Tag Archives: ALEC

Amodei Quacks Like A FLAG-waving Duck

Amodei 3

Representative Mark Amodei (R-NV2) doesn’t like being categorized as “anti-public land,” or more precisely lumped in with the Bundy Boys.  However, his sponsorship of legislation and other activities have him on the Anti-Public Land list:

“Amodei landed on the list for sponsoring legislation that would give the state control of 7.2 million of the approximately 58 million acres of federally controlled land in Nevada, opposition to the creation of the Basin and Range National Monument, membership in Federal Lands Action Group and a statement about the Malheur occupation.

The statement, attributed to Amodei and two other members of the action group, said the lawmakers didn’t condone the Oregon action but added, “we do understand their frustration with increasingly heavy handed federal agencies that continue to violate the rights of hardworking American farmers and ranchers.” [RGJ]

Duck looks The poor little Republican has been cast amongst the Bundys.  How did he end up bunched up with them?  First, he’s a “FLAG” member.

“Rep. Amodei is a FLAG member and introduced H.R. 1484, the Honor the Nevada Enabling Act of 1864—which would seize Nevada public land for state control. In 2015, Rep. Amodei also introduced H.R. 488, which would cripple the Antiquities Act by blocking the extension or creation of national monuments in Nevada, unless authorized by Congress. Rep. Amodei has also cosponsored four other bills aimed at curtailing the Antiquities Act and seizing public lands. In response to the occupation of the Malheur National Wildlife Refuge, Rep. Amodei signed on to a joint statement that condemned federal officials for law-breaking, rather than condemning the actions of the armed militants.” [CAP]

So, what is FLAG, and how does it relate to the Anti-Public Lands crowd?  The organization is the brain child of two Utah Representatives, Stewart and Bishop, who announced its creation on April 28, 2015.  And, the purpose?

Today, Representatives Chris Stewart (R-Utah) and Rob Bishop (R-Utah) launched the Federal Land Action Group, a congressional team that will develop a legislative framework for transferring public lands to local ownership and control. […] This group will explore legal and historical background in order to determine the best congressional action needed to return these lands back to the rightful owners. We have assembled a strong team of lawmakers, and I look forward to formulating a plan that reminds the federal government it should leave the job of land management to those who know best.” [Stewart]

Who were among the first members of the FLAG group? “Other members of the Group include Representatives Mark Amodei (R-Nev.), Diane Black (R-Tenn.), Jeff Duncan (R-S.C.), Cresent Hardy (R-Nev.), and Cynthia Lummis (R-WY).” [Stewart]

We should assume the group means what it says.  It wants to transfer public land to local ownership and control.   Towards this end the FLAG group held its first “forum” in June 2015, and among the speakers was a representative of the “Independent Institute.”  Board members of this organization include a private equity manager, a person from Deloitte & Touche USA, a member of the Howley Management Group, the Botto Law Group, a managing director of Palliser Bay Investment Management, Reditus Revenue Solutions, Audubon Cellars and Winery, Berkeley Research Group LLC, and the former chair of Garvey International.  [II.org]  This isn’t a list that inspires one to ask if they are primarily interested in public land for the sake of conservation.

Prof. Elwood L. Miller (UNR) was on the initial panel, adding a touch of accounting expertise to the argument that the federal government is too bureaucratic and caught up in procedural questions to be a good steward of public lands.  Attorney Glade Hall added the usual federal control isn’t constitutional argument. “It is a patent absurdity to assert that such full powers of governance cover 87 percent of the land surface of a state of the Union and at the same time assert that such state has been admitted to the Union on an equal footing with the original states in every respect whatever,” Hall said.” [STGU] A sentiment echoed by the head of the Natural Resources Group, whose book on the “theft” of the environmental issue is available from the Heritage Foundation.

In short, there was nothing to remind anyone of a fact-finding operation in this inaugural panel sponsored by FLAG.  It was of, by, and for individuals who want to ultimately privatize federal lands.

It’s also interesting that the panel members offered these opinions based on personal experience, or “talking to people,” but nothing in the presentations was offered to demonstrably prove that the federal government has no authority (beyond the usual crackpot interpretations spouted by the Bundy-ites and allies) or is actually and provably incompetent to manage public lands.  The guiding assumption – however poorly demonstrated – was that the local agencies could do a better job. Period.

If anyone is still unsure of the ideology driving FLAG, please note that the Heritage Foundation and the Mercatus group aren’t the only players supporting the efforts.  There’s also the John Birch Society (They’re still around) touting the confab on Facebook.  Additionally, there’s the ever-present American Legislative Exchange Council (ALEC) imprimatur on the project.

One segment of ALEC testimony from a February 2016 FLAG meeting can serve as an illustration of their argument:

“Bureaucratic inflexibility and regulatory redundancy make it almost impossible for the federal government to handle the lands in its charge for optimal environmental health. Any change in strategy on how to manage the lands, such as harvesting trees on forest lands to reduce wildfire fuel loads and prevent pest infestation, can take years to adopt and implement. By the time the federal government is able to act, it is often too late.”

Examples? The argument is made that three factors are responsible for the severity of wildland fires – poor logging practices, overgrazing, and over aggressive fire control. At this juncture, we could well ask how, without regulatory control, can better logging practices be promoted throughout the region? Or, if the Bundy Bunch isn’t convinced by the Federal authorities to pay their grazing fees and not trespass on BLM lands, then how is a state with less in the way of resources supposed to take on the task? 

However, the most intriguing element of the ALEC position is this: Further, they have operated with budget shortfalls for over a decade calling into question whether they even have adequate funds to get the job done.”  At this juncture it’s appropriate to ask – and who is touting cutting the federal and state budgets?  Who, if not ALEC?  Thus, the federal government can’t do a better job because the funding has been cut, and because the funding has been cut it can’t do the job?  Circular Reasoning at its finest, looped in with the obvious cuts and shaving from state budgets.   The ultimate argument would be that neither the federal government nor the state governments can “do the job” and therefore the lands should be transferred to private hands.  Nothing would please the Koch Brothers more?

The second way one gets attached to the Bundy-ites is to get mealy and smushy about their activities.  As in, “we do understand their frustration with increasingly heavy handed federal agencies that continue to violate the rights of hardworking American farmers and ranchers.” [RGJ]  It’s past time to get specific.  Exactly what constitutes “heavy handed federal agencies?”  Are they agencies which are tasked to collect grazing fees?  How long is an agency expected to wait for a person to decide to pay those fees? 

Exactly what constitutes a “violation of rights of hardworking people?”  Exactly what rights have been violated?  How is it a violation of my rights to have to pay the same grazing fees, or have to move cattle from overgrazed areas, just like every other rancher in a given area under Federal management?  Freedom, rights, and independence are easy words to toss around, but without actual evidence of real violations of RIGHTS then the argument is hollow.

