Neel Kashkari's Jobs Plan

NEEL KASHKARIS JOBS PLAN
R EBUIL DING THE MIDDL E CL A S S
NEEL KASHKARIS JOBS PLAN

Rebuilding the Middle Class
A NEEL KASHKARI FOR GOVERNOR WHITE PAPER

March 25, 2014
PAID FOR BY NEEL KASHKARI FOR GOVERNOR 2014
Neel Kashkaris Jobs Plan To Rebuild The Middle Class
Table of Contents
JERRY BROWNS LEGACY The Destruction of the Middle Class !!!!!!!!!!!!!!!!!!!!! 3
NEEL KASHKARIS PLAN Rebuild the Middle Class by Putting Californians Back to Work ...!!!!!!!. 5 Manufacturing !!!!!!!!!!.!!!!!!!!!!!!!!!!!... 7 Water !!!!!!!!!!!...!!!!!!!!!!!!!!!!!!!!10 Natural Resources !!!!..!!!!!!!!!!!!!!!!!!!!! 14 Regulations !!......!!.!!!!!!!!!!!!!!!!!!!!!!... 19
2 A Neel Kashkari For Governor White Paper
JERRY BROWNS LEGACY

THE DESTRUCTION OF THE MIDDLE CLASS
Governor Jerry Brown is running for an unprecedented fourth term based upon his decades of experience. Winning his first statewide office when Richard Nixon occupied the White House, no one has had more influence on California over the last 30 years than Jerry Brown. So lets look at whats happened in the state during that time: when Governor Brown was elected more than 35 years ago, it was good to be a middle class family in California parents had good jobs and children had access to a good education. Unfortunately for millions of families today, that is no longer true. Back then, California ranked 24th in jobs; it now ranks 47th. Back then, California had the 11th most educated workforce; it has since dropped to 48th. Back then, California ranked 26th middle of the pack for highest poverty rate; the state now ranks 1st. Jobs, education, and poverty. In each of these areas, the states standing has been devastated, shrinking the middle class and foreclosing the opportunity of future generations. Jerry Browns legacy is the destruction of Californias middle class. More recently, the nation was jolted six years ago by an economic crisis so traumatic that its often mentioned in the same breath as the Great Depression of the 1930s a period marked by bread lines, an unemployment rate that soared close to 25%, the failure of thousands of banks and businesses, and an 89% decline in stock prices.1 Facing an uncertain economic landscape that had the potential to meet the scale and scope of the Great Depression, the federal government deployed extraordinary measures to stabilize the American economy in the Fall of 2008. The years that followed were still difficult, but many states across the U.S. have managed to recover and chart a better future. During Governor Browns current term in office, California has lagged other large Southern states in job creation. From January 2011 to January 2014, California jobs
1
Nick Taylor, A Short History Of The Great Depression, The New York Times, Accessed 02/08/14.
grew 5.7% from 16.2 million to 17.1 million. Texas outpaced California with a job growth rate of 6.3% - growing from 11.4 million to 12.1 million jobs. And Florida posted an even more impressive job growth rate of 7.9% - increasing jobs from 8.2 million to 8.9 million.2 Californias slow economic growth has far-reaching effects and is reflected in the lives of most families. Slow growth means that there are not enough new jobs to meet demand within the workforce and that those who do have jobs must make do with stagnant wages. The results in Governor Browns California are clear: an 8% unemployment rate, a jobs rank of 47th among the states, 17% of Californians struggling with unemployment or underemployment, and a 24% poverty rate the highest in the nation. The status quo is unacceptable. While the current state of California is dire, the future does not look much brighter. After spearheading a huge tax increase in 2012, Governor Brown proposed a $106 billion budget the largest in state history.3 Paired with this record spending is a failure to address looming costs that serve as a drag on the economy, including hundreds of billions of dollars in long-term unfunded liabilities.4 While these costs may seem to reside in the distant future, families and businesses know that every dollar owed will eventually be paid by future taxes. So while Governor Brown chooses to kick the can down the road by ignoring long-term unfunded liabilities and foolishly spending on projects like the $67 billion high-speed rail project, Neel Kashkari knows that a strong economy that grows jobs, creates revenue, and lifts the collective fortunes of all Californians is the path to a prosperous future and can put the state in a position to address its unfunded liabilities over time. * * *
2 3
Local Area Unemployment Statistics, Bureau Of Labor Statistics, Accessed 03/19/14. Chart B, Budget Expenditure Historical Data, California Department Of Finance, January 2014. 4 Jessica Calefati, Californias Wall Of Debt Is Only A Slice Of Its Liability Problem, San Jose Mercury News, 01/26/14.
