THE LAMORINDAN 11-20-09

A SPECIAL MEETING FOR A SPECIAL SPEAKER

In lieu of holding our usual Friday festivities, we crashed the 30th Annual Community Thanksgiving Breakfast, sponsored jointly by us, the Lafayette Club, the Lafayette Chamber of Commerce and Pacific Gas & Electric. (We were able to finesse this coup because we lined up the speaker.) As fine a group of groups as that might be, none of them brought breakfast. Fortunately, a lovely breakfast buffet was served by Chef's Touch Catering. King Johann von Fazel's original idea was to hold this hootenanny in the Trader Joe's parking lot. Mercifully, cooler heads prevailed, and Veterans Memorial building was the thumbs-up venue. Thanks to Marine Corp League Detachment 942, American Legion Post 517, VFW Post 8063, and the Military Officers of America Association for their assistance.

Because this was a more-or-less official meeting for us and the Lafayette Club (and maybe for the Chamber, too, for all I know) things went a bit differently today, as chronicled below. The single biggest difference, however, was in the degree of respect shown by us for our illustrious President -- we actually pretended to have some.

Lafayette Club President Sandi Mitchell co-presided with John. We treated her with respect, too. Anonymous sources opine that this trend toward enhanced respect for authority by LSR members will die a quick and unlamented death no later than . . . now.

So read on. Or don't. See if I care.

THOUGHT FOR THE DAY

As soon as King John found out that the rotation had Rich Shearer slotted to do the Thought For The Day, he canceled the thought and brought in a ringer to do an Invocation. And the ringer wasn't even Ray Welles, but rather Dan Senter of Our Savior's Lutheran Church, who invoked up a veritable storm.

VISITING ROTARIANS & GUESTS OF OTHER PERSUASIONS

No introduction of guests and visiting Rotarians in the usual fashion today, although I did see Norm Eggar (Dave Waal's father-in-law) and Holly and Bobbi Landers (Buddy Burke's spouse and her mother, respectively) in the crowd, and I did sit with John Moulthrop of the Concord-Clayton Valley Sunrise Club. Other guests will have their anonymity preserved, much to the relief of them and their respective parole officers.

On the other hand, we had no end of dignitaries being dignified in the house. So let's see how many I can offend by getting their names wrong, in no particular order:

Nancy Skinner, Calif. Assembly Member, District 14
Gail Uilkema, Contra Costa County Board of Supervisors, District 2
Gus Kramer, Contra Costa County Assessor
Don Tatzin, Mayor, Lafayette
Brant Andersson, City Council, Lafayette
Carol Federighi, City Council, Lafayette
Steve Falk, City Manager, Lafayette
Tom Borrino, PG&E
Tony Eichers, Chairman of the Board, Lafayette Chamber of Commerce
Ed Stephens, Veterans Memorial Building Board of Directors
Alan Kruse, Veterans Memorial Building Board of Directors

BIRTHDAYS, ANNIVERSARIES, AND OTHER MISCELLANEOUS GOODIES

Did you really think Herr Fazel was going to let the general public see our B&A foolishness?

A MOMENT WITH AYMERIC

With all the Big Doings today, nothing from Aymeric. Stay tuned for future reports.

YET ANOTHER NEW MEMBER JOINS THE FOLD

Robbie Kunkel has been coming to our meetings for some time. We could have inducted her a couple weeks ago. But His Fazelness and His Merrie Band o' Board Members decided that this joint meeting would be a perfect time to do so, thereby making the Lafayette Club green with envy and showing the community the caliber of new member we are able to attract in spite of ourselves.

George Chaffey did the honors with his usual savoir-faire. Hesto-presto: Robbie, you are now a member of an organization that boasts over 1.2 million members worldwide in 33,000 Clubs spread amongst 200 countries, give or take.

We also learned a bit about Robbie. We have met OIS student Carolyn several times, and she was here today to see her mom get sworn in. Sons Thomas (Miramonte High) and Jonathon (Berkeley City College) could not be here, but we'll meet them soon enough.