Bundy rally And, one lands on the anti-public lands roster by sponsoring legislation like Representative Amodei did in April 2015:

“Most recently, Congressman Mark Amodei (R-NV) introduced a “large-scale” public lands bill, which would allow the state of Nevada to seize and sell off public lands. Representative Rob Bishop (R-UT), chair of the House Natural Resources Committee, also requested $50 million in the federal budget in order to facilitate immediate transfer of public lands to state control.”  [TP]

Looks like a duck, walks like a duck, quacks like a duck, then there’s no reason to list it as anything other than a duck.

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Filed under agriculture, Amodei, ecology, koch brothers, National Parks, Nevada news, Nevada politics, Politics, privatization, public lands, Rural Nevada

A Second Look At AB 182: ALEC’s assault on Nevada Public Employees

AB 182

REVIEW: If one feels the need for a bit of background information, the origin of bills like AB 182 can be found in the ALEC model legislation package known as “The Public Employee Freedom Act.”  (pdf)  The bill is a veritable laundry list of the ALEC bill-mill wishes:

“(1) AN ACT relating to local governments; prohibiting a local government employer from entering into an agreement to pay dues to an employee organization through deductions from compensation; (2) prohibiting such an employer from providing paid leave or paying compensation or benefits for time spent by an employee in providing services to an employee organization; (3) prohibiting the inclusion of certain employees in a bargaining unit; (4) revising provisions relating to a reduction in force; (5) providing that a collective bargaining agreement between a local government employer and a recognized employee organization expires for certain purposes at the end of the term stated in the agreement; (6) requiring public notice of certain offers made in collective bargaining; (7) eliminating final and binding fact-finding except upon the election of the governing body; (8)  removing a portion of the budgeted ending fund balance of certain governmental funds from the scope of collective bargaining and from consideration by a fact finder; (9) eliminating statutory impasse arbitration for firefighters, police officers, teachers and educational support personnel;…”

Nothing would so please the corporate masters of ALEC and the Koch Brothers alliance than to see public employee unions brought down, scuttled, and preferably stricken branch to root.

Every provision in this bill is strategically calculated to prevent unions from providing their services to their members.  No dues check off, making dues collection more costly and cumbersome for members; combined with the  attack on union leadership – after all, if the leaders can’t afford the volunteer time then service is necessarily reduced.  Eliminate “supervisory personnel,” if they so much as think about making an “independent judgment.”  No lawyers, no doctors, no supervisory personnel, may by involved in a bargaining unit?  No “confidential employee?”

Allow a government agency to reallocate resources such that there is a reduction if force – translation: layoffs – and then say “We did it because we moved the money elsewhere.” Anywhere? Any budget category? For any purpose? For the purpose of laying off personnel?  No “evergreen provisions?” No cost of living adjustments without a new master contract?

AB 182 assumes there will be no employee strikes – illegal for public employees in this state – but there won’t be any resolution options either. No fact finding, mediation, or arbitration results shall impinge on the employer to do whatever the agency wishes.  It’s take it or leave it time.

And, 16.6% of the total “budgeted expenditures” must be kept in reserve.  Really?  While this sounds “financially responsible” it really isn’t.  There are supposed to be funds allocated at the local level for “extraordinary maintenance and repairs or improvements, funds for contingencies, and funds to stabilize operations, and to provide a cushion in case of a natural disaster. [See: NRS 354]  There’s really little more to this than pulling 16.6% away from the bargaining table.

CONSIDER THE SOURCEWho is supporting ALEC?

The corporate sponsorships include:  The American Bail Corporation; the Altria Group (tobacco), AT&T, Diageo, Energy Future Holdings. Exxon Mobil Corporation, Koch Companies  Public Sector, Peabody Energy (coal), Pfizer Inc. PhRMA, State Farm Insurance, United Parcel Service, Amerian, American Express, US Airways, Anheuser Busch, Bayer Corporation, Bell Helicopter, BP America, Burlington Northern, Catepillar, Century Link, Chevron, Comcast, Conoco Phillips (under Phillips 66 brand), Dow Chemical, Eli Lilly Inc, Farmer’s Group, Georgia-Pacific (Koch Bros), Honeywell, Insight Schools Inc, JR Simplot, Marathon Oil, Raytheon, Reynolds American, T Mobile, Transcanada, (yes, THAT Transcanada)Verizon, and Xcel Energy.

However, a more interesting list is who has dropped membership in the organization which provides models for legislation like AB 182: Pepsi, Coca-Cola, Pepsi, Kraft, Intuit, McDonalds, Wendy’s, Mars, Reed Elsevier, American Traffic Solutions, Blue Cross Blue Shield, Yum! Brands, Proctor and Gamble, Kaplan, Amazon.com, Medtronic, Wal-Mart, Johnson and Johnson, Dell Computers, John Deere, MillerCoors, Hewlett-Packard, Best Buy, General Motors, Walgreens, Amgen, Dreyfus, Amgen, General Electric, Western Union, Sprint Nextel, Symantec, Entergy, Merck, Bank of America, Wellpoint, Bristol Myers Squibb, Brown-Forman, Publix Markets, Glaxo Smith Kline, Unilever, 3M, Darden Restaurants, IBM, Intel, Nestle USA, Berkshire Hathaway, NV Energy, Alliant Energy, Microsoft, Pacific Gas and Electric, Yahoo Inc, International Paper, Occidental Petroleum, Overstock.com, Facebook, Google, Union Pacific, eBay, Wells Fargo, and Northrop Grumman. [link]

Not to put too fine a point to it, but the Nevada legislators sponsoring AB 182 – Republicans Kirner, Dickman, Gardner, Oscarson, Wheeler, Edwards, Jones, Hambrick, Ellison, and Nelson – are still promoting legislation (and an ideology) which is no longer all that popular among major corporate sponsors.  The ALEC bill mill has lost some of its patina of late, but 10 Nevada Republicans haven’t quite noticed the train’s left the station?

While ALEC may be headed off to the horizon, the Koch Brothers and their Americans for Prosperity are alive and well.

“AFP adopts the anti-union positions held by its libertarian funders, David and Charles Koch.[56] A video published on YouTube on February 26, 2011 shows Scott Hagerstrom, the executive director of Americans for Prosperity Michigan, advocating “taking unions out at the knees so they don’t have the resources” to fight for workplace benefits or political candidates.” [Sourcewatch]

One has only to look at Michigan, Ohio, and especially Wisconsin under the Koch financed Walker regime, to see that AFP can simply adopt the legislative packages from ALEC, and insert these into state legislatures – like Nevada.

Thus, Republicans Kirner, Dickman, Gardner, Oscarson, Wheeler, Edwards, Jones, Hambrick, Ellison, and Nelson are simply doing the bidding of the Koch Brothers and promoting their reactionary agenda.

CONSEQUENCES:   This assault on unions, and specifically the attack on public employee unions, are part of the general hostility of corporations toward labor, and toward government.  The results are obvious.  As union membership has declined over the years so have middle class incomes.  [MJ] [APO] [EPI]  And, how did many families move into the middle class in the first place?  By becoming police officers, firefighters, teachers, community health nurses, librarians, land management specialists, transportation specialists, heavy equipment operators, social workers, public health service workers, and so on.