NEEL KASHKARIS PLAN

REBUILD THE MIDDLE CLASS BY PUTTING CALIFORNIANS BACK TO WORK
The competition for jobs is not just global, its local. California is in a fierce competition for jobs with other states. The bad news is that we are currently losing the battle held back by regulations that make it harder and harder for small businesses to grow and the stubborn refusal to safely harness our states natural bounty to create hundreds of thousands of jobs. The states inefficient tax system is another area that suppresses economic growth. Not only are Californias taxes too high, they are also poorly designed, resulting in a highly volatile revenue stream that makes the state vulnerable to boom-and-bust cycles of budget deficits and surpluses. Tax reform is an important priority, but the first step is to create good jobs. By putting people back to work, strengthening the states tax base, and generating a more reliable revenue stream, California can regain its economic footing and have a stable platform from which to initiate a tax reform process that lowers rates and supports broad economic growth. The good news is that California is uniquely positioned to execute a real economic comeback. With a breadth of industries that includes agriculture, manufacturing, technology, financial services, and entertainment, among many others, there is a strong base on which to launch a turnaround. As governor, Neel will champion a set of 10 reforms that will unleash the private sector to put Californians back to work, including:
MANUFACTURING: Bring high-paying jobs back to California o Make California a jobs magnet by attracting new companies and encouraging existing manufacturers to expand here at home o Assert national leadership by working with Washington to pass free trade bills that open new markets to California goods WATER: Increase water storage to enhance water security o Ask voters to cancel high-speed rail and redirect bond money toward critical water storage projects, while working with Washington to craft a cost-sharing agreement o Fully utilize current reservoir capacity NATURAL RESOURCES: Harness Californias full oil and gas potential to create good energy jobs while protecting the environment o Support safe development of the Monterey Shale Formation o Create an Energy & Environment Jobs Taskforce to identify impediments to the rapid development of this critical sector REGULATIONS: Create an environment where small businesses and farms can grow and put people back to work o Impose a 10-year mandatory regulatory sunset and review to achieve regulatory neutrality o Reform CEQA to provide a fair and certain process for all o Adopt Flex Time rules to allow greater cooperation between employers and workers o Improve the states jobs climate by capping non-economic personal injury rewards at $250,000 to match the states medical malpractice regime * * *
MANUFACTURING
Bring high-paying jobs back to California Californias manufacturing sector is stagnant under Governor Brown. During his current term as governor, California manufacturing jobs have effectively flat-lined with a paltry 0.5% growth rate5 that is far behind the overall national growth rate of 3.8%6 and dwarfed by states like Texas that have achieved 6.8% growth over the last three years. The states poor manufacturing climate has resulted in companies either picking up and leaving, or choosing other states for new projects. For example, Campbells Soup recently announced the closure of its 65-year-old plant in Sacramento and its plan to shift production to North Carolina, Ohio, and Texas.7 Chevron will move California jobs that arent physically stationed on rigs to Houston.8 And Tesla the Palo Alto-based electric car maker recently announced that it would invest $4 to $5 billion in Nevada, Arizona, New Mexico, or Texas not California for a new battery factory that would employ 6,500 workers.9 Neels Jobs Plan will strengthen Californias economy by reversing the flow of businesses fleeing the state, giving existing companies an incentive to stay and open new manufacturing operations, and advocating for the opening of new markets so that more of the world can enjoy California products. Make California a jobs magnet by attracting new companies and encouraging existing manufacturers to expand here at home. States like Texas offer lucrative incentives for companies to relocate. The Texas Enterprise Fund is a cash reserve fund established by Governor Rick Perry that has provided close to $500 million in incentives to 106 companies since 2004.10 Using the Texas Enterprise Fund, Governor Perry has even been able to poach
5 6
State Manufacturing Employment, Bureau Of Labor Statistics, Accessed 03/21/14. National Manufacturing Employment, Bureau Of Labor Statistics, Accessed 03/21/14. 7 Allysia Finley, The Reverse-Joads Of California, The Wall Street Journal, 03/04/13. 8 id. 9 Jerry Hirsch, California Positively Gets A Negative From Tesla On Battery Factory, The Los Angeles Times, 03/07/14. 10 Brendan Greeley, Rick Perry, Texass Star Business Recruiters, Will Be Missed, Businessweek, 07/11/13.
