PATTOO WEEK 6: The Question of Murray, Tait’s Rebuttal, and Murray’s Fiscal Con Job in Its Full Glory

PATTOO — the “Protecting Anaheim Taxpayers from Their Own Opinions” Act (known by some ideologues as the “Anaheim Taxpayers Protection Act”) first came to the Anaheim City City Council for its approval on March 3, 2015.  It is a Charter Amendment that would require a 2/3 vote of the Anaheim City Council to place any proposed new, increased, or extended tax on the ballot.  Anaheim’s Council may send it to the citizens for a November 2016 vote.

To follow this, you’ll probably want to read:

• Cynthia Ward’s original March 9 story on the subject
• Tuesday’s introductory post for PATTOO WEEK, which sets forth the major ideas for the week
• Wednesday’s second post — public comments, a bit o’ Murrbottery, and Kring Komedy
• Thursday’s third post — Vanderbilt and Tait offer some realistic concerns; Murray offers many unrealistic retorts
• Friday’s fourth post — Getting deeper into the bonds issue; Murray’s in a hurry and has an urgent question
• Saturday’s fifth post — A holiday weekend digression, mostly about parliamentary procedure; you can skip it
• Our four-part series from March 8 presenting OJB’s own official unofficial March 3 meeting transcripts

Part One — Public Comments
Part Two — Murray’s Intro, Kring’s Kvetch, and the Vanderbilt-Houston Discussion
Part Three — Tait & Houston, “Mr. Procedure,” Debbie Moreno, Murray, Brandman
Part Four — Bonds, 3-2 Measure N Vote, Angry Brandman, Tabling, Tait on JPA Loophole

As if we need to repeat it: these aren’t official transcripts; they were the best we could do with our OJB volunteers.

We’re covering the middle of the 4th transcript.  Skipping over Part 5, in Part 4 we heard Vanderbilt and Tait intensify their concerns about whether passing this measure could harm Anaheim today by increasing the interest rates we’d pay on bond refinancing.

[1] THE MURRAY QUESTION

We’re going to use the same “bullet point then comments introduced in orange” method that we did yesterday.  Except: I’m going to quote Murray’s speeches in full so that no one can complain that I’m picking and choosing from among her words.

At one point in the debate, Murray suddenly developed a burning itch to ask a question.  Seriously, watch:

MURRAY (2:04:41), after Finance Director Debbie Moreno muffs an answer to Vanderbilt: “I have a question, too.” Sadly, she had spoken just before Vanderbilt, so it was not her turn.  Tait and Kring got to go first.

MURRAY (2:06:28), interrupting Tait’s discussion with City Attorney Houston over the margin of the City Council vote to put Measure N on the ballot: “Mr. Mayor I have a question —”

MURRAY (2:07:49), after she and Tait correct Kring that they both voted against putting Measure N on the ballot:  “Mr. Mayor, I just have a question—”

Must be one heck of a question, right?  Here it is — broken down into ten component parts!

1. “It’s been an interesting discussion about bonds, since this doesn’t involve bonds.”
2. “But, you know, I think we have gotten into the weeds and diverted form the issue at hand, which is about a voter threshold of the Council, not of the people.”
3. “The General Law cities already have this in place, and have had it in place for some time”
4. “But following the line of logic that we have been discussing here tonight, all general law cities would have terrible bond ratings, and all charter cities would be, you know, beating ‘em up and down the street in Wall Street.”
5. “So I don’t think that that has borne itself out; I think empirically it’s not proven to be true, unless they have other economic factors that are leading to lower ratings.”
6. “The issue here tonight, is an up-or-down vote on whether we should increase the threshold to 2/3 to put tax measures before the voters.”
7. “Tax measures, again, increase the cost of living on our residents, increase and are regressive in nature, by and large.”
8. “And it is an issue that was discussed in the last election, which is why it was brought to my attention, and why I don’t want to wait 10 years for another Charter Review.  I want our voters to be able to have a say, now, in the next General, and so I’m asking for the support of the Council to move forward …”
9. “… and again, allow us to move forward conforming with General Law cities across the State …”
10. “… which, by and large, exempting them from other economic issues, district cities actually are the ones having the harder economic time across the State right now.  I would ask that we please move forward and provide these protections for taxpayers.”

Having racked ’em up, let’s knock ’em down.

1: Yes, this actually does involve bonds, in two respects.  First, as Vanderbilt and Tait have suggested, adding a big new hurdle to the City’s ability to pass tax increases — including GATE TAX increases (sales taxes on tickets to amusements that by and large don’t even touch residents) — may make the City less creditworthy when it comes to repaying bonds in difficult times, which means paying higher interest rates.  Second, the City’s unrestrained ability to pass bonds for new construction is one of the main things that may make future tax increases necessary, when those bonds’ huge balloon payments come due.