The wages and salaries earned by public employees, as determined by negotiated master agreements, put more families into the middle class, and more money into local economies.  Once again – the Koch Brothers aren’t interested in Bob’s Bodega or the Smith Family Furniture Store, or Jill’s Fashions —  the kinds of small businesses which form the core of local economies.  Possibly the view from inside the 0.001% bubble doesn’t allow for the possibility that products such as Koch Brother’s brands wouldn’t sell in such quantities without local retailers – local retailers who rely on middle income consumers to produce their revenue?

The anti-union, anti-labor perspective is ultimately unsustainable.  Yes, paper towels (like Koch’s Brawny brand) are basic household items, but put too much downward pressure on household income and people will discover that re-washable rags will work as well.  Every household needs toilet paper, like Koch’s Angel Soft, but households under pressure to save pennies may find cheaper brands to purchase.  While the Koch’s can fall back on Flint Hills energy products, local grocers can’t fall too far back from their local demand.  Grocers average a margin of 1-6%, [AZBus] which is not a large cushion to sustain too much drop in customer demand.

Perhaps it’s easier to sit back insulated by a top 0.001% annual income and think of Liberty, Freedom, Personal Accountability, and other abstractions, but the middle class consumer, including the middle class firefighter, police officer, teacher, social worker, or public health nurse doesn’t have that luxury.  Freedom for most people comes down to what Franklin D. Roosevelt called “Freedom from Want.”  The freedom which allows a family to procure all that’s necessary for basic needs, and leave  little left over for a home, for retirement, for an education for their children.  They want, and need, the freedom to breathe between paychecks.

Bills like AB 182 take the air out of the room.  If Republicans Kirner, Dickman, Gardner, Oscarson, Wheeler, Edwards, Jones, Hambrick, Ellison, and Nelson would pull this bill, people could all breathe a little easier.

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Filed under Nevada economy, nevada education, Nevada legislature, Nevada politics, Politics, public employees

ALEC and Nevada GOP launch vote suppression bills

vote suppression

It isn’t quite true to say that vote suppression bills are “a solution in search of a problem,” because the “problem” as seen by ALEC and associated Republicans is that too many people are voting, thus placing a permanent GOP majority in doubt.  Here’s a portion of AB 266, the perfectly predictable photo ID bill:

“Section 2 sets forth the acceptable forms of proof of identity which are: (1) certain government-issued documents or identity cards that show a recognizable photograph of the person to whom the document or card is issued; (2) a voter identification card; or (3) certain documentation from an administrator of certain health care facilities that are licensed by the State.”

What’s the problem? Just show the election officials your driver’s license? That, according to the Brennan Center isn’t a solution to the real problem – encouraging more people to participate in our electoral politics.

“Approximately ten percent of voting-age Americans today do not have driver’s licenses or state-issued non-driver’s photo ID. Based on Americans’ moving patterns, many more do not have photo ID showing their current address. And getting ID costs substantial time and money. A would-be voter must pay substantial fees both for ID cards and the backup documents needed to get them-up to $100 for a driver’s license, up to $45 for a birth certificate, $97 for a passport, and over $200 for naturalization papers. The voter may also have to take several hours off of work and travel significant distances to visit government offices open only during select daytime hours. Finally, many identifying documents cannot be issued immediately, so potential voters must allow for processing and shipping, which may take from several weeks to an entire year.”

As the Brennan Center relates, there’s nothing “free” about the documentation needed to get voting photo identification cards, even though the card itself is supposed to be issued at no charge.  And, who are those most likely to be suppressed by this legislation?  No surprise here:

“The impact of ID requirements is even greater for the elderly, students, people with disabilities, low-income individuals, and people of color. Thirty-six percent of Georgians over 75 do not have a driver’s license. Fewer than 3 percent of Wisconsin students have driver’s licenses listing their current address. The same study found that African Americans have driver’s licenses at half the rate of whites, and the disparity increases among younger voters; only 22% of black men aged 18-24 had a valid driver’s license. Not only are minority voters less likely to possess photo ID, but they are also more likely than white voters to be selectively asked for ID at the polls. For example, in New York City, which has no ID requirement, a study showed that poll workers illegally asked one in six Asian Americans for ID at the polls, while white voters were permitted to vote without showing ID.”

Whose vote is in jeopardy?

Predictably that would be elderly people, students, people with disabilities, low income Americans, and people of color.  We’ve covered this territory before in terms of Nevada voting, especially in rural areas.  The geography of this state, and the fact that most of the population tends to live in just two counties, means that rural voters are also at risk.

It’s also no surprise that some of the same people who walked off the ALEC gang plank into the depths of vote suppression are the same who made the same march previously, see here.  AB 266 also brings back memories of Senator Roberson’s 2011 SB 373.

How does this fly in the face of American judicial principles? 

Here’s a reminder:

“If you signed your registration form in Nevada declaring under penalty of perjury that you are at least 18 years of age, are a citizen of the United States, are not among the classes of persons held ineligible, and are a resident of the state.  The burden of proof that you have committed perjury rests with the state.

The burden of proof always rests with the state — in any prosecution for anything.  If a person is alleged to have voted once in Clark County and again in Nye County that would call for a prosecution of a crime under NRS 293 — but the burden of proof rests with the state.   If a person is alleged to have voted using an assumed identity, then this calls for prosecution, and once again — the burden of proof rests with the state.

Any suggestion that the citizen be required to “show proof of citizenship” at the polls is not only redundant, but shifts the burden of proof from the state to the individual.  That’s not the way the American system of jurisprudence works.  It’s not the way the American judicial system has ever worked.

A person in any court in the United States is never presumed guilty until he or she can demonstrate innocence.  A person need never prove beyond a reasonable doubt that he or she did not commit a burglary, an arson, a theft, a manslaughter — the burden of proof always rests with the state.  Demanding “proof of citizenship” at the polling stations presumes that unless a person can “prove” otherwise he or she is a fraudulent voter upends the very foundation of our criminal justice precepts.” [DB]

Fancy Focus Group Terms Don’t Hide The Intent

Conservative Republicans are fond of using terms like “election integrity,” as if there was something amiss in our current system.  There isn’t.  The one question these advocates of vote suppression don’t want to answer is:  How many cases of voter impersonation fraud have been identified in this state?  As of August 2014, there were 31 cases of voter impersonation fraud in the entire country, and not one case was associated with a Nevada election. [WaPo]

But, but, but…sputter the advocates, “Photo ID will make people feel better about their elections.”  That’s false, too.  When researchers from Harvard and Columbia put this to a statistical test, the results didn’t support this contention:

“Because actual evidence of voter impersonation fraud is rare and difficult to come by if fraud is successful, reliance on public opinion as to the prevalence of fraud threatens to allow courts to evade the difficult task of balancing the actual constitutional risks involved. In this short Article we employ a unique survey to evaluate the causes and effects of public opinion regarding voter fraud. We find that perceptions of fraud have no relationship to an individual’s likelihood of turning out to vote. We also find that voters who were subject to stricter identification requirements believe fraud is just as widespread as do voters subject to less restrictive identification requirements.” (emphasis added)

Conclusions

Vote suppression bills are precisely that – legislation intended to make it more difficult for groups least likely to need or afford photo identification to vote in state and national elections.  They are promoted by associations like ALEC, which produces the model legislation, in order to secure a permanent GOP majority in elected bodies.  Let’s slip out on the tree limb and conjecture that if the elderly, students, the disabled, and the poor were voting for eliminating the minimum wage, enhancing corporate tax breaks, and terminating the Consumer Financial Protection Bureau … the GOP would be demanding same day registration, and ALEC’s bill mill would be going full bore.