the business of Apple one of Californias most iconic companies by committing $21 million over 10 years to build a new campus that will create 3,600 jobs.11 While California does not need to offer incentives as large as states like Texas to be economically competitive, California must at least be in the hunt. The state, however, is not doing enough to welcome new business or offer enough reason for existing companies to stay. As governor, Neel will promote a tax incentive plan that puts California back in the game. For any existing business currently operating outside of California that moves to California and brings at least 100 new jobs, that company will be free from paying any state corporate taxes associated with the income generated by its new California operation for 10 years. This program will include strict anti-fraud and anti-abuse protections to make sure only companies that bring and keep at least 100 jobs to California will qualify. And to help restore the states manufacturing sector, Neel will also allow any existing California company that opens a new manufacturing facility in the state to operate free from any state corporate taxes associated with the income generated by its new California manufacturing facility for 10 years. Anti-fraud and anti-abuse protections will ensure only new, incremental manufacturing production will qualify. Critics may charge that such tax incentive programs surrender precious revenue, but the fact is that without such an incentive, very few companies would relocate or choose to build new manufacturing facilities in California, so little actual corporate tax revenue will be lost by the state. This policy can provide a huge boost to Californias manufacturing sector and help put Californians back to work with good, high-paying jobs.
11
Gov. Rick Perry, Gov. Perry Announces Apple To Create 3,600 New Jobs In Austin, Press Release, 03/09/12.
Additionally, the people who will be employed through these new jobs will become taxpayers, growing the states individual income tax base and contributing to the economy as community members who purchase other goods and services. The net effect of this pro-growth policy will be immediate job creation in support of a strong middle class, a growing business community that anchors itself in California, and increased state revenue to support a healthy state budget. Assert national leadership by working with Washington to pass free trade bills and open new markets to California goods. With exports being a relative bright star in an otherwise anemic economic recovery,12 California must do all it can to open new markets to California goods. Two important trade agreements are currently working through Congress one with Pacific Rim countries and another with Europe.13 Recognizing the broad benefits of free trade, even President Barack Obama has joined Republicans and business groups in requesting fast-track approval to facilitate the passage of these deals. Labor groups are bucking the president, however, and oppose the trade deals due to fear of further globalization. At stake is the creation of valuable manufacturing jobs and an opportunity for states like California to increase its export market. As important as this debate is to California, Governor Brown is content to sit on the sidelines while the debate plays out in the halls of Washington. As governor, Neel will take an active approach by exercising strong leadership at the federal level and advocating on behalf of policies that reduce trade barriers, open the world to Californias goods, and support a strong manufacturing sector. * * *
12 13
Marc Glover, California Export Trade Sets Record In 2013, Merced Sun Star, 02/06/14. Anne Lowrey, Obama And G.O.P. Facing Opposition To Trade Pacts, The New York Times, 01/30/14.
WATER
Increase water storage to enhance water security Californias ability to manage its water supply is absolutely critical. The historic drought that currently grips the state has far reaching effects, from the 17 rural communities threatened with the depletion of residential drinking-water supplies14 to the ailing agricultural industry nestled in the heart of the San Joaquin Valley, where 38% of jobs are related to the farming and food processing industries.15 As it stands, many Valley counties struggle under the weight of double-digit unemployment.16 Cities like Mendota in Fresno County have reached an unemployment rate of 34%, compounded by fears that its rate may rise above 50% under extreme drought conditions.17 The current drought is not Californias first and it will certainly not be its last. From the most recent drought that stretched between 2007 and 2009 a drought that was relatively mild compared to the current crisis there is a clear link between jobs and water. Data from that recent period shows that 21,000 agricultural jobs were lost 16,000 from the drought alone, and another 5,000 from Delta export restrictions that limited water supplies from flowing southward through the Delta.18 The time to prepare for the next drought is now, and all momentum on the issue must be harnessed to confront the issue with urgency and a spirit of cooperation. Neels Jobs Plan will prepare the state for future droughts by maximizing the states limited water capacity, immediately investing in enhancing water storage, and working with Washington to continue the states historic partnership with the federal government on water infrastructure.
Paul Rogers, California Drought: 17 Communities Could Run Out Of Water Within 60 To 120 Days, State Says, San Jose Mercury News, 01/28/14. 15 Scott Smith, California Farmers Brace For Drought, Unemployment, Associated Press, 02/02/14. 16 February 2014, Monthly Labor Force Data For Counties, California Employment Development Department, 03/21/14. 17 Scott Smith, California Farmers Brace For Drought, Unemployment, Associated Press, 02/02/14. 18 Jay Lund, Director Of The Center For Watershed Sciences At The University Of California, Davis, Op-Ed, California Droughts Precipitate Innovation, Sacramento Bee, 01/18/14.