Robbie is a Cowboy. Not a cowboy cowboy, but an alumna of Oklahoma State University, with a degree in microbiology. She went on to get a degree in, you guessed it, general theology. And yes, the crowd did a collective head-snap at the one. Robbie is an instructor at Contra Costa College, where she teaches such varied courses as logic, ethics, and one called "Quantum Physics and Mythology." What do these courses all have in common? Not a single one of us knows the first thing about any of them.

As usual, we all came forward to shake Robbie's and Carolyn's hands and welcome them into the larger family of Rotary and the smaller but louder family of Lamorinda Sunrise. Good to have you finally aboard, Robbie.

IT SMELLS LIKE . . . VICTORY

Remember the Wine & Cheese Festival a couple of months back? Remember the challenge the Lafayette Club issued? They said they would get more volunteers out to help out than we would, and put up $100 as a wager. Being too dumb to decline, we accepted. And because there were more of us than there were of them who were dumb enough to show up, we won the challenge. Now, the bet was settled long ago, but apparently King John enjoys publicly humiliating vanquished foes. How else to explain why Lafayette Club President Sandi Mitchell presented him with an Ed McMahon/Publishers Clearinghouse-sized check in front of the assembled multitudes? [aside: funny! J]

It's good to be King.

THE SPIRIT OF THE HOLIDAYS LIVES

It wasn't announced today, but as a reminder for the three or four of you who actually read this e-rag, the Annual Lamorinda Sunrise Extraordinarily Ecumenical Holiday Party will be Thursday, December 3, at Frank's Church (a.k.a. the Orinda Community Church, for those of who don't know who Frank is or why we so flippantly refer to "his" church). $30 for adults, $15 for kids. This buys you dinner and your kids a visit from Santa.

Don't forget, if you are bringing a young'un to the Party (and you should), be sure to bring a wrapped and labeled present for Santa to pull out of his bag for said young'un.

THE RENO TRAIN LIVES, TOO

Here's another item that didn't get mentioned at the meeting, but Chuck Kenney promised to let me know where he is hiding Cameron if I ran this.

According to Chuck, the Reno Train Trip is alive and well (relatively speaking) and looks to continue that way for the foreseeable future. (Translation: As long as Harry Reid is a US Senator from Nevada, there will be a Reno Train Trip -- plus, other developments have resulted in Amtrak being far more accommodating.) It will be handled differently this year, and you can customize your Reno experience.

Instead of LSR having a set number of spots on the train, each individual signs up on line, first come, first served. There are a set number of total seats on board (but if there is sufficient interest, they will add another car or two). But get this -- unlike previous years, where there was a one-size-fits-all package consisting of the train up and back, a room in Reno, and the Monday luncheon with all the Reno area Clubs -- you can pick what you want and/or need. You can take the train up but not back if you prefer. If you have some place to stay in the area and don't want to pay for a room, you don't have to. Everything is a la carte (even the Amtrak handcart), as they say in some country that doesn't use English.

Two small issues, unfortunately: I'm not sure of the dates (best guess is Jan. 24-25, but that's a guess) and I don't know the website through which you can do all of this al la carte-ing. But that info will made available shortly (meaning when I can track Chuck down to get pointed in the right direction).

UPCOMING STUFF

Emperor John announced that the Crutches for Africa project is moving forward in that we now have a place to store the gazillions of crutches we will all be collecting to send to Africa (the continent, not the country). Rumor has it that it is not Joanne Luscher's downstairs.