Vote suppression bills are unconstitutional. Discrimination should be the last thing found in polling stations. Further, to place the burden of proof on a “defendant” is counter to the very basic principles of American justice.

Vote suppression bills serve no one except corporate interests, as the Harvard/Columbia research reports – they don’t even make people feel any better.

AB 266, and its companions SB 169, and AB 253 should find their way to the bottom of some committee file cabinet – and not their way to the Governor’s desk.

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Filed under Nevada, Nevada legislature, Nevada politics, Vote Suppression, Voting

Union Busting 101: Nevada’s AB 182

Union busting If anyone is functioning under the happy delusion that the current session of Nevada’s Assembled Wisdom is intent upon securing the happiness of the middle class – look no further than AB 182.

“It would clarify the rules that exclude supervisors from collective bargaining, prohibit using government funds to pay employees engaged in union activities, require employees to seek union deductions before they would be collected by a government entity, and make agreements retroactive to the date of the expiration of the previous contract. It would also require a final contract offer to be made public, among other provisions.” [LVRJ]

Welcome to the re-labeled world of corporate sponsored legislation as defined by ALEC and the related ACCE.  The “public final offer” part is straight out of ALEC model legislation.   This has not been overlooked:

“ACCE’s first meeting coincided with ALEC’s national conference. One workshop topic was “releasing local governments from the grip of collective bargaining.” Another report discusses the conservative Heritage Foundation’s plan for localities across the country to experiment with “local” right-to-work initiatives. Heritage predicts that these experiments could provoke a legal challenge ending up in the hands of the US Supreme Court, which they hope will effectively end “fair share” of agency fees for public employees currently under collective bargaining agreements.” [Teamsters]

There’s an agenda at work here, and it’s NOT one conducive to maintaining the middle class families involved in local government, firefighting, police and public safety, teachers, and others who perform vital public services at the state and local level.   The Republican Noise Machine has been relentless in its messaging about public employee unions and the members they serve, and the term “messaging” is appropriate because what’s been transmitted isn’t rational, and often isn’t even factual.

“Two widely shared misperceptions are helping to drive this shift of opinion. The first holds that public sector workers now earn more on average than their private sector counterparts, making them what Indiana’s Republican governor, Mitch Daniels, calls “a new privileged class in America.” The leading candidates for the 2012 Republican presidential nomination have helped promote this view. “Average government workers are now making $30,000 a year more than the average private-sector worker,” declares Mitt Romney. “It used to be that public employees were underpaid and over-benefited,” adds Tim Pawlenty. “Now they are over-benefited and overpaid compared to their private-sector counterparts.” The second perception is that collective bargaining contracts have been major contributors to the growing budget deficits of the states, a view promoted by Chris Edwards, the director of tax policy studies at the Cato Institute.” [Dissent]

What is conveniently omitted from the discussion is the fact that most government workers are older and have more education than the “average private sector worker.”  Using a term like “counterpart” makes it appear that the opponents of public sector unions are comparing average government workers to average private sector employees – they aren’t.  If the term “counterpart” is defined strictly as one person doing an essentially similar job then the numbers don’t back up the union opponents.  The facts are:

Jobs in the public sector typically require more education than private sector positions. Thus, state and local employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23% of private sector employees have completed college as compared to about 48% in the public sector.

Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants such as education and work experience. State workers typically earn 11% less and local workers 12% less.

Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, healthcare, and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8% lower for state employees and 7.4% lower for local employees than for comparable private sector employees. [NIRS]

Thus we can discount the “Pigs at the Public Trough” argument for what it is – propaganda, using misleading numbers and comparisons to make an ideological point.  And, we can dismiss the “driving the deficit” argument as well:

“There is no direct correlation between states with unionized public workers and those facing budget deficits. New York State, which boasts the highest percentage of unionized public employees of any state, is running a projected budget deficit of 16.9 percent for fiscal year 2012, while North Carolina, which prohibits public sector collective bargaining, faces an even larger budget deficit (20 percent) according to the data of the Center on Budget and Policy Priorities. Similarly, there is no direct correlation between collective bargaining and pension obligations that have gone unfunded. According to the conservative American Legislative Exchange Council, New York has done a better job at funding its pension obligations (currently at 100 percent funding) than Virginia, which does not permit public sector collective bargaining and is currently funding only 80 percent of its obligations.” [Dissent]

Not only is there no correlation between collective bargaining and budget deficits, but we should also take into consideration the unasked question: Why is it always a matter of cutting expenses, and not a question of whether more revenue should be raised to sustain public services?

There is a correlation ALEC and ACCE don’t want to discuss.  As the EPI documentsthere is a correlation between declining wages and the decline in union membership.   Unless one subscribes to the illogical and oligarchian ideologies of the ultra-conservative think tanks and the billionaires who support them, the logic of good old fashioned capitalism is obvious – the more wages, the more demand, the more demand, the more sales, the more sales, the more profits, the more profit the better for all concerned.

And, this holds true for public employees who pay their mortgages, buy groceries in the local supermarket, buy clothes from local retailers, purchase automobiles from local dealers, pay for gas at the local station, and get their hair cut by local barbers and beauticians.  However, ALEC and ACCE’s perspective isn’t driven by any concern for ‘those small businesses,’ but by a concern for the corporate bottom line – a bottom line which would be enhanced if levels of state and local taxation were to be reduced.  It sounds seductive to the local business owner to hear “we’re going to reduce your taxes,” until that coin is flipped to the obverse and the people who depend on those taxes for income stop thinking about the new car, defer car maintenance, put off buying new clothes, and reduce personal expenditures.

AB 182 launches some very specific attacks on public sector unions which bargain for wages and working conditions.  For example, who is a supervisor? 

Sections 2, 3, and 7 exclude school supervisory and administrative positions from membership in bargaining units, and expands the definition of an excluded confidential employee to include any employee whose duties entail access to proprietary or confidential information.  Therefore, anyone with any supervisory duties is excluded – good by principals and administrators, and with a bit of creativity that “proprietary or confidential” information clause could exclude many others.

Section 1 is a double whammy.  First, there will be no dues deductions. This is nearly always the first point of attack, and if we didn’t figure this out already, there’s a model bit of legislation from ALEC called the Public Employer Payroll Deduction Policy Act.  There are also some alternatives offered by ALEC to this same end. Secondly, the opponents of public employee unions have noticed that union leadership is voluntary and if there is any remuneration it isn’t all that much. So, the “head of the serpent” can be removed by simply refusing to grant leave for union purposes, and also by removing anyone who is not compensated by the union from participating in union activities because they’ll lose time and benefits for doing so.  That would wipe out most committee chairs, officers below the top level, and most local activists.