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Ask voters to cancel high-speed rail and redirect bond money toward critical water storage projects, while working with Washington to craft a cost-sharing agreement. California is long overdue for a new commitment to water storage. New Melones Dam completed in 1978 was the last unit added to the Central Valley Water Project.19 At the time, Californias population was approximately 23 million.20 Over the last 35 years, however, the states population has grown by 65% to 38 million.21 The federal government has been a major player in Californias water infrastructure since construction began on the Central Valley Project in the 1930s.22 While a state water bond is an absolute necessity in securing the states water future and may include funding for a variety of purposes, enhanced water storage is non-negotiable. Despite glaring evidence that Californias water crisis hurts the states overall economic security and paralyzes specific industries that count water as an input to production, Governor Brown ignores common sense and the laws of economics by committing his full attention and substantial public resources to financing a $67 billion high-speed rail project. The state faces a multitude of serious challenges, including ranking 1st in poverty and 47th in jobs among the states, but figuring out a way to travel in between Los Angeles and San Francisco is not one of them, and it illustrates the height of Governor Browns misplaced priorities. Californians need good jobs, not a train that is over-budget and behind schedule. And for much of Californias agricultural community, water means jobs. As governor, Neel will put high-speed rail back on the ballot, empowering the
Ellen Hanak, Managing Californias Water, Public Policy Institute Of California, February 2011. State of California Total Population, California Department Of Finance, Accessed 03/08/14. 21 California Department of Finance, California Population Passes 38 Million As Growth Gains Momentum According To New State Demographic Report, Press Release, 12/12/13. 22 Central Valley Project, U.S. Bureau Of Reclamation, Accessed 03/08/14.
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people of California to reject the misguided project. Neel will ask voters to approve a plan using the bond money up to $9.95 billion as was originally approved for high-speed rail23 for water storage to strengthen Californias ability to cope with and manage an unreliable and highly volatile water supply. And by independently addressing water storage, the remaining water priorities can potentially be tackled in a smaller, separate water bond. Neel is open to working with legislators on the final shape of the water bond(s), but believes the high-speed rail money should be used for storage and that storage must not wait if there are delays reaching agreement on other water elements. Neel will defer to state experts on which storage projects to prioritize, but generally believes in an all of the above strategy. Neel will also work with the states congressional delegation to partner with the federal government to craft a cost-sharing arrangement. Congressional Democrats have signaled a willingness to draft legislation that would permit some form of federal cost-sharing a hallmark of water infrastructure projects throughout the West.24 Neel looks forward to continuing this tradition of cooperation by urging the federal government to share the responsibility of critical water infrastructure projects that would help assure Californias water security which, in turn, would help assure Americas food security. The final size of the water storage bond will depend on the outcome of negotiations with Washington. Fully utilize current reservoir capacity. Enhanced water storage is an absolute necessity. While increasing storage capacity includes the construction of new water storage facilities, both above and below the Delta, and above and below ground, the state must also make the most of existing reservoirs. A U.S. Geological Survey model predicts that many California reservoirs are operating at far less than their original capacity.25 The
23 24
Voter Guide, California Secretary Of State, 11/04/08. Michael Doyle, Drought Be Dammed, California Lawmakers Look To Storing Water, Fresno Bee, 02/27/14. 25 Sierra Nevada Facts, The Sierra Nevada Conservancy, November 2013.
sediment occupying these reservoirs amounts to an estimated 1.7 million acre feet of water, enough for 3.4 million families26 and double the storage that would be created through the construction of the Sites Reservoir.27 So while new storage capacity must be constructed, we must also fully utilize existing reservoirs. Costs associated with restoring existing reservoirs to their full capacity will be included in the water bond dedicated to increasing water storage across the state. * * *
Sen. Fran Pavley, Water Committee Chair Calls For New Appraoches To California Water Supply, Drought Response, Press Release, 02/11/14. 27 Timm Herdt, Water-Bond Debate Exposes Sharp Differences Among California Interest Groups, Ventura County Star, 02/11/14.
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NATURAL RESOURCES
Harness Californias full oil and gas potential to create good energy jobs while protecting the environment The direct economic benefit of Americas oil and gas boom is undeniable. In 2011, the US produced 8.5 million cubic feet of natural gas from shale wells alone a value of $36 billion.28 States like North Dakota and Texas have been buoyed by strong energy sectors that have provided broad economic opportunity, created good jobs, and supported low state unemployment rates. California cannot afford to be left behind in this energy jobs boom. The less often highlighted benefit of increased domestic oil and gas production is its effect on the global geopolitical order. Just five years ago, Mahmoud Ahmadinejad was reelected to lead Iran a nation that openly admitted it was building a uranium enrichment facility and demonstrated its aggression by test-firing missiles capable of reaching Israel.29 Today, the Iran of Hassan Rouhani speaks in a more conciliatory tone, with some progress toward containing the countrys nuclear program. In the words of former Obama National Security Advisor Tom Donilon, Irans change in posture can be summed up in one word: fracking. Theres a direct line between the U.S.-led sanctions effort to put pressure on Iran and the flood of oil and gas coming out of the ground at home due to fracking technology, Donilon said.30 And because the price of oil is set globally, the American oil boom directly affects the global oil market. The downward pressure on oil prices created by increased U.S. production has begun to restore Americas geopolitical influence globally. California must do its part to strengthen Americas leadership role in the world. Neels Jobs Plan will aggressively develop good energy jobs and reap the benefits of economic growth while supporting the national agenda of securing Americas foreign
28 29
Kevin A. Hassett And Aparna Mathur, Benefits Of Hydraulic Fracking, American Enterprise Institute, 04/04/13. Denver Nicks, How The U.S. Energy Boom Is Changing Americas Place In The World, TIME Magazine, 02/07/14. 30 id.