4: No, that doesn’t logically follow.  General Law cities have all sorts of constraints on them that Charter cities do not: that’s a big reason why cities pass charters.  Some of those constraints involve raising revenue, but other of those constraints involve spending.  Also, General Law cities are generally less populous, less rich, and less complex.  They seek out smaller loans that pose less risk to lenders.  Charter cities also have higher concentrations of needy people, beyond the number that can readily be served by private charities, that require expenditures.  These are all reasons to predict that General Law cities would have better bond ratings, despite the “2/3 vote to put new taxes on the ballot” requirement.

5:  So the “unless [Charter Cities] have other economic factors that are leading to lower ratings” is right!  They do!

6:  With the exception of progressive income taxes, luxury taxes, or taxes with exemptions that help lower earners, this is true — “by and large.”  But: examples where it isn’t true include: (A) taxes on non-residents, like tourists; (B) taxes small enough not to affect tourist revenue; (C) taxes on goods or services that poor, working class, and middle-class people don’t use much or at all, or (D) taxes on goods or services that they do use, but that are quite small.  Guess what fits into all of those categories?  Yes, A GATE TAX.  Orlando, Florida has a 6.5% tax on Disney World, EPCOT, etc. and it is doing just fine.

7:  Let’s take a real world example.  Right now, a family of 4, one kid above 10 and one below, can afford to go through the gate at Disneyland for $390 (not counting the costs of parking, food, entertainment, mementos, etc.)  A 1-2% gate tax — meaning a $3.90 to $7.80 surcharge — is not going to break them.  Disney raises their tickets by about $4 apiece – call it $15 for that family — every year, so it clearly believes that the market can bear far more than that.  Because this applies to luxury services (which entrance to Disneyland has become), it’s not regressive.  This isn’t a “straw that breaks a camel’s back” tax.  No one with any sense wants to kill off Disney’s “golden goose” — and this wouldn’t.

8: This is sort of hard to believe.  Anaheim’s agreement not to impose a gate tax on Disney for 20 years expires in 2016. Murray’s closest friend is Disney’s Government Affairs head Carrie Nocella.  That’s a lot more likely of a reason for this to be coming up now than that Dr. Jose Moreno, when asked at a recorded candidate forum at Murray’s (and Todd Ament’s) “Influence Church” in Anaheim Hills whether he could categorically rule out any tax increases ever, said “no.”

9: Why would Anaheim want “conformity” with General Law cities in this respect when it generally tries to avoid it?

10: California’s “District cities” are, of necessity, Charter Cities; refer to the above answer to point 4.

One final point: read those two paragraphs in hot pink again.  Do you see a single question in there?  No — she never “just had a question.”  Sadly, Kris Murray has become so accustomed to lying from the dais that by now Murray can’t even be honest about why she says — three times in just over three minutes — that she wants to be recognized to speak!

[2] TAIT SETS FORTH HIS PRINCIPLES; THEY DON’T INCLUDE CIRCUMVENTING THE CITY CHARTER

We may now safely return to bullet points for a time.

• Tait is concerned about fiscal responsibility.  He thinks that the Council should consider Murray’s proposal to limit the ability to go to the people and decide whether they want to tax themselves along with other measures.
• He favors asking the voters whether they want to enforce what the City Charter says — that they have to go to the people to to make large borrowings like bonds — rather than circumventing it with a Joint Powers Authority.
• “We don’t have a taxation problem; we have a spending problem and a borrowing problem.”
• If the Council limits the ability to go to the people on taxation issues, it should also address the borrowing issue.

When, hopefully no sooner that 50 years from now, Tom Tait leaves behind this earthly world, that quote there in orange has a pretty decent chance of making it into his obituary.

After this, Tait has the “Was Measure N a Tax?” squabble with Jordan Brandman that was reviewed in Part 5.  The lesson to take here is that, if this Council wants to raise taxes in the future, it will do its damnedest — aided by Staff — to define whatever “revenue enhancement” it wants to implement as “not a tax.”  That’s another way that taxpayers won’t be protected.