Section 6 gets rid of the Evergreen provisions. It “generally provides that upon the end  of the term stated in a collective bargaining agreement, and until a successor  agreement becomes effective, a local government employer shall not increase any  compensation or monetary benefits paid to or on behalf of employees in the  affected bargaining unit.”  Thus much for previously bargained cost of living adjustments.

And if there’s an impasse in the bargaining process?

“If an impasse is reached in collective bargaining negotiations, existing law  establishes a process of fact-finding. Under existing law, the findings and  recommendations of the fact finder are final and binding if the parties so agree or a  statutory panel determines that the findings and recommendations are to be final 40 and binding as to some or all of the issues in dispute. (NRS 288.200-288.203) 41 Sections 10 and 15 of this bill eliminate the panel.”

And, there’s more:

“Under existing law, an impasse in collective bargaining negotiations involving  firefighters, police officers, teachers or educational support personnel may be  submitted to an arbitrator, whose decision is final and binding. (NRS 288.215, 59 288.217) Section 15 repeals those provisions, eliminating the statutory right to  arbitration as a means of impasse resolution.”

Remember, public employees in Nevada have no “right to strike” protections, and AB 182 removes the fact-finding and the arbitration options to settle an impasse.  So, what’s left? If an impasse remains unresolved the government entity can’t raise any compensation and the employees are frozen in place?

AB 182 is, for all intents and purposes, an ALEC/ACCE dream piece, based on ideology rather than a rational approach to economic and social requirements, and supportive of corporate as opposed to local economic interests.   The Committee on Commerce and Labor should file this one away in the “unconscionable” part of its cabinetry.

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Filed under Economy, Nevada economy, Nevada legislature, Nevada politics, public employees

ALEC assault on Nevada PERS: AB 190

AB 190 AB 190 is hitting the light of day [ltn] – and for those advocates of middle class financial security and adequate pensions for former public employees this bill needs to go back down into its pit.  This bill is a bit of ALEC dreamland:

“…relating to public employees’ retirement; providing for the establishment of a hybrid retirement program for certain public employees; requiring the program to include a defined benefit plan and a defined contribution plan; setting forth the required provisions of each plan; requiring certain public employers under certain circumstances to make additional contributions to the Public Employees’ Retirement System to reduce the unfunded liability of the System;…[ NVLeg]

The Hybrid From Hell

This portion of the bill would create a system similar to the one enacted in Utah, and promoted by ALEC in its “State Solutions for Government Pension Reform.” [ALEC pdf] *See Utah Reform, page 18.

There are a couple of crucial point embedded in the ALEC publication.  First is the notion that defined benefit plans are a “problem.”  It doesn’t matter the fiscal state of the pension benefits program – if it isn’t about to send the state into bankruptcy, there are ways to massage the statistics in order to make it appear the state has a monstrous unfunded liability.   Funding from the Koch Brothers partially funds the NPRI’s conclusion that there is a $41 billion current liability.  And, gee whiz – wouldn’t you have guessed it? – they recommend a Utah style hybrid public pension program. *See DB 12/9/14.

Before grabbing the children and heading for the hills in a panic – consider the possibility that we can make the unfunded liability number really big by reducing the advance funding factors.  Translation, if I were to total up the liability for every public employee, working and retired,  and treat it as if it were all going to be paid out tomorrow morning, the number would be really  big – and really misleading and  inaccurate.

What we need to focus on is how well the program deals with liabilities over time.  So, when AonHewitt did an independent review of the NV PERS system what did it find?

“AonHewitt found that NV PERS “funding levels and the discount rates were not uncommon, where NV PERS differs from others is in its Funding Policy and contribution rules which provide much better than average protection, when compared to similar systems. Continued review and comparisons of costs and benefits with other large plans, actuarial audits, and consistent updating of the Funding Policy facilitates NVPERS ability to remain among the best run large public systems.”  [AonHewitt pdf]

Sorry, privatizers and financialists, there really is no reason to adopt any major changes in the current define benefit plan in Nevada because, as the independent comparative review discerned, Nevada doesn’t have the problems associated with other large pension systems in some other states.

There’s Gold In Those Hills (for Someone)

Thus far, ultra-right organizations such as ALEC and associated think tanks like the NPRI have been beating their drums and issuing reports to friendly news outlets about the Problem – which doesn’t exist in Nevada, in the hopes of promoting ALEC’s agenda that brings us to the second major point of the issue:

ALEC, et. al., want to promote defined contribution plans because there’s money to be made.

“On the private side – Continue to tell workers that they’ll be better off with their “economic freedom” (in a defined contribution plan) to finance their own retirement plans with “flexibility,” and they can use their money as they want – just make the management fee structure so complicated it takes a degree in Finance to figure it out, and then operate on the happy assumption that the financial professional’s first duty is to his own firm’s bottom line not with a specific obligation to cover the future retiree’s bottom.   Give us your money, pay us the fees, and just trust us!  Go quietly, and no one will get hurt?” [DB]

AB 190 is a classic assault on a perfectly good public retirement system which is NOT generating an unwieldy unfunded liability.  If the ultimate purpose isn’t to retain the best features of the current system, but to replace it with defined contributions in the future, then the other motive which springs to mind is that the financialists among us have been ogling the coffers of public employee retirement systems and want very much to dip into them up to at least their elbows, if not their shoulders.

What the advocates of AB 190 want to do is fairly easy to see – ultimately hand over wads of money from the public employees retirement funds to wealth management firms who will exact their fees and transactional costs with less public scrutiny than is required in a publicly managed retirement system.  What could possibly go wrong?

Golden Years or Fleeced Sheep?

Not sure this is the case? Then look at the provision in the bill in which individual trust accounts are inserted. [NV Leg pdf Section 4]  Let’s review two problems associated with the individual trust accounts.  First, how many people have the financial training, experience, or acumen to manage their own trust accounts?   The obvious answer is – not many.

In this instance a newly hired heavy equipment operator for NDOT might be given his “freedom” to establish an individual retirement trust account.  This freedom has a price tag.  There will be transactional and management fees associated with this account. There will be transactional decisions made about the portfolio and contents of the account.  If the basis for the transactional decisions is “proprietary” information within the wealth management firm handling the account, then how is the NDOT employee to determine if the transactions were made in his or her best interests?

This brings us to the second problem, not only do many public employees (or other regular folks for that matter) lack the financial expertise to track their own individual retirement trust accounts, but if the system isn’t very carefully structured, and the contracts exceedingly open – the employee may not be able to find out how and why investment decisions were made on his or her behalf.  However, the wealth management firms will be delighted.