interests by increasing our ability to assert strong international leadership on pressing geopolitical issues. Support safe development of the Monterey Shale Formation. Hydraulic fracturing commonly known as fracking has safely occurred in California for more than 30 years with no reported damage to the environment.31 While North Dakotas Bakken and Pennsylvanias Marcellus shale formations have been credited with fueling huge domestic energy booms, Californias Monterey Shale formation is a 1,750-square-mile swath of land that runs below the center of the state and represents two-thirds of the nations entire shale oil reserves more than 15 billion barrels of oil.32 The positive economic effects of safely harnessing this natural resource cannot be overstated and represent an unparalleled economic opportunity for California to regain its position as a leader in domestic energy production. According to an academic study authored by the University of Southern Californias Price School of Public Policy and its Global Energy Network, estimates show that the projected economic impact of the Monterey Shale Formation may reach up to: ! ! ! Employment: 2.8 million new jobs. Personal Income: $223 billion growth. State, Local & County Tax Revenue: $24.6 billion in increased collections.33 Under legislation passed last year (Senate Bill 4), the California fracking industry will operate under a new set of regulations intended to establish strong environmental protections and increase transparency and accountability in future fracking activity. Among other requirements, the law will require oil and gas companies to apply for fracking permits, publicly disclose the fracking chemicals
Hydraulic Fracturing In California, California Department Of Conservation, Accessed 03/18/14. John E. Cox, Jr., Fred Aminzadeh, And Adam Rose, The Monterey Shale & Californias Economic Future, USC Global Energy Network, March 2013. 33 id. at Table 3
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they use, provide notice to neighbors of drilling sites, and monitor ground water and air quality.34 The new law also requires the state to prepare an Environmental Impact Report (EIR) under the California Environmental Quality Act (CEQA) to analyze the environmental impacts of fracking on a statewide basis. In an effort to hinder development in the Monterey Shale, however, fracking opposition groups now argue that, notwithstanding the statewide EIR that is currently being prepared, CEQA reviews should be applied individually on a wellby-well basis. So instead of allowing wells to operate under the statewide EIR, which takes into account common characteristics of well location, geologic condition, planned input, etc., fracking challengers seek to force CEQA review upon each and every well, which would effectively paralyze the fracking industry from moving forward and preclude job creation. The far reach of CEQA as a tool to stymie development is well known, but it has never threatened a swath of industry as large and with as much economic potential as that presented by the Monterey Shale Formation. Obstructionists unsatisfied with some of the most stringent regulations in the nation and possibly the world should not be allowed to use CEQA under the guise of environmental protection. As is true with many issues, Governor Brown has talked about developing the Monterey Shale Formation and its unprecedented volume of crude oil, but he fails to move expeditiously enough to harness its potential to create good jobs for California families. For example, in the three years that Governor Brown has been in office, Texas increased its production of crude oil by 77% from 530 million to 941 million barrels and North Dakota increased its production of crude oil by 105% from 153 million to 313 million barrels.35 In the same threeJayni Foley Hein, State Releases New Fracking Regulations Amid SB 4 Criticism, Controversy, UC Berkeley Center For Law, Energy & The Environment, 11/18/13. 35 State Crude Oil Production, U.S. Energy Information Administration, Accessed 03/18/14.
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year time period, California only increased its crude oil production by 3% from 194 million barrels to 199 million barrels.36 Governor Brown has shown no sense of urgency to unleash energy sector jobs and appears content with the status quo. As governor, Neel will be the strongest advocate for the environmentally sound development of the Monterey Shale formation, conferring with industry to ensure that the interests of environmental protection and economic growth work in partnership to serve the people of California. Create an Energy & Environment Jobs Taskforce to identify impediments to the rapid development of this critical sector. While fracking has been safely conducted in California for decades, the opportunity presented by the Monterey Shale Formation presents a new frontier for in-state oil extraction. In 2012, California had 50,000 producing wells, but only 560 of them were extracted through fracking.37 This illustrates that, while California has high production potential, there is much work to be done to properly scale the fracking industry. California can certainly look to the experience of other states to help grow the fracking industry, but with so much at stake both in creating energy jobs and protecting the states environment the state must work in partnership with the oil and gas industry. On the first day of his term as Governor of California, Neel will form an Energy & Environment Jobs Taskforce comprised of experts from the energy industry, the environmental sector, and the state government whose mission is to accelerate the environmentally sound development of Californias energy resources to spur rapid job creation in the state.
