Category Archives: policy

Wrangling high speed trains

This summer, the California High Speed Rail Authority proposed putting its high speed trains through Alhambra, the suburb close to downtown L.A. where my family and I temporarily landed. The I-10 freeway runs through the city with 12 lanes (6 lanes each way) and a commuter train line down the center of the freeway. Despite such a wide transportation corridor, the Rail Authority had the gall to propose a route along but outside the footprint of the freeway. Such a route would require homes to be seized and people evicted. Unlike other areas near freeways, Alhambra and its neighboring cities are not blighted nor ghettos. Moreover, a route down the center of the freeway on the commuter tracks would force the Rail Authority to build on an elevated platform from 35-50 feet high. Worse yet, the Rail Authority is rushing its environmental study process through despite having plenty of time on its side. It currently intends to finish its environmental reviews in 2014 but not begin construction until 2020, the earliest. By rushing, it is predetermining the I-10 freeway as the route selected.

I am showing my opposition the only way I know how. I created a web site where I am tracking the project and providing analysis about the route, focusing on the things the Rail Authority is leaving out of its presentations. http://www.alhambra123.org/ I am also organizing my community so that it is informed, can learn more about the project, and voice concerns now before it is too late.

Like Water For Spectrum

You can now download the paper I wrote for a Mass Communications class I took during the fall semester (also with a more practical title): Water Law Principles Applied to Spectrum Opportunities for Wireless Rural Broadband (PDF — 37 pages – with links) (Google Docs – without links).

In the paper, I recommend that the FCC utilize principles from water law to open up radio spectrum to encourage mobile/wireless broadband in rural areas.

From the introduction:

The Federal Communications Commission (FCC) issued an order, [the White Spaces Order], in November 2008 to free up  unused radio spectrum in the television frequency band for unlicensed use by low power devices. A  goal of the order is to help lower the costs of entry to potential wireless broadband providers by making more spectrum available for free to businesses and consumers.

One shortcoming in relation to rural users is the order’s failure to address backhaul between a rural  community and backbone networks. Frequencies in the television spectrum that are the focus of the  White Spaces Order do not lend themselves well to point to point communication necessary for longer  distance backhaul from a community to a backbone connection point. Without access to spectrum for  backhaul, rural communities will be forced to rely on other alternatives such as more expensive fiber cables. As such, the Commission will need to provide spectrum that is better suited for backhaul required for viable and economic high speed Internet services in rural communities. To that end, I suggest that the Commission apply three modified principles of water law that: 1) require spectrum use  be beneficial and reasonable; 2) require the licensee to actually use the spectrum and not hold a license  for speculative purposes; and 3) provide for equivalent replacement of a communications signal.

Applying these principles will free up unused and underutilized spectrum for more productive purposes including point to point backhaul connections.

Continue reading: Water Law Principles Applied to Spectrum Opportunities for Wireless Rural Broadband (PDF — 37 pages – with links) (Google Docs – without links).

May 19, 2009 Special Election

I am voting NO on all of the propositions in the May 19, 2009 special election. The legislature needs to do the job it was elected to do. If not, then every one of them not willing to compromise in good faith should resign.

What will it take for the California legislature to do its job? Instead of passing a budget, it delayed the hardest decisions and deferred to voters. At what cost? The propositions do not even balance the budget or structurally change how budgets are made or how money is spent. The propositions only move money from one set of pots to to another in a apparently symbolic move. It is like moving deck chairs on the Titantic as cold Atlantic waters stream into a big gash in the side of the boat. Hello, there are structural problems causing California’s budget woes! Worse, these are temporary measures that delay or exacerbate the problems faced by the state government. Really, what do passing these initiatives get us?

via California Legislature: Where cost-cutting plans go to die – Los Angeles Times.

“Republicans pitched most of the plans to help deal with the deficit — which is expected to hit $8 billion by summer — but even some from moderate Democrats were rejected.

State officials have projected the midyear budget shortfall as a result of the recession. And if voters reject the budget-related ballot measures in the May 19 special election, the deficit could top $14 billion.”

via State will need to borrow more than $20 billion S.F. Chronicle.

“California will have to borrow more than $20 billion unless state leaders close another multibillion-dollar deficit that will deepen if voters reject budget-related ballot measures on May 19, according to a report Thursday by the nonpartisan Legislative Analyst’s Office.