Half of the Research is false, ergo Half the Products are false

If these two problems aren’t enough to may a person queasy, there’s one more issue to explore.  Financial firms are happy to inform investors that their investment decisions are based on empirical research.  Sounds nice, doesn’t it?  Wait.  Evaluating trading strategies has proven to be a mare’s nest of research forms, leading the Journal of Portfolio Management to report that,  “Most of the empirical research in finance, whether published in academic journals or put into production as an active trading strategy by an investment manager, is likely false. This implies that half the financial products (promising outperformance) that companies are selling to clients are false.” [Economist]

Do the advocates of AB 190 comprehend what the JPM author’s are saying when they conclude that:

“In summary, the message of our research is simple. Researchers in finance, whether practitioners or academics, need to realize that they will find seemingly successful trading strategies by chance. We can no longer use the traditional tools of statistical analysis that assume that no one has looked at the data before and there is only a single strategy tried. A multiple-testing framework offers help in reducing the number of false strategies adapted by firms. Two sigma is no longer an appropriate benchmark for evaluating trading strategies.” [JPM]

Let’s translate:  If there is a 50-50 chance that the research is wrong, then there’s a 50-50 chance the financial product sold on the basis of that research will be falsely assumed to be a good product to put in a retirement portfolio.   How is our NDOT equipment operator, our public school teacher, our firefighter, our police officer, our assistant county administrator, our receptionist in the Department of Education, supposed to track his or her retirement account IF the research isn’t made available, and if it is, it might very well be inaccurate?

We might revert to the previous advice from the management firm – give us your money, don’t ask too many questions, go quietly, and no one will get hurt – in this firm. You, might be another matter.

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If It Ain’t Broke, Whack It Anyway: “Pension reform” in Nevada

NV Retirement ALEC Back on July 21, 2014 Nevada Assemblyman Randy Kirner (R-26) ask for the drafting of a bill to create an interim task force to examine alternatives to the Nevada Public Employees Retirement System. (BDR 184)  A more useless bit of legislation isn’t quite imaginable.  Unless, of course, one has in mind the ultimate goal of changing the system from a defined benefit plan to a defined contribution plan. 

If this is the case, then it is right out of the ALEC playbook, which offers model legislation for this purpose.  The corporate interest group also offers model legislation in case the state decides to retain its defined benefit plan.  The defined contribution plan is a notion the Koch supported NPRI has been promoting since at least 2011.  The ‘solution’ was proposed again in 2013 in NPRI’s handbook for legislators. (pdf)  ALEC, the corporate bill mill, waded into these waters again in 2014 with its recommendations from the Public Pension Reform Working Group. (pdf) It might be of some interest to note that the private chair of the task force was held by Amanda Klump, of Altria Client Services, (that would be promoting the interests of the tobacco giant, which used to call itself Philip Morris.

A quick look at a 2014 publication of pertinent facts about state and municipal pension funds (pdf) and information on Nevada’s system from NASRA, should put one’s mind to rest, unless the unsettled portion is still churning through the misinformation and misleading conclusions drawn from publications of ALEC, the Altria Group, NPRI, and the Koch Brothers organizations.

One bill draft request, #185, from Assemblyman Kirner has made it to the light of day in the form of AB 3. Assemblyman Kirner’s effort would increase the size of the PERS Board to nine members, and three of whom would be individuals who: “have specified experience relating to the design or management of retirement plans; (2) are not employees of the State or its political subdivisions; (3) are not elected officers of the State or its political subdivisions; and (4) have never been active members of the System.”  Thus, there would NOT be a member of the board who is an employee of the state of Nevada or one of its political subdivisions,  is serving in a management position,  has 10 years of service, is not an elected official, and is not an active member.  In short – Assemblyman Kirner would remove the individual board member who has a direct interest in the positive outcomes of any policy decisions and replace the individual with three board members who are ‘technocrats,’ serving from the financial sector perspective. How convenient?

Assemblyman Kirner is evidently not pleased with a PERS board consisting of a former CFO of the City of Las Vegas, two members from the Police and Firefighters Retirement Fund Advisory Committee, a chief accountant with the department of Transportation, a former Clark County Budget Manager, a former Director of Payroll and Benefits from the Clark County School District, and a representative from SEIU.  Perhaps there are too many members who might have questions about turning the defined benefits system into a defined contribution scheme?

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Filed under Nevada budget, Nevada economy, Nevada politics

AB 2: The Take Your Gun To School Bill on NV Legislature’s Agenda

AB 2 The firearm proliferationists are launching their agenda early in the  Nevada legislative season, with A.B. 2 – the pack your gun around in your vehicle everywhere you want to go bill.  Or, as the Legislative Counsel Bureau puts it more elegantly:

“Legislative Counsel’s Digest: Existing law generally makes it a gross misdemeanor to carry or possess certain weapons while on the property of the Nevada System of Higher Education, a private or public school or a child care facility, or while in a vehicle of a private or public school or a child care facility except in certain circumstances. (NRS 202.265) This bill adds an exception so that a person is not prohibited from possessing such weapons on the property of the Nevada System of Higher Education, a private or public school or a child care facility if the weapon remains out of public view and if the weapon is: (1) inside a motor vehicle that is occupied or, if the motor vehicle is unoccupied, the motor vehicle is locked; or (2) stored in a locked container that is affixed securely to the motor vehicle.”

There are precious few places where the proliferationists can’t pack their weapons of choice and pleasure.  School campuses are one such place.  Under the provisions of A.B. 2 that protection is eliminated.  And, of course the gun-proliferationists were out in force for the hearing. [LVRJ]  The supporters, notably Assemblyman Hambrick are quick to point out this isn’t a “campus carry” bill. However, it’s interesting that one individual offering testimony described his trouble clearing up charges after “someone entered his locked car at Reed High School in Sparks where he worked and found his gun. That person reported it.”  And, now someone needs to ask the question:

What if the individual who entered his locked car in the Reed High School parking lot didn’t report it, instead, say, stole it, or worse used it in the commission of a felony?  Are we to believe that if the gun is out of sight, and locked in, that it’s safe on school grounds?  Not necessarily, if the person offering the testimony is to be believed. Someone did, in fact, get into the vehicle, and did, in fact, find the firearm.

The NRA mythology is nothing if not embedded in the minds of those who promote gun ownership and possession.  Does the gun make you “feel safe?” It might, but the statistics show another pattern.  The ‘good guy with a gun’ myth has been pretty thoroughly debunked. [Slate

This won’t be the last proliferation bill before the 2015 session of the legislature, and there are some “model” bills from the NRA and ALEC which ought to be tracked.  Watch for bills similar to the “Campus Personnel Protection Act,” for which ALEC has model legislation.  There is also a model for the outright concealed carry statutes promoted by the NRA and ALEC.  Another variation on this theme is the concealed carry reciprocity model also promoted by those two organizations.  There’s also a model bill to prevent cities and counties from prescribing any local firearms regulations.

We might also want to be aware of ALEC/NRA model resolutions on guns and child safety, which basically says tell your kids guns are dangerous, a little “education” is all that’s needed.  Interesting, since a person in the United States is more likely to be killed by a toddler than a terrorist. [Forward]  See also, the NRA resolution on promoting Eddie the Eagle to protect us from toddlers who find firearms.  Then, there’s the resolution decrying waiting periods for gun purchases, or as we might call it the “Suicide Facilitation Act?”