[3] THE MURRAY MANIFESTO: THE DEFINITIVE COLLECTOR’S EDITION OF HER CON JOB

1. “Clearly, we’re having a disagreement on whether to impose a 2/3 vote via the charter on future Councils as they consider potential proposed tax increases.
2. “But what’s very very important for our residents to know and to underscore here tonight is: Anaheim is one of the most fiscally sound cities in the state of California.”
3. “We have a restored reserve.  We have our health care, lifetime medical benefits that were already eliminated for future employees, but we have a trust in place to cover those costs.”
4. “We have in the position of restoring Police and Fire, and we’re reinvesting hundreds of millions of dollars in our neighborhoods, because the city has an economic model that’s working.”
5. “We are moving to a new paradigm, we are moving to a larger Council, and we are asking for this additional taxpayer protection to be in place.”
6. “But nothing we do here tonight is going to impact our current ratings or, based on current revenue models, and that’s what our bonding was set up.”
7. “And nothing we do here tonight is going to limit the economic growth, which we just had a massive workshop on — talking about how our economy is coming back and coming back strong.”
8. “So I want our residents to be sure and know that they are in good hands, that this is a fiscally responsible City Council that has made very good decisions over the last four years, in conjunction with private investment, which has helped us recover, faster than most cities, and we are very fortunate in that way.”
9. “This is about simply instituting something that already happens across the state of California if you happen to reside in a general law city and that is a 2/3 vote before you as a resident, as a voter, are asked to consider a tax increase.”
10. “So with that, I do hope we can move forward and vote tonight we’ve had extensive debate, and I appreciate that debate, and I would again ask that we move forward.”

In other words, “just trust us.”  That’s difficult to do when the Council majority has pulled stunts like it did with the initial Angels Stadium deal: including commissioning an economic study from a sister subsidiary of a company bidding on the Angels concessions contract, instructing them that it should conclude that losing the Angels would be an economic disaster for the City; not ensuring that the study satisfied the requirements of the contract; not distributing it to the public so we could criticize it; not allowing a study author who had flown in from Minneapolis to take questions from the Council; letting the study deceive the Councilmembers while they were vouching for its credibility; and then when the Mayor brought it back for a second look at the following meeting and discovered the fraud, calling a special meeting to punish the Mayor by taking away his power to place items on the agenda between meetings.

That just doesn’t scream out “trustworthiness” when it comes to economic forecasts.

Well, I’m not asking you the reader to trust me — but I do think that you might want to consider trusting Tom Tait  To the rebuttals:

2: No, it’s not, and you’d have to be an idiot to trust in the Council’s vouching for itself.  Anaheim’s bottom line looks good right now because it is borrowing money from future Councils to spend today, to make itself look good enough to re-elect, while deliberately deceiving the public about the cost of this borrowing by asserting that the City’s current payments will stay the same — because most of the money due is back-loaded into “balloon payments.”  I could go on about ARTIC and the Streetcar and the various giveaways and tax abatements, but Tait has already done so.  (See Part 3, Section 2, of this series.)

3: My bottom line these days is that if it helps the poor, the working class, and the middle class, these days — without imposing unwarranted financial risks internally or unacceptable external costs — it’s very likely good.  So I’m not sure that I’d go bragging about the accomplishment of cutting out medical coverage for employees.  Even so, this ignores the “borrowing and spending” problem that Tait identifies.

4: That money was part of the Convention Center Bond deal.  We BORROWED that money and left it to future City Councils in future decades to pay it back.  This is not a sign of economic health; it’s a sign that the Council successfully bamboozled the public.  (That’s probably one reason that they really wanted to avoid a vote on it.)

5: This is no reason to impose this new restriction.  Murray doesn’t even pretend otherwise.

6: The first part of this sentence is about as deceptive as possible without being a flat-out lie.  No, it won’t affect our current ratings because they already exist.  It would affect our future ratings, potentially even in the very near term, because there’s no reason to believe that bond rating agencies would use Anaheim’s “current revenue models” to assess a risk of default over 35 years.  (Admittedly, they might not care because the City could always liquidate its ownership in public property to cover those looming, lurking, balloon payments.  For some reason, the current Council doesn’t advertise this possible way to avoid bankruptcy — perhaps because some of their political patrons would be the first to line up to pay “fire sale” prices.   But that’s not something that a “fiscally sound” city should ever have to worry about doing.)  The latter part of the sentence doesn’t make sense.

7: Yes, the U.S. economy is coming back, and so is the California economy, and maybe even the Orange County economy generally — but not many other are, to the degree that the City of Anaheim is, spending huge amounts of money now that will slaughter future generations down the road.

8: She does indeed want the residents of Anaheim to believe this.  That makes it self-serving, but it doesn’t make it true.

9: See the previous #9.

10: Let’s just let James Vanderbilt reply to that one.  Bullet point mode — ON!

• This is a major policy choice, so he appreciates the chance for thorough debate and thinks it has been helpful.
• He appreciates Murray’s arguments because they make a strong case to take into account.
• He just wants to ask the right questions to ensure that they’ve covered all their bases.
• With apologies for re-entering the weeds: when Anaheim’s bonds are sold or refinanced, they are scrutinized and receive complicated ratings.
• Each gradation in those ratings can have considerable affects on the ultimate interest rate that the City will pay.
• So, with respect, be believes that the questions he is asking are not out of line.

(What a bomb-thrower he is!)

In our next installment, we’ll see how the situation was resolved.  More than that, you’ll get a chance to see how Kris Murray, in one sentence, totally gives away the game and destroys her own argument.  It’s rather lovely to watch.