor Arnold Schwartzenegger

This past week three politicians had some real doozies, two I thought were just plain dumb statements and the third has caused quite a stir from some on the right but I thought it was truthful. Here they are, you be the judge.

First come California State Senator Alan Lowenthal (D) on the floor of the Senate during the marathon session to pass a bill to bridge the cash crunch facing the state. As you may recall the bill was held up because our state wisely requires a two-thirds majority to pass tax hikes and the Democrats needed three Republican Senators to vote for the bill on the floor. What Lowenthal said was, in my opinion, not only quite dumb but very indicative of why California has the constant fiscal problems it does.

“It doesn’t matter how we got here.” Our state is on the verge of bankruptcy, tax payers are not receiving refunds from money already paid to the state, workers are being furloughed on an every other Friday basis, a $42 billion deficit is on the horizon, and “it doesn’t matter how we got here.” Um, yes it does; it matters very much how we got here and the fact that Lowenthal, and no doubt plenty of other Democrats in Sacramento and across the state, think it does not matter is about ninety percent of the problem. We got here because despite holding out for less spending increases the past five years Republicans were still unable to stop a 40% increase in spending by Democrats—enabled by our SaysHeIsARepublican Governor. It matters because willy-nilly without concern as to the future our gerrymandered-term-limited-Democratic dominated Assembly and Senate spent money like whores in a lingerie store on pet projects and pork benefiting their main financial contributors: unions, particularly public employee unions. Mr. Lowenthal it does matter and it will matter and if you and your colleagues do not recognize this then please step aside and let someone else with an understanding of cause and effect take your places.

Next up comes our Governor, Arnold Schwarzenegger (R-sort of). After the catastrophic bill was passed he called Sacramento legislators “courageous.” Um, no it was not courageous it was in fact quite cowardly. Cowardly because it addressed none of the systematic problems that created not only this fiscal crisis for our state but guarantee future fiscal crises. Cowardly because our elected officials refused to face down those who bought their seats for them with millions and millions of dollars of campaign contributions and tell them they had to give something up for this state to get on the road to financial health. Cowardly because they know the system remains broken and rather than actually be somewhat courageous and fix the problems they passed them off to the next generation of lawmakers, and the one after that, and the one after that. “Courageous” is one of the few adjectives that would come to mind for me when it comes to describing our state government and its approach to their fiscal duties. Cowards hide problems or blame them on someone else, that is what our state legislature has done, again.

Finally is a statement made this week by Attorney General Eric Holder. During a speech for a ceremony celebrating Black History Month, Holder spoke about race relations in our country and said the American people“are essentially a nation of cowards.” Important in framing this topic is that Mr. Holder is black This through Hannity, Limbaugh, Coulter and many other talking and writing heads on the right into a snit. Comments ranged from “maybe he did not notice we elected a black man as President” to “perhaps he has forgotten that even forty years ago he would not have been able to eat in many of the restaurants in the city where he gave this speech” to “this is just like Michelle Obama saying she was not proud of her country” blah, blah, blah. They rose up and essentially said the Holder’s comments were dumb.

I happen to agree with Holder’s comments, when it comes to race relations and dialogue we are cowards. I know I often am. I am a coward because often in a group I will not say what I want to say, or will change it because I do not wish to offend, or worse be labeled. Race dialogue in this country has become almost non-existent unless given by the Jessie Jacksons, Al Sharptons or Rev. Wrights who shape the dialogue by castigating all that is not their version of black-white relations. Often those, who are not people of color—i.e. white—attempting to speak about race, or have a dialogue inevitably make a statement or use a word or somehow have their comments intentions misunderstood and are torn apart by those with an interest in perpetuating racial divisions (see Jackson, Sharpton, Wright, et al). While trying to have an honest dialogue those who disagree with their viewpoint will attack them, will label them racist, will demand retractions and dismissals. Against this backdrop of possible repercussions, fear is created for many white people who then become afraid to discuss race relations and openly ask questions and share their thoughts and feelings. So yes Mr. Holder we have become a nation of cowards, what are you going to do to change this? How are you going to give me the courage to speak my thoughts without fear of retribution, labels and misconstruing of my comments to fit someone else’s agenda? How will you allow open and honest dialogue between all blacks, all Asians, all Hispanics, all whites? It is easy to label someone and dismiss them because of the label—a favorite tactic of some commentators on the left. It is much more difficult however to create and respect an environment of openness that allows everyone to speak their opinion, to learn other’s opinions, and come to understand that unity does not mean uniformity, nor agreement.. Unity means the ability to live together, respect each other and be able to have discussions, conversations, disagreements and experiences together—openly, freely.

Two dumb statements and one truthful statement. Two statements that foreshadow more of the same bad governance in our state and one statement that, if properly interpreted and acted upon, can forever change our nation and our ability to interact and live in Unity.