For ceremonial purposes, there’s the ALEC/NRA model resolution on the glories of the 2nd Amendment – as interpreted by the National Rifle Association.  Or as introduced in Nevada,  AB 100, “relating to the Attorney General; requiring the Attorney General, under certain circumstances, to commence an action to protect and secure the rights of residents of this State under the Second Amendment to the United States Constitution…” Translation: If the President of the United States issues an executive order “infringing” on 2nd amendment “rights” then the AG’s office will file a suit.   Paranoia reigns supreme?

However, if you’d really like to witness paranoia in action – click over to the NRA’s legislative action page.  Here’s betting we see several items from the NRA wish list, during this session of the Assembled Wisdom.

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Heads Up Items: Infrastructure, ALEC, Social Security, Financial Reform

Jig Saw Puzzle

There are items which don’t lend themselves to a full blog post, but are of immediate interest. Here’s a sampling:

#1. ALEC may be down to nine big corporate sponsors, but that doesn’t mean it doesn’t have a full agenda for its 2015 legislative season.  Watch for bills, often crafted from ALEC ‘models,’ on pre-empting efforts to increase the minimum wage. depriving low wage workers of health insurance, deregulating electronic cigarettes, protesting global taxes on tobacco, regulating ride share companies, lowering certification standards for dental practitioners, limiting the ability of individuals or businesses to dispute a denied property insurance claim, and school privatization.

#2. We’d probably ought to be watching the state of pipeline infrastructure in this country.  The current pipelines are aging, and some were constructed during the 1950s when low frequency electric resistance welds were popular – these welds are failing.  There’s more information from Inside Climate News, and from the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration reports.

#3.  There are inklings that the Republicans in Congress are planning to turn discussions of Social Security into an Annual Crisis – such as they’ve done with debates about the budget deficit and the national debt.  The process is almost an art form: Declare a CRISIS; mount a full-on publicity campaign complete with constant press releases, comments from members of Congress, and pundits on television; ignore factual refutation and information; then use the CRISIS to leverage concessions from the Democrats.

#4. Expect the Republicans in Congress to step up their attacks on the financial reform regulations enacted in the Dodd-Frank Act.  For some excellent background information see the conversation between Bill Moyers and Simon JohnsonSalon also has a piece on the same subject, and the New York Times weighs in as well.  If you missed these, it might be a good idea to have a click and read.

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Filed under Economy, financial regulation, Infrastructure, Social Security

Heller and the ALEC by the back door minimum wage issue

Heller 2Yesterday’s post concerned Senator Dean Heller’s (R-NV) decision to support the Republican filibuster of an increase in the federal minimum wage, focusing primarily on the economic effects and the number of Nevada workers who might be immediately affected.  However, there was a second element to Senator Heller’s objection to the measure — that the states should be the ones to raise the minimum wage levels in their jurisdictions.   As if they would?

What might prevent a state from opting to increase the minimum wage?  ALEC.

The American Legislative Exchange Council is actively working toward the goal of enacting legislation reducing minimum wages and overtime pay, or stopping localities from doing the same:

“Since 2011, politicians backed by the American Legislative Exchange Council, which has hit the headlines for previous campaigns on voting rights and gun laws, have introduced 67 different laws in 25 different states on the issue.

The proposed laws are generally aimed at reducing minimum wage levels, weakening overtime protection or stopping the local creation of minimum wage laws in cities or states. Using language similar to “model bill” templates drafted by Alec, they were put forward by local politicians who are almost always Republican and affiliated with the powerful conservative group.” [TRS] (emphasis added)

Eleven of those bits of “model legislation” eventually became law, including in New Hampshire, Arizona, and Idaho.  For state legislators not inclined to do their own drafting, ALEC has conveniently provided a piece of fill-in-the-blank model legislation (pdf) for them.  In fact, according to the National Employment Law Project, ALEC is steadfastly opposed to  (1) minimum wage laws, (2) living wage legislation, (3) minimum wage laws for starting workers, (4) increases in overtime pay.  There is model legislation to preempt state efforts in all these areas. [NELP pdf]

However Jeffersonian Senator Heller may wish to sound about “state’s rights,” the design should be reasonably clear — conservative forces backed by deep pocketed corporate sponsors want to eliminate minimum wage legislation, prevent living wage bills, and preempt state and local efforts to enact protections for working people.  So, from the bully pulpit inside the Beltway, Senator Heller is free to pontificate about the desirability of state leadership in this economic realm BUT the practical effect is to toss the issue back into the state legislatures wherein ALEC can work its magic.

Nothing would please the Austerians more than to play the divide and conquer game — happily believing that lower labor costs will entice enterprises into low wage regions.   If, for example, Nevada were to eliminate its minimum wage, then in combination with other states with such draconian statutes, that would create pressure on other states to do likewise in order to be ‘competitive.’  We know this to be a pie in the sky solution because factors like transportation, infrastructure, work force experience and training, and resource availability are essential in the business location formula.  However, it does create the mixture necessary for a race to the bottom in wages and benefits. Just the sort of thing to make corporate revenues whistle and sing to the analysts.

The second problem with this plan is that while labor costs may be a major factor in manufacturing, they are not as crucial in other economic sectors.  We’ve looked at two types of retail operations before (restaurant and grocery); the important element for these small businesses is speed of service.  Long waits and long lines do not profitability make.   The more labor intensive the enterprise the more labor costs will be a factor, and this is illustrated by looking at the labor costs as a percentage of revenue for sole proprietorships, those little businesses the GOP purports to champion.)

The percentage for food service and bars is 36.74%, for agriculture 37.60%, for construction 53.64%, for health care 77.74%, for manufacturing 38.15%, for retailing 19.40%.  [BizStats]  We can drill down into the retail sector and find that the percentages are 20.43% for clothing stores, 13.66% for food and beverage establishments, and 6.48% for gas stations.   Indeed, for all those little sole proprietorship Mom and Pop stores to whom the Republicans appeal for support — the highest percentage never goes above 35%. [BizStats]

If we draw back and look at a large picture of productivity and worker compensation there’s not much to support Senator Heller’s apparent inclination to race to the bottom there either.

Labor productivity, as defined by output per hour, increased in 63% of the 52 service related and mining industries according to a BLS Study (pdf) using 2011 figures.  “Unit labor costs fell in 11 of 47 service providing industries Unit labor costs declined more frequently in industries where productivity rose, as productivity gains offset movements in hourly compensation.” [BLS pdf]

If productivity is increasing and unit labor costs are decreasing, then why would Senator Heller and his allies in ALEC want to eliminate minimum wage laws and prevent living wage legislation?

Let’s hazard the guess that the impetus to get even more productivity (more work per hour) at even less cost has everything in the world to do with Wall Street and not a heck of a lot to do with Main Street.