36 37
id. Jim Carlton, Oil Firms Seek To Unlock Big California Field, The Wall Street Journal, 09/22/13.
The Taskforce will report directly to the governor and will issue a preliminary report within 100 days of inauguration identifying obstacles to the urgent creation of energy jobs in California. It will then issue quarterly reports monitoring progress and identifying new obstacles as they emerge. The Taskforce will continue its urgent work until at least 500,000 jobs have been created in the California energy industry with the option to continue, if industry, environmental, and state leaders deem it appropriate in consultation with the governor. * * *
REGULATIONS
Create an environment where small businesses and farms can grow and put people back to work A population as large and diverse as Californias demands a regulatory regime that takes into account a variety of considerations to create a fair system that upholds the quality of life Californians have come to expect and enjoy. Regulations, however, are not cost-free and effectively impose a stealth tax on all Californians by potentially driving jobs out of state. Over the years, the gradual, but constant growth of regulations has led to an unwieldy and unmanageable system that is difficult for businesses to navigate. The result has been an impairment of Californias economic competitiveness with other states and other countries directly resulting in fewer good jobs for Californians. The results are undeniable: California ranks dead last as the worst state for business.38 Chief Executive Magazine observes: Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell.39 Neels Jobs Plan will reform Californias regulatory environment to create a smart and efficient regulatory structure that protects Californians while promoting robust growth in good jobs for California families. Impose a 10-year mandatory regulatory sunset and review to achieve regulatory neutrality. With a state as large as California, there are many regulatory bodies with the authority to issue rules. According to the Little Hoover Commission, more than 200 state departments propose an average of 700 rulemaking packages every year, with each packet containing as many as 30 regulations. To illustrate the magnitude of rules that are actually approved, from 2000 to 2010, the Department of Food and Agriculture approved 660 rules and the Fish and Game
38 39
Jan Norman, CEOs: California Worst State For Business, Orange County Register, 05/02/12. JP Donlon, Another Triumph For Texas: Best/Worst States For Business 2012, Chief Executive Magazine, 05/02/12.
Commission approved 307 rules.40 And during that time period, Californias Office of Administrative Law approved an average of more than 190 rules each year.41 Despite this proliferation of rules in California, there is no orderly process to review rules that are already on the books. There is no oversight mechanism empowered to ensure that regulations developed by different agencies do not conflict, or in the aggregate, do not create an undue impediment to job creation. The state lacks the type of review necessary to determine whether adopted regulations are effective in meeting their goals or if new approaches might be more cost-effective. And lastly, there is no procedure to discard regulations that simply dont work or have become obsolete.42 To address these issues, Neel will reform the regulatory system by spearheading a law that will require a 10-year rolling regulatory sunset whereby all regulations are evaluated in light of changing economic conditions, evidence that the regulation is ineffective, or at the emergence of a superseding federal regulation that may require better coordination. Specifically, every existing and future regulation will automatically sunset on its 10-year anniversary unless the Little Hoover Commission reviews the regulation and votes to keep it through a two-thirds majority. All existing regulations more than 10 years old will automatically sunset on their next 10-year anniversary unless voted to be maintained via the new sunset review process of the Little Hoover Commission. Within the 10-year rolling regulatory review process, the Little Hoover Commission will also be empowered to clarify and simplify existing rules, improving efficiency, decreasing costs, coordinating overlapping rules, and reducing impacts on job creation while meeting stated objectives. Working in
40 41
Better Regulation: Improving Californias Rulemaking Process, The Little Hoover Commission, October 2011. id. 42 id.