In addition, California may have to pay hundreds of millions of dollars in additional borrowing costs as a result of the banking crisis. In previous years, the state was able to secure lower interest rates by purchasing loan guarantees from commercial banks.

But banks have told state finance officials that they can at best back about $1 billion in loans, far short of the state’s borrowing needs, said Tom Dresslar, a spokesman for state Treasurer Bill Lockyer.”

The articles say so much more than what I flash here. Really, they are worth reading to educate yourself. Really, these propositions do little to help the situation.

via Californiaâ??s Cash Flow Crisis: May 2009 Update.

Without significant budget-balancing and cash management actions by the Legislature or unprecedented borrowing from the short-term credit markets, the state will not be able to pay many of its bills on time for much of 2009-10.

  • $23 billion: Amount in loans from private investors needed in the fiscal year beginning July 1 if voters reject the May 19 ballot measures and the Legislature does not act;
  • $17 billion: Amount in loans from private investors needed if voters approve the ballot measures
  • $14 billion: Budget shortfall if voters reject Propositions 1C, 1D and 1E (i.e. the measures bring in $6 billion to budget).
  • $8 billion: Budget shortfall if voters approve Props. 1C, 1D and 1E

And here are highlights from the Official Voter Information Guide distributed by the Secretary of State followed by my commentary, labeled [DFB]. Highlights are mine.

Proposition 1A:

  • “Possible greater state spending on repaying budgetary borrowing and debt, infrastructure projects, and temporary tax relief. In some cases, this would mean less money available for ongoing spending.”
  • [DFB] In other words, we will borrow money now but we will be required to pay more for debt servicing and paying interest on that debt in future budgets. Moreover, we will need to cut spending in future years to pay for our budget woes now. Where will that money come from?

Proposition 1B: Fiscal Impact:

  • “Potential state savings of up to several billion dollars in 2009â??10 and 2010â??11.””Potential state costs of billions of dollars annually thereafter. “
  • [DFB] There are no estimates attached to this future cost. The voter guide says “it is difficult to know how this measure would change the state’s finances.” Voter Guide, page 21.

Proposition 1C:

  • “Impact on 2009â??10 State Budget: Allows $5 billion of borrowing from future lottery profits to help balance the 2009â??10 state budget.”
  • “Impact on Future State Budgets: Debt-service payments on the lottery borrowing and higher payments to education would likely make it more difficult to balance future state budgets. This impact would be lessened by potentially higher lottery profits. Additional lottery borrowing would be allowed. “
  • [DFB] Get this part: “would likely make it more difficult to balance future state budgets”? Yes, the authors of this measure are trying to address a difficult to pass budget by hamstringing future legislators by making it difficult to balance/pass future budgets. Isn’t that how we got into this mess? It infuriates me to no end to see this level of misfeasance. [bleeped out so I do not make a statement against my penal interests – sorry, I had a Criminal Procedure exam earlier this evening ;)]

Proposition 1D:

  • “Redirects existing tobacco tax money to protect health and human services for children, including services for at-risk families, services for children with disabilities, and services for foster children. “
  • [DFB]: This is an example of moving money from one pot to another. It is temporary and lasts five years. What happens in five years? This whole mess begins anew.

Proposition 1E:

  • “Amends Mental Health Services Act (Proposition 63 of 2004) to transfer funds, for a two-year period, from mental health programs under that act to pay for mental health services for children and young adults provided through the Early and Periodic Screening, Diagnosis, and Treatment Program.”
  • “The proposed temporary redirection in Proposition 63 funding would make less money available for mental health programs. To the extent that such programs are reduced, state and local governments could incur added costs for homeless shelters, social services programs, medical care, law enforcement, and county jail and state prison operations. The extent of these potential costs is unknown and would depend upon the specific programmatic changes that resulted from the redirection of Proposition 63 funding.”
  • [DFB] This is another temporary measure lasting two years that moves money from one pot to another. As the analysis shows, there is a big budget gap that will be left for cities and counties to make up, perhaps from thin air.