Nothing so delights the financial markets as the prospect of creating more “shareholder value” by reducing the inputs — reduced costs for materials, reduced costs for fixed assets, reduced costs for depreciation, reduced costs for employee (read: worker not CEO) compensation.  As the lady once said of the turtles:  It’s earnings reports, earnings reports, earnings reports, all the way down to the bottom.  [CarnegieScience]

And there we have it. It’s workers — racing all the way to the bottom, with no federal minimum wage to underpin their economic security — it’s American workers being told that if their counterparts in China are willing to work for $1.74 per hour then they are being “overpaid” here.  And — with Senator Heller’s state’s rights excuse greasing the downward ramp.

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Filed under Economy, Heller, Politics

Sandoval’s Session: GCSB Menu — To Serve Man?

To Serve ManNevada’s economic plan — hold another conference? There’s nothing like a lovely conference to get the juices flowing in regard to economic development.  Not that there’s anything essentially unproductive about getting small business leaders in the same room with government officials and inspiring speakers…but.   The Governor’s office and the Chamber are teaming up to present panels on “Access to Capital, Educating Tomorrow’s Workforce and Healthcare: Myths and Facts.” [NV2013]

The “grand sponsor” of the event is NV Energy.  Other sponsors include Heritage Bank, AT&T, Advantage Capital Partners, and IQ Technology Solutions.   [NV2013]

Skeptics may wonder what AT&T, whose petition to the FCC in 2013 is straight out the of ALEC model plans book, [HuffPo] wants to say to small business owners and managers in Nevada, other than to promote the idea that they should continue to utilize their old copper wires to offer U-Verse services over their system without all basic obligations and regulations on the state and federal level.  We might wonder about AT&T’s grand plans for broadband access for small businesses when these observations come to light:

“In 2009, AT&T’s started the federal ball rolling with comments outlining that the states should not have jurisdiction over broadband and it should be the exclusive purview of the FCC — read federal law. Moreover, regulations should be removed on virtually all aspects of their business that would be applied by either the FCC or the commission — including removing service quality requirements.”  [HuffPo]  (Emphasis added)

NV Energy is the self-same corporation purchased by Warren Buffet’s MidAmerican Energy Corp. for $5.6 billion this past May. [USAT] This would also be the self-same energy corporation looking for a rate increase:

“NV Energy’s residential power and natural gas customers would see rate increases starting in January under the utility’s three-year general rate case filed Monday with the state Public Utilities Commission.

The increases, which include a profit and must be approved by regulators, would add $1.48 per month to the average single-family residence power bill across Northern Nevada and $3.96 to the typical monthly bill for natural gas customers in Reno-Sparks. Commercial customers in Northern Nevada would see an average 2.81 percent decline in electricity rates under the filing.”  [RGJ] (June 4, 2013)

Thus far we have one corporate sponsor that wants to “transition” its communications services without making any real technological progress, and desires to do so without state “interference” or those “burdensome regulations” on quality of service; and, another that has a rate increase proposal before the PUC.  What could possibly get skewed?

Heritage Bank is pleased to tell one and all that it is the Number One processor of SBA 504 loans in northern Nevada:

Heritage Bank of Nevada has been named the #1 SBA lender for 2012 in Northern Nevada as the largest processor of SBA 504 loans.  In FY2012, Heritage Bank partnered with Nevada State Development Corp. to provide funding on 15 projects totaling $22,014,750. Heritage Bank’s portion of the loans totaled $9,812,788 and the SBA’s 504 loans totaled $8,179,000. [Heritage Bank]

SBA 504 loans are made to business owners for purchasing or refinancing commercial real estate.  As of January 2013, Heritage Bank had lent out funding for 15 small business projects totaling $22 million, with 90% of the funds for commercial real estate loans.  [RGJ]

A firm is eligible for a SBA 504 loan if it has a tangible net worth less than $15 million and an average net income less than $5.0 million after taxes for the preceding two years. [SBA]  It’s safe to say that most of Nevada’s small businesses would be eligible for these loans.

Grinding down a bit on the SBA 504’s:  A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs are located nationwide and operate primarily in their state of incorporation (Area of Operation). CDCs work with SBA and private-sector lenders to provide financing to small businesses through the CDC/504 Loan Program, which provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. [SBA-CDC]

The typical SBA 504 CDC has the following components:

  • A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost;
  • A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost;
  • A contribution from the borrower of at least 10 percent equity.

So, a “project” would get its real estate, or equipment, loan in blocks —  50% from the lender/bank ; 40% from a CDC; and, a contribution of 10% equity.

What we’re not seeing in the Heritage Bank numbers are  7 a loans, those made to entrepreneurs and business persons who are launching start ups, or expanding businesses.  The 7a, or general business loans are the kind we’d most often associate with the start up, financing, or expansion of new businesses.

Between October 2012 and May 2013, the major players in the 7(a) program were Wells Fargo, Meadows Bank, Seacoast Commerce, Republic Bank, Hanmi Bank, U.S. Bank NA, Pacific Enterprise Bank, and further down the list, Heritage Bank with five 7 (a) loans out for a bank total of $1,170,000.  [SBA lenders]

If Heritage is seeking to inform more small business owners and managers of the availability of SBA 7 (a) loans that would be an excellent panel. However, if financing in Nevada is getting increasingly sucked into the “income generating property” business there are some questions which need to be raised.  How much money is getting resourced to real estate development firms seeking to buy up distressed property and make conversions to rental units?  Would a subsidiary of one of the Really Big Banks qualify as a business eligible for 504 loans?

Advantage Capital Partners is another of the highlighted sponsors of the Governor’s economic gathering.   The firm describes itself:

“Since 1992, we have raised more than $1.6 billion in institutional capital, often involving innovative structured financing solutions. Our capital has been provided by a large number of the nation’s leading insurance companies and commercial banks.”  [ACP]

Excuse me, but after the Debacle of 2007-2008, when I see phrases like “innovative structured financing solutions” my immediate reaction is to curl into a fiscal fetal position.  Why?  The very definition of structured finance is enough to bring on tremors:

A service that generally involves highly complex financial transactions offered by many large financial institutions for companies with very unique financing needs. These financing needs usually don’t match conventional financial products such as a loan. [Investopedia]

And what might be included in those “highly complex financial transactions?”   Some of our old and not-so-dear friends like: Collateralized Bond Obligations, Collateralized Debt Obligations, syndicated loans, and those wonderful Synthetic CDO’s etc.  I think we’ve seen this movie before, and the ending was — if not pleasant — at least memorable.

And, who’s paddling in these waters? “Our capital has been provided by a large number of the nation’s leading insurance companies and commercial banks.”  — What could possibly go wrong?

To Serve Man

On August 28, 2013 the Governor and the attendees of the GCSB conference will be under the Grand Sierra roof with (1) a communications firm that wants ever so much to be rid of pesky government regulations concerning customer service, (2) bankers who are delighted to offer SBA backed loans for real estate transactions, (3) a “high” finance firm still promoting the joys and profitability of synthetic CDO’s and other financial exotics that contributed to the Great Mortgage Meltdown, and an Energy corporation looking to increase its rates …

It could indeed be a menu To Serve Man.

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Filed under Economy, Nevada economy, Sandoval