Also, a reminder: June 20, 2010. Fathers Day. Mark your calendars, because this is when the First Annual Name-To-Be-Decided Lamorinda Sunrise Car, Motorcycle, Boat and Maybe Bicycle Show will be held in the Postino parking lot. This is our out-of-box-thinking fundraiser for the year, so everyone (that means YOU!) is needed to roll up his/her sleeves and pitch in. As for now, has anyone seen my Edsel? [aside: I actually owned one, but don't tell anyone]

LET'S KEEP GIVING A HAND

Past District Governor Candy Pierce came down from the Cordelia Sunrise Club today to help in the presentation to Controller John Chiang of a certificate commemorating an LN-4 hand to be donated in his name. She reminded us that this wonderful program was born from a tragedy: a 21- year-old woman who lost her life in a car crash. Her father wanted to do something meaningful to memorialize his daughter. At about the same time, he saw reports of the tragedy of kids all over the world who are losing limbs to old land mines and accidents as well as in a disturbing number of places, deliberate amputation by armed forces, both government and insurgent, to prevent young boys from becoming weapon-toting enemy combatants. He saw efforts to fit these children with prosthetic legs, but saw nothing being done to replace lost arms.

That was the inspiration behind the LN-4. After developing prototypes, testing, going back to the drawing board, and more testing, the final product came to life. It is called the LN-4 in memory of the young woman whose passing sparked the project -- her name was Ellen -- and this design was the fourth iteration. The LN-4 is manually operated, meaning that one must use an existing hand or arm to ratchet the fingers closed (it can be opened by bumping the "wrist"). But at a cost of only $50 each, it can give its user (and the project has expanded to include both adults and children) the ability to write with a pencil or pen, ride a bike, carry a bucket, drive a car, dress themselves, and do a thousand little tasks every day that we able-bodied folk take for granted.

The LN-4 project started as a pilot project in District 5160 during Candy's year as District Governor. She and the 67 Club Presidents asked that each Club donate one hand. As she put it, we did a little better than that. How about $200,000 worth, or 400 hands? Every week, we buy another hand to send overseas to someone who has lost a hand and we make the donation in the name of our guest speaker. This week's hand will go out in the name of Controller John Chiang. May there be many more.

Thank you, Candy, for taking the time to come down to explain to all who were here today about the LN-4 hand.

PROGRAM

If you came to hear State Controller John Chiang paint a rosy picture of California's fiscal situation, you left disappointed. If you expected to hear a partisan diatribe, your expectations went unfulfilled. But if you wanted straight talk about California's financial health, with neither rose-colored lens pie-in-the-sky nor Chicken Little doomsaying, you got what you wanted. It was not a happy picture he painted, but it was even-handed, backed up with facts, and bolstered by Mr. Chiang's impressive command of the details.

Mr. Chiang emphasized up front the distinction between two critical elements of assessing the fiscal state of the State: the Budget is a plan, but cash -- what the state brings in and what it is obligated to pay out -- is the reality. The recently enacted budget is a plan. The reality is that that budget is based on the assumption that the State will have income close to its best-ever years. As Mr. Chiang explained, this is not a realistic assumption.

So here is more of the reality. The top three revenue sources for state government are, in order, income taxes, sales taxes and corporate taxes. All have been affected, and not for the better. For example, April 2007 tax receipts were $14 billion. Tax receipts for April 2009 were half that. Put simply, revenue coming into state coffers is down. Way down. By about 35%.

The top three recipients of state spending are, in order: education, social welfare, and prisons. The needs of these items are not decreasing: teachers still have to be paid, people still have to eat, and prisoners still have to be quartered and guarded.

So how did we get here? Mr. Chiang pointed out a couple of factors. The first one involves the increase in revenues during the years preceding the recent downturn. In the 1990's there were about 24,000 households in California that had over $1 million in adjusted gross annual income (AGAI). With the real estate boom, that number swelled to about 44,000. That obviously meant more revenue coming in. Former Governor Gray Davis advocated saving a big chunk of the increase. This was not done; instead, it all got spent (surprise!). Today, we are back to about 24,000 $1 million AGAI households, Meanwhile, California has incurred additional spending obligations. This creates a serious problem (surprise!).

Second, and this is really a part of the first factor, is the increase in borrowing by the state to pay bills. When California spends more than it receives, there are three ways to correct the imbalance: cut spending, raise taxes, and borrow. Bottom line: The state has borrowed too much, and it is not wise. First, the kind of borrowing California has done does not solve the problem; it only delays the day of reckoning (and likely makes it harder and more expensive to deal with). Second, California's bond rating (meaning, in effect, its credit rating) is the worst of all states in the country. This means that, at best, California has to pay more in interest for borrowed funds. At worst, it means that sources of money to borrow may dry up entirely. If you are too big a risk, creditors will not lend to you, or will lend to you only at exorbitant rates; this is true for governments as well as for private companies and individuals.

