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Bill Leonard - Contributor

Bill Leonard is a Member of the State Board of Equalization

A Week Under the Dome...
Golden Fleece, Econ 101 and Household Survey Divergence..

[Bill Leonard] 12/27/04

Golden State Fleece Award

When I was a legislator I gave Golden State Fleece Awards to state agencies that wasted taxpayer dollars. I had a trophy, but no recipients ever wanted to claim it. Sadly, it is now appropriate that it still sits on my office shelf because the Board of Equalization is greatly deserving of it. More than two months ago I opened my district office in Ontario. (Just a refresher on the math: I was sworn-in during January of 2003. The BOE and the state’s Department of General Services finally secured southern California district office space for me in October of 2004. The magnitude of that inefficiency far exceeds my Golden State Fleece Award.) When we moved into the office, my staff ordered power strips and trashcans—hardly unusual requests for a new office. Tuesday of last week the power strips finally arrived by priority shipment. The enclosed invoice showed that the Board paid $22 each for the power strips. It took my staff about 30 seconds on-line to find the exact same item for $12.99. So we waited two months and paid nearly double to get items my staff could have obtained at the local office supply store. This is the insanity of the state’s procurement system and I hope the Governor is able to accomplish the desperately needed reform in this area. By the way, as of this writing, we still do not have trashcans.

Rule 138 Update

In a surprising, unanimous vote in favor of the taxpayers, the Board of Equalization recently defeated a proposed amendment to eliminate the property tax exemption for aircraft being repaired in California. By this vote, the Board sent a strong message that California is willing to fight to keep aviation jobs in our state.

The California Assessors Association had proposed a revision to the exemption rule that would have subjected far more airplanes to property taxes, perhaps all of them. Fortunately, the Board heard ample testimony about the economic disaster this regulatory change threatened to cause. Local governments and industry representatives were there to explain how any attempt