concert, the goal of the 10-year rolling sunset and periodic review will be to achieve regulatory neutrality eliminating a comparable number of regulations as are added over time. This will ensure that Californias notoriously burdensome regulatory regime does not incur any net growth in regulations and has an orderly process through which regulations are pruned for maximum efficiency and effectiveness. Reform CEQA to provide a fair and certain process for all. Passed more than 40 years ago and heralded as another instance where California set the pace for pioneering legislation, the California Environmental Quality Act (CEQA) has since been joined by a wide array of federal, state, and local environmental and land use regulations. Not including local action, Congress and the state Legislature have adopted more than 120 laws to protect environmental quality, including well-known laws like the Clean Air Act, the Clean Water Act, and the Endangered Species Act.43 While CEQA was intended to ensure the role of environmental considerations in land use projects, it has become the tool of choice for obstructionists who seek to delay a land project or make it prohibitively expensive to pursue. For example, in San Jose, CEQA is being used by the owner of one gas station in an effort to stop his competitor across the street from adding more fuel pumps. CEQA has even been deployed by neighborhood groups asserting NIMBY-tactics to prevent the modernization of an El Cerrito elementary school to replace a seismically unsafe middle school, piling on more than $10 million in costs to the school district and delaying construction by four years. 44 Recognizing the hurdle CEQA presents, Governor Brown has acknowledged the need for comprehensive reform, calling it The Lords work. But as Los Angeles Times columnist George Skelton points out, Governor Brown has seemingly
43 44
Principles For Reform, CEQA Working Group, Accessed 02/15/14. Op-Ed, Jim Wunderman And Carl Guardino, Time To Modernize CEQA, San Francisco Chronicle, 01/16/13.
been waiting for the Lord to do it.45 And striking a defeatist tone just last year, Governor Brown opined that the issue [of CEQA reform] was too difficult for the Legislature.46 Acknowledging that CEQA requirements and the looming specter of a project getting stuck in costly legal limbo creates a chilling effect, Governor Brown and the Legislature provide special treatment for pet projects. Just last year, Senate President Pro Tem Darrell Steinberg promised the National Basketball Association legislation to speed the legal process of handling CEQA lawsuits brought against the $448 million basketball arena planned for Steinbergs Sacramento district.47 Specifically, the law limits injunctive relief such that arenarelated construction cannot be stopped unless the court finds a danger to public health and safety.48 It also provides the arena legal certainty by limiting the length of time legal challenges can be trapped in the courts 90 days at the county superior court level and 180 days at the appellate court level.49 While the new basketball arena may be a worthy project that helps revitalize downtown Sacramento and creates good jobs, fair treatment under CEQA should not be reserved for projects that are able to curry the favor of the governor or a powerful legislator, or are represented by expensive lobbyists. Difficult or not, CEQA reform is necessary for the state to improve its economic climate by removing uncertainty both in time and money and providing an equal playing field. As governor, Neel will champion CEQA reform that ends abusive lawsuits and provides process certainty to all, not just well-connected interests that are able to win the special favor of the governor and powerful legislators. To that end, all projects that come under CEQA challenge should be afforded the same injunctive relief and expedited review process that the Sacramento arena warranted. If such treatment is good enough for
45 46
George Skelton, Reform Of CEQA Requires Compromise, Los Angeles Times, 08/25/13. id. 47 Tony Bizjak And Dale Kasler, Steinberg Arena Bill Goes To Brown, Sacramento Bee, 09/12/13. 48 Sen. Steinberg, Stenbergs CEQA Modernization Bill Heads To Governors Desk, Press Release, 09/12/13. 49 id.
Governor Brown and Senator Steinbergs pet arena project, it should be good enough for small-business owners and farmers who are working hard to put Californians back to work. Adopt Flex Time rules to allow greater cooperation between employers and workers. The evolution of the modern economy has created the call for a more flexible workplace. For workers who juggle the demands of school, parents who struggle to balance the needs of growing children, or adults who are responsible for the care of elderly parents, current law forces many to reduce their desired work hours and adhere to a rigid schedule that decreases earning capacity. Under California law, many workers are constrained by the eight-hour work day, mandating that any employee who works more than eight hours a day is entitled to overtime pay.50 The eight-hour work day, however, does not account for the flexibility needed to keep modern families afloat, especially in a tough economy where stagnant wages have not been able to keep up with the rate of inflation.51 In California, 31% of children are raised in a single-parent household.52 This circumstance presents challenges that the traditional eight-hour work day cannot easily accommodate, such as when a worker needs to take off work early to bring a child to a doctors appointment or attend a parent-teacher conference. As highlighted by the Shriver Report a new non-profit effort by journalist and former California First Lady Maria Shriver a recent study shows that more than half of workers would prefer a flexible schedule.53 Flex Time usually refers to an arrangement where employees are allowed to work four 10-hour days and have three days off, instead of the traditional
50 51
Overtime, California Department Of Industrial Relations, Accessed 02/15/14. Neil Shah, Stagnant Wages Are Crimping Economic Growth, Wall Street Journal, 08/25/13. 52 Children In Single-Parent Households, Robert Wood Johnson Foundation, Accessed 02/15/14. 53 Rebecca Webber, How Three Real People Found Flex Jobs, The Shriver Report, 11/18/13.
