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THE NOONER for July 2, 2012

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PENSIONS: The Legislature is anticipated to adopt the pension reform overhaul this week, although there have been conflicting rumors of whether the month-long summer recess will begin Tuesday or Friday. Don't get too excited for an early recess as there is lots to get done this week.

While no language has yet surfaced, the framework has been described as:

For new employees, a hybrid program would be created:

  • defined benefit would be capped at ~$100,000 for employees participating in social security and ~$130,000 for those who do not
  • retirement age for non-public safety employees would be increased to 62 years (rather than 55 and 60) and public safety would be increased to ?55?
  • change from final year comp to average of three highest years

For all employees:

  • requirement that employee and employer share equally in contributions
  • limits on spiking
  • eliminates purchase of "airtime"--service credit for years not actually worked
  • forfeiture of pension for felonies convictions related to official duties

The plan is the product of the conference committee on SB 827 and AB 340 and addresses many of the governor's pension reform demands. The plan is not, however, expected to get Republican votes and will likely be crafted as a majority-vote bill that will take effect January 1. 

SPEAKING OF PENSION BOOSTS: David Siders reports that Bill Lockyer is interested in the chancellor job being vacated by Charlie Reed at the California State University. Certainly on Lockyer's reference list is Board of Equalization member Betty Yee, who wants to run for controller and is waiting to hear if Lockyer is running for the position.

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MORTGAGE MODS: The conference report on the changes to mortgage regulations is also on the floor, and it's business versus consumers and labor.

TRAILER TALK: The news at the end of last week that Molly Munger was suing the state challenging the trailer bill that reordered the ballot to put the governor's tax measure as top billing has much bigger implications than this year's tax measure. Specifically, when is a "trailer bill" a trailer bill?

Trailer bills have long been used to make the statutory changes to implement a budget plan. Before November 2010, most of these required a two-thirds vote like the budget bill in chief. However, Proposition 25 provided:

Notwithstanding any other provision of law or of this Constitution, the budget bill and other bills providing for appropriations related to the budget bill may be passed in each house by rollcall vote entered in the journal, a majority of the membership concurring, to take effect immediately upon being signed by the Governor or upon a date specified in the legislation.

For purposes of this section, "other bills providing for appropriations related to the budget bill" shall consist only of bills identified as related to the budget in the budget bill passed by the Legislature.

Thus, there are generally two requirements for a majority vote trailer:

  1. "providing for appropriations related to the budget bill"
  2. must be listed in the main budget bill

Historically, many trailer bills did not actually "appropriate" money. They made the changes to underlying programs to adjust for funding levels included in the main budget bill. However, to ensure compliance with the "providing for appropriation related to the budget bill" language, lawmakers have included $1,000 appropriations in the trailers, along with the statutory changes.

The ballot reordering bill AB 1499 includes such an appropriation and is listed as a trailer in the main budget bill.

I expect that Sacramento County judge Timothy Frawley will find AB 1499 to be within the Legislature's discretion to be declared a trailer bill. Meanwhile, he'll let Munger's attorneys present results of the depositions of county elections officials to ensure that Jerry Brown's phone calls were not undue influence on the counting. Nevertheless, judges don't like to intervene in areas of legislative or executive discretion, on which both of Munger's arguments are based.

However, if Frawley were to find that AB 1499 is not eligible to be a trailer bill, it would be eviscerate Proposition 25. Without the ability to make the statutory changes needed to implement the budget bill, the ability to pass it with a majority vote would be near meaningless.

Joel Fox writes that Munger wins regardless, by highlighting the hard-handed tactics used in the budget process, while Joe Mathews asks the policy question as to whether constitutional amendments should be first on the ballot.

In an ironic parallel universe, Republicans in Washington, DC are now arguing that health care reform can be repealed with a simple majority in the United States Senate (bypassing filibuster) through the budget reconciliation process. This process allows a once-a-year majority vote on items changing the budget that will reduce the deficit over a ten-year period. 

Republicans of course cried foul when Democrats used the process to pass health care reform in 2010, and Democrats will cry foul if the process is used for repeal. It becomes an interesting question how a "repeal and replace" bill could be crafted that the Congressional Budget Office could score as deficit-reducing, when the CBO scored health care reform deficit-reducing in the first place.

Also this week, high speed rail financing, water bond, and the governor's reorganization plan...

$$$: Governor Brown gets $770,000 for his tax ballot measure just before Saturday's reporting period deadline.

AD19 (West SF): Michael Breyer refuels his warchest for his runoff against Phil Ting with $150,000. Interestingly, he put the money in the day after the filing deadline.

FIREWORKS: Leland Yee's SB 249 to prohibit the sale of assault weapon conversion kits pounded my server over the weekend with responses ranging from reasonable concerns to outright racism and crazy talk.

RELIEF: The final fundraising e-mail before Saturday night's deadline arrived in my inbox at 10:41 p.m.

BETTER THAN CNN: Our Taiwanese friends have the best take on the Supreme Court's health care ruling.

BEAT THIS: There are a lot of highly accomplished people on The Nooner list, but I doubt your obit can beat this.

TOTALLY OFF-TOPIC BUT HILARIOUS: Jeff and Jamie's Birth Plan [McSweeneys.net]

TOP HEADLINES ON AROUNDTHECAPITOL.COM AS OF 12:00PM
California Legislature Could Opt For Sanity On Campaign Donor Disclosure
Dan Walters @
sacbee.com
If legislators are interested in real campaign reform, they'll embrace AB 1146. If they want to maintain the status quo and maintain secrecy in campaign finance, they'll reject it.

