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Tuesday, Oct 3, 2023

Are We Getting Our Money’s Worth?

To operate one’s business effectively requires frequent comparisons of costs with value received. If one continuously pays more for a product or service than he or she receives in value, losses will result and the business will fail. Perhaps it is time to apply this concept of “value received” to our California Legislature. California’s current annual cost for a legislative seat is approximately $400,000. This cost includes the legislator’s salary of approximately $100,000 and a staff budget, including staff salaries, autos, phones, faxes, stationery etc. of approximately $250,000 to $300,000. Office rent is additional and is paid from the state’s general fund. The question is: are we receiving value of $400,000 per legislator? And, if not, what should we do about it? Those who have been reading my column since its inception approximately sixteen months ago, have seen the voting patterns of our legislators regarding the bills I have profiled. With few exceptions, the voting follows strict party lines. Based on this, one should question whether we truly need all the legislators. If all of the legislators in a given party vote the same way, what difference does it make if we have one or five from that party? California currently has 120 legislative districts comprised of 80 Assembly districts and 40 Senate districts. What if we eliminate half of them and create larger districts? We would save approximately $24 million (60 x $400,000) in direct costs alone. Additionally, with fewer legislators, we are bound to have less proposed legislation. A reduced number of bills could result in additional significant cost savings. The costs associated with the processing (independent analysis, printing, etc.) of a bill have been estimated to be approximately $5,000. If one-half of the bills per session were eliminated, the additional savings could amount to more than $12 million. The 2003-2004 regular and extraordinary legislative sessions produced more than 5,000 bills and, unfortunately, many of them were harmful to jobs and businesses and a number of them seemed just plain ridiculous. There were bills of significant importance, including workers’ compensation reform and the referendums providing for Propositions 57 and 58 and there were bills permitting fresh churros to be cooked by mobile food facilities and prohibiting foie gras. In August, when Gov. Schwarzenegger suggested a part-time legislature, he said in reference to the legislators: “Spending so much time in Sacramento without anything to do, then out of that comes strange bills.” I recently heard that a legislator was apparently running out of ideas for legislation and to avoid the appearance of not doing enough, the legislator created a contest encouraging employees and others to submit ideas for proposed legislation. What we don’t need in California is more legislation and regulation for the sake of making legislators appear productive. A part-time legislature is probably not the answer. If the salaries and staff budgets were reduced to accommodate a part-time situation, the field of potential candidates would be severely restricted. The only candidates we would be able to attract are those that are independently wealthy or those that would need to have a second job. There are those that will say that having fewer legislators and larger districts will create a situation where some of the constituents are better represented than others. However, I believe that redistricting, if done by an independent non-partisan board, can achieve fair and effective representation for all with fewer legislators. The following are the bills that I have chosen to profile this month: -SB 494: This bill provides for a health care provider to place a lien on the recovery that a Medi-Cal beneficiary receives from a responsible third party for the charges of past medical expenses, as opposed to the amount approved and paid by Medi-Cal. In fact, the amount paid to Medi-Cal would be inadmissible in any action or claim against the third party. Providers would be permitted to collect more from private liability insurers (re: auto, homeowners, and general liability policies) than what they agreed to accept for services rendered to a Medi-Cal beneficiary. The result would be increased insurance premiums for virtually all Californians who have some form of liability coverage, once again increasing the costs of doing business in California. Status: Passed Senate and Assembly, vetoed by governor Sept. 21, 2004. Valley Legislators voting for bill: Senate, Alarcon, Kuehl; Assembly, Frommer Koretz, Levine, Montanez, Pavley. Valley Legislators voting against bill: Senate, Margett, McClintock; Assembly, Richman, Strickland. Valley Legislators absent, abstaining or not voting: Senate, Scott. -SB 1056: This bill requires a city, county, or city and county to prepare an economic impact report prior to approving or disapproving a proposed development project that would permit the construction of a “superstore” retailer. The applicant would be required to pay for the report but would not be allowed to be the conductor of the report. The required criteria to be addressed in the report concentrates on negative impacts and does not consider the positive impact of economic efficiencies offered by superstores or the potential for job growth and economic development. The result would be additional costs to developers creating a disincentive to locate in California and provide jobs to our economy. Status: Passed Senate and Assembly, vetoed by governor Sept. 18, 2004. Valley Legislators voting for bill: Senate, Alarcon (author), Kuehl, Scott; Assembly, Frommer, Koretz, Levine, Montanez, Pavley. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP (LLHR) and a director of the Valley Industry and Commerce Association (VICA).

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