Proposition 1F:

  • “Encourages balanced state budgets by preventing elected Members of the Legislature and statewide constitutional officers, including the Governor, from receiving pay raises in years when the state is running a deficit.”
  • Minor state savings related to elected state officialsâ?? salaries in some cases when the state is expected to end the year with a budget deficit.”
  • [DFB] This is like being bitten by a minnow. A Delta smelt, perhaps? It lacks teeth big enough to pierce the skin. Worse, it will have a negligible effect on the budget. I’d rather see a sliding scale that forces the legislature to deliver a structurally balanced budget by July 1. Every week after would see a 10% reduction in pay for that period. If a legislator was paid $100,000 per year they would be paid based on $90,000/year the following week and $81,000/year the following week. At week 29, they would be paid based on $5,233/year salary. See the chart below. Now that ought to get their attention in contrast to the slap with the pinkie finger the legislature has given itself.

graph

Of course I only cherry picked the items that caught my eye or that I should call attention to. Read the propositions yourself.

To be fair, voters are part of the problem. We have tied the hands of the legislature with proposition after proposition to support our pet projects, idealogical views, and pocket books. What we have collectively done is force legislators to do the equivalent of cloud seeding. Fortunately, we’ve had a prosperous enough time where money came easily in coincidental alignment with those revenue seeding experiments. Now, the magic is gone and we need to fess up to reality. Money does not grow on trees or fall from the sky. Debt is not cheap. And California’s budget is a briar patch that needs to be dethorned.

There should be no “third rail” to this debate. That overused political colloquism should go out the window in this conversation. There is nothing that should be held too sacred in conversations about how to fix – how to truly fix – the state budget. Prop 13, Prop 98, Prop XX, all need to be considered without reservations. It may take a vote of the people to undo some of the mess we created but at least put something valuable and constructive for us to debate and vote on instead of something from a sewage plant, spit-shined and treated like Cinderella’s glass slipper. At the end of the day, the conversation must be about the balance sheet: revenue versus expenditures; and how to make each more stable and controlled.

Catholic Bishops Lack Bark

I think the Catholic bishops are wrong to complain about Notre Dame University inviting President Obama to speak at its commencement ceremonies and honoring him for his achievements. Unlike a church, a university is intended to be an open environment that is tolerant of many different viewpoints. Notre Dame and the dozens of other Catholic universities in the U.S. have built well earned reputations as just such open environments.

Refusing to invite a diverse set of speakers based on a singular issue is clueless, as one bishop characterized Notre Dame’s decision. Do the bishops intend to expel all faculty, students, and staff who disagree with their position on abortion? Will they insist Notre Dame hold back degrees of students who voted for Obama, have had an abortion, supported a friend who had an abortion, or are supportive of a woman’s right to choose? Until they are ready to do either or both, then the bishops should let Catholic universities remain open academic environments, confer honorary degrees based on objective standards, and invite any speakers chosen by the school. God forbid the bishops should take any affirmative steps toward either action because we might just see an outright revolt by university trustees in addition to students choosing other universities. I, for one, would then not qualify to earn a law degree from Santa Clara Law School as I hold similar views to Mr. Obama with regard to a woman’s right to choose and stem cell research.

Need I even go so far as to point out that the bishops are not speaking from a very good spiritual position and the church is already struggling for relevance. This is, after all, the same set of bishops who played active roles in the still-fresh sexual abuse scandals.

AP, Y! News: Notre Dame’s Obama invite riles Catholic bishops.

This coming week, Bishop Thomas Wenski of the Roman Catholic Diocese of Orlando, Fla., will take the unusual step of celebrating a Mass of Reparation, to make amends for sins against God.

The motivation: to provide an outlet for Catholics upset with what Wenski calls the University of Notre Dame’s “clueless” decision to invite President Barack Obama to speak at its commencement and receive an honorary doctorate May 17.

The nation’s flagship Catholic university’s honoring of a politician whose abortion rights record clashes with a fundamental church teaching has triggered a reaction among the nation’s Catholic bishops that is remarkable in scope and tone, church observers say.

At least 55 bishops have publicly denounced or questioned Notre Dame in recent weeks, employing an arsenal of terms ranging from “travesty” and “debacle” to “extreme embarrassment.”

The bishops’ response is part of a decades-long march to make abortion the paramount issue for their activism, a marker of the kind of bishops Rome has sent to the U.S. and the latest front in a struggle over Catholic identity that has exposed rifts between hierarchy and flock.

Bishops who have spoken out so far account for 20 percent of the roughly 265 active U.S. bishops â?? a minority, but more than double the number who suggested five years ago that then-Democratic presidential hopeful and Catholic John Kerry should either be refused Communion or refrain from it because of his abortion stance.