The Caucus: Fehrnstrom Says Romney Does Not View Health Care Penalty as a Tax
MICHAEL D. SHEAR @
nytimes.com
The Republican message machine is trying hard to accuse President Obama of increasing taxes on middle class Americans in the wake of the Supreme Court's ruling that the health care mandate is valid as an exercise of the government's taxing power. But they are doing so without the help of Mitt Romney.

Poll shows Americans want battles over healthcare law to stop
Noam N. Levey @
latimes.com
WASHINGTON – In the wake of the Supreme Court’s decision to largely uphold President Obama’s healthcare law, a majority of Americans now want to put the fight over Affordable Care Act the behind them, a new national survey indicates .

Court Ruling Opens Door To Big Changes In Health Care
Daniel Weintraub @
healthycal.org
The Supreme Court decision last week upholding President Barack Obama's health reform law clears the way for a transformation in the way millions of Californians will get their health insurance, and, ultimately, their care.

Rick Orlov's Tipoff: Nothing Simple In Berman-Sherman Race
Rick Orlov @
dailynews.com
Nothing is simple when it comes to the race between Reps. Howard Berman and Brad Sherman -- even an analysis of the vote from the June 5 election in the 30th Congressional District.

UC Alumnus Pushes Tuition-freeze Plan At California Colleges
Larry Gordon @
latimes.com
A UC alumnus wants California to freeze undergraduate tuition at UC, Cal State and community colleges at the levels students paid when they first enrolled.

GlaxoSmithKline to pay largest health care fraud fine in U.S. history
Jesse J. Holland @
mercurynews.com
GlaxoSmithKline will pay $3 billion and plead guilty to promoting two popular drugs for unapproved uses and to failing to disclose important safety information on a third in the largest health care fraud settlement in U.S. history, the Justice Department said Monday.

The Buzz: Bill Lockyer said to be interested in CSU chancellor job
sacbee.com
If California Treasurer Bill Lockyer runs for public office in 2014, it will likely be for state controller. But a more immediate opening may have piqued his curiosity.

High-speed Rail: Bay Area Legislators' Support Key
Matier and Ross @
sfgate.com
When California's high-speed rail plan comes up for the big vote this week in Sacramento, there will be a lot more at stake for the Bay Area than just bullet trains to Los Angeles.

Dan Walters Daily
Hannah Madans @
blogs.sacbee.com
Dan Walters says the Assembly has the votes needed to start construction on California's high-speed rail project, but several Democratic senators are balking at authorizing the money.

California Bill Would Allow A Child To Have More Than Two Parents
Jim Sanders @
sacbee.com
State Sen. Mark Leno is pushing legislation to allow a child to have multiple parents.

PG&E Identifies 239 Pipelines At Risk Of Failure
Jaxon Van Derbeken @
sfgate.com
Nearly two years after the pipeline explosion that killed eight people and devastated a neighborhood in San Bruno, Pacific Gas and Electric Co. considers 239 of its natural-gas transmission lines to be at risk of a similar failure, according to a company assessment obtained by The Chronicle.

Viewpoints: Mitt Romney's Bain problem exploited in swing state ads
sacbee.com
While the Supreme Court's upholding of the health care law was last week's most important event in historical terms, it will not be the decisive event of the 2012 election. In the long run, polling in swing states suggesting that Mitt Romney's tenure at Bain Capital is hurting him and could have larger implications for where this campaign will move.

Bond Insurer May Contest Stockton Bankruptcy
Ed Mendel @
calpensions.com
The leading municipal bond insurer, Assured Guaranty, said three Stockton bond issues totaling $161 million “remain fully protected by our unconditional and irrevocable guaranty to pay scheduled principal and interest in full and on time.”

Proposed Sacramento Ordinance Would Restrict Actions Outside City Hall
sacbee.com
Jessica Backlund, an Occupy Sacramento activist, feeds Bentley, a dog owned by another protester, last week in front of old City Hall. Strict controls on what's allowed at the site will be considered by the City Council.

The Caucus: A Holiday Week In a Tough Campaign
MICHAEL D. SHEAR @
nytimes.com
Summertime for presidential candidates means taking advantage of the long, hot weeks before the party conventions kick the campaign into high gear.

State's Medical Malpractice Law Faces More Challenges
Bernice Yeung @
baycitizen.org
The family of a San Francisco man who died after a 2008 surgery filed an appeal last week over their malpractice award – the latest in a round of legal challenges to a state law that has long pitted medical providers against consumer advocates and attorneys who represent patients.

Rangel's Victory Margin Shrinks in New Vote Tally
KATE TAYLOR @
nytimes.com
Representative Charles B. Rangel and State Senator Adriano Espaillat are separated by only 802 votes as more than 2,000 absentee and affidavit ballots remain to be counted.

Editorial: Public kept in the dark on labor contract
sacbee.com
The Sacramento City Council has signed off on a new deal with City Hall's largest union that includes noteworthy progress on pensions. That's the good news.

John Roberts Plays The Pol
Charles Mahtesian @
politico.com
Jan Crawford’s account of Chief Justice John Roberts’s role in the health care ruling – which reports that he originally sided with the four conservative justices then switched his position -- is a must-read piece from the weekend because of its strong implication that political considerations drove Roberts’s decision.

Rupert Murdoch wants Romney to win despite criticisms
Morgan Little @
latimes.com
WASHINGTON -- With a duo of tweets sent out Sunday, News Corp.CEO Rupert Murdoch surprised followers with a sharp rebuke of the way Mitt Romney has been running his presidential campaign. Murdoch, often associated with the conservative side of politics with his ownership of media outlets such as Fox News, the New York Post and Britain’s The Sun, gave a candid peek into his political perspectives.