template of five eight-hour work days.54 But the idea of Flex Time does not need to be so rigidly defined and should empower employees with the ability to work with their employer to craft a mutually beneficial and optimal work schedule. The only hourly workers who are currently exempted from the eight-hour workday are nurses and farm hands, but there is no reason why other employees should not also share the benefits of a flexible work schedule.55 Aside from helping to manage work schedules, Flex Time also has the greater benefit of decreasing stress on the transportation network and reducing the environmental effects of commuting. For example, by allowing employees to work four days a week while still providing 40 hours of productivity, there would be fewer cars on the road, travel times for other commuters would decrease, the transportation network would be less stressed, and cars would emit less pollution. As governor, Neel will advocate on behalf of Flex Time, allowing California to join the 47 other states that provide some form of it, and empowering workers with the ability to better balance their work and personal lives without sacrificing their earning capacity. Under this reform, the restrictive eight-hour work day will be replaced with a 40-hour work week where overtime is triggered after a worker exceeds 40 hours of work within a given work week. This flexibility will ultimately strengthen the job market by allowing employees with restrictive schedules the ability to work more hours, earn more money, and support a strong middle class. Improve the states jobs climate by capping non-economic personal injury rewards at $250,000 to match the states medical malpractice regime. While California enjoys being home to great Fortune 500 companies like Apple, Disney, and Google, most Californians are employed by small businesses.56 In
54 55
Larry Mantle, GOP Bill Expanding Flextime For California Workers Gets Killed In Sacramento, KPCCs Airtalk, 02/07/14. id. 56 California Small Business Profile, U.S. Small Business Administration, February 2013.
fact, Californias 3.5 million small businesses represent 99.2% of all employers and employ 50.4% of the private-sector workforce.57 Yet, despite only taking in about 19% of business revenue nationwide, the U.S. Chamber of Commerces Institute for Legal Reform reports that small businesses bear a disproportionate burden 69% of the costs for the tort system.58 Unfortunately, some small businesses have become so numb to litigation that it is now merely considered a cost of doing business.59 California has been a leader of previous tort reform movements. In 1975, California faced a medical insurance crisis where plaintiffs were winning large settlements and awards. The high cost of insurance policies forced physicians to go without insurance, limit their practices, or threaten to leave the state. In response, California led the nation by enacting the Medical Injury Compensation Reform Act (MICRA), which capped non-economic damages at $250,000.60 Non-economic damages are awarded to compensate a party for immeasurable injuries like pain and suffering and emotional distress. Limiting non-economic damages, however, still allows for standard economic damages that compensate for medical bills, lost wages, or other out-of-pocket expenses. Without a cap on non-economic personal injury awards, juries are tasked with assigning a dollar value on non-tangible injuries like pain and suffering. And due to the emotional nature of many personal injury cases, the monetary awards are unpredictable and erratic. As governor, Neel will promote symmetry in the legal system by aligning non-economic awards for personal injury cases with the current $250,000 cap on medical malpractice claims. Similar to reforms ushered in through MICRA, economic damages may still be fully compensated. This will not only help ensure victims the ability to win fair and appropriate compensation for their injuries, but capping non-economic damages
California Small Business Profile, U.S. Small Business Administration, February 2013. Jennifer Barrera, Improving California Legal Climate: Cost-Effective Way To Improve Jobs Outlook, California Chamber Of Commerce, January 2014. 59 Adriana Gardella, Settling Is Not The Only Way To Resolve An Employee Lawsuit, The New York Times, 02/20/13. 60 Robert Marcelis, Medical Injury Compensation Reform Act Of 1975, UC Davis Business Law Journal, 09/15/13.
58 57
on personal injury cases will also strengthen the jobs climate by providing more certainty to businesses especially small businesses that bear a disproportionate burden of costs associated with the tort system. * * * The status quo under Governor Browns failed leadership is unacceptable. California, however, cannot budge from its perch of being 1st in poverty or 47th in jobs just by nibbling around the edges of reform. The good news is that we know how to solve our problems. By growing the economy through safe extraction of energy resources, reforming the states regulatory regime to be modern and nimble, luring new businesses through job-creating incentives, and enhancing water storage, Neel will rebuild the middle class and pave a path of shared prosperity. We can do this. We can absolutely do this. Together, we will restore the states leadership position atop the national economy and cement Californias status as the Golden State for generations to come.
NOV
2014
KASHKARI
GOVERNOR

Neel Kashkari&#39;s Jobs Plan

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Neel Kashkari&#39;s Jobs Plan

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NEEL KASHKARIS JOBS PLAN

R EBUIL DING THE MIDDL E CL A S S