Treasury Notice 2008-83 also nixed in Senate

The Senate passed its version of the stimulus package today (HR 1.AS2). As is often the case, it seems there is something for everyone. For example, the Senate generously left intact Wells Fargo’s gift from Hank Paulson and crew, Treasury Notice 2008-83, although the notice has been restricted from further use. The gift is likely to make it into the final bill because the text came from the House version of the bill and was left untouched by the Senate.

SEC. 1281. CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE.

In other words, Congress is letting stand any bank mergers before Jan. 17 which might have relied on Treasury Notice 2008-83 which gave banks (and only banks) a pass on section 382(h) of the tax code. I provide a basic summary in an earlier post: Revenue Code Section 382: in the face of a financial crisis

Update: This made it through conference and was signed into law by President Obama.

Federal stimulus plan would repeal big tax break for banks given by Notice 2008-83

It looks like Congress is about to squelch Treasury Notice 2008-83 but will provide a gift to banks that already relied on it. I think of it as much a parting gift to outgoing Treasury Secretary Paulson.

The draft economic recovery/stimulus package that is starting to wind its way through Congress essentially says that the Treasury Department went beyond its powers by issuing Notice 2008-83 but that banks that already relied on the tax guidance provided by the notice may still take advantage of the huge tax breaks it provides them.

Relevant text from the bill:

PART 4 â?? CLARIFICATION OF REGULATIONS RE-LATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE

SEC. 1431. CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE.
(a) FINDINGS.â??Congress finds as follows:
(1) The delegation of authority to the Secretary of the Treasury under section 382(m) of the Internal Revenue Code of 1986 does not authorize the Secretary to provide exemptions or special rules that are restricted to particular industries or classes of taxpayers.
(2) Internal Revenue Service Notice 2008â??83 is inconsistent with the congressional intent in enacting such section 382(m).
(3) The legal authority to prescribe Internal Revenue Service Notice 2008â??83 is doubtful.
(4) However, as taxpayers should generally be able to rely on guidance issued by the Secretary of the Treasury legislation is necessary to clarify the force and effect of Internal Revenue Service Notice 2008â??83 and restore the proper application under the Internal Revenue Code of 1986 of the limitation on built-in losses following an ownership change of a bank.
(b) DETERMINATION FORCE EFFECT OF INTERNAL REVENUE SERVICE NOTICE 2008â??83 EXEMPTING BANKS FROM LIMITATION CERTAIN BUILTâ??IN
LOSSES FOLLOWING OWNERSHIP CHANGE.â??
(1) IN GENERAL.â??Internal Revenue Service Notice 2008â??83â??
(A) shall be deemed to have the force and effect of law with respect to any ownership change (as defined in section 382(g) of the Internal Revenue Code of 1986) occurring on or before January 16, 2009, and
(B) shall have no force or effect with respect to any ownership change after such date.
(2) BINDING CONTRACTS.â??Notwithstanding paragraph (1), Internal Revenue Service Notice 2008â??83 shall have the force and effect of law with respect to any ownership change (as so defined) which occurs after January 16, 2009 if such changeâ??
(A) is pursuant to a written binding contract entered into on or before such date, or
(B) was described on or before such date in a public announcement or in a filing with the Securities and Exchange Commision required by reason of such ownership change.

Full Text of The American Economic Recovery and Reinvestment Plan

The bill was posted today and will be officially introduced by Rep. Rangel to the House Ways and Means Committee over the coming days. Apparently, this is hot off the presses. A Committee press release about the bill is dated Saturday, Jan. 17, 2009 although it does mention the bill blocking Notice 2008-83.

The AP provides more commentary on the stimulus package and the repeal of Notice 2008-83.

via Stimulus plan repeals big tax break for banks – washingtonpost.com.

House leaders moved this week to repeal the tax break for banks even as the Senate voted to help many of those same institutions by releasing the second $350 billion of the widely unpopular Wall Street bailout. Many lawmakers are unhappy with the results after the Bush administration spent the first $350 billion, making them wary of helping banks in the stimulus package.

Repealing the tax break would negate those savings in future bank mergers. It would not, however, affect mergers already under way, according to a summary of the stimulus package released by the tax-writing House Ways and Means Committee.

I personally think Congress should prevent any party from taking advantage of the guidance from Notice 2008-83. The banks that did knew or should have known that it was likely not legal, outside the powers of the Treasury Department, and would be slapped down by Congress. I wrote more about that in my last post about Notice 2008-83.

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