Another major factor in the decline of California's financial state is unemployment. At the start of 2007, the unemployment rate was about 5%. By the end of 2007, it was 5.7%. Now, two years later, it has more than doubled, to 12.2%. Especially hard-hit have been jobs tied to property values, such as construction jobs and jobs in the mortgage industry. As credit dried up in the wake of the subprime mortgage crisis, existing homes simply did not sell and new homes did not get built. This loss of one million jobs means dramatic decreases in income tax revenue because fewer people have income. It means dramatic decreases in sales tax revenues because people have to tighten their belts and buy less. It means dramatic decreases in corporate taxes because people are buying fewer goods and services. As mentioned above, these are the three biggest revenue sources for the state, and all three have been hit hard. Like kaboom.

Compounding this problem is what people did in the boom times. They borrowed and borrowed against home equity. Thus when the housing market came back down to earth, many of us Californians were overextended.

Further compounding the problem is the fact that the credit crisis of last year created a falloff in the purchase of cars, because even solid buyers could not get loans to finance the purchases. This added fuel to the fire of decreasing sales, decreasing jobs and decreasing tax revenues.

So what led to the shutdown of state payments earlier this year? The simple answer was to avoid putting California into receivership, which would have placed the state's finances in the hands of a court-appointed receiver and worked untold hardship. For example, under receivership, California would be unable to borrow any money at all. This would have been a major catastrophe, as the state requires access to loans for cash flow purposes even if no new bonds or other long-term debt are assumed. The longer answer: As of January 2009, the state had $10 billion in accounts payable and only $6 billion in liquid assets to pay the bills. Thus various projects were shut down and payments, including tax refunds and benefits payments, were delayed wherever possible. The immediate disaster was averted, but it worked real hardship on untold numbers of citizens.

Mr. Chiang also disagreed with the implementation of "Furlough Fridays" in much of the state government. He understands why they are needed. His objection is that they were forced on state workers rather than being the product of negotiation. (Ed. note: The initial once-per-month furlough days were the product of negotiation with the union that represents state workers. The additional two furlough days were summarily and unilaterally imposed by the governor.) Mr. Chiang urged Mr. Schwarzenegger to negotiate with state workers. Mr. Chiang's concern is that there is a very real chance that the furloughs that were forced on the workers -- as opposed to furloughs imposed pursuant to mutual agreement -- have been found by several trial courts to be illegal. These cases are up on appeal now, and if the state loses -- a very real possibility -- the state could be on the hook for back wages and interest (at 7% APR). This is a financial hit that the state most certainly does not need and that Mr. Chiang feels could and should have been avoided.

One thing Mr. Chiang mentioned that the state can do to help ease the pinch is increase its collections efforts. The state is owed something on the order of $80 billion in uncollected debt. Increasing debt collection efforts could thus pay off handsomely.

Mr. Chiang also criticized the two-thirds majority requirement in California for the legislature to enact a budget. He believes in transparency in the budget process, and he thinks the supermajority requirement occludes transparency. He also believes that it destroys accountability.

On a significantly more cheery note, Mr. Chiang noted that his office oversees about $5 billion in unclaimed property. This is money that belongs to individuals but is sitting unclaimed in the state's hands. Showing that he is nothing if not prepared, Mr. Chiang read of a list of names matching those of LSR and Lafayette Members with bucks just sitting there in Sacramento coffers, waiting to be liberated by its rightful owners.

Thank you, Mr. Chiang, for your clear, concise and realistic evaluation. It was about as nonpartisan a talk as one will ever hear from an elected official, which was entirely appropriate for the subject matter. We may not have felt better about the state of California's fiscal health, but we certainly left with an improved understanding of the whys and wherefores.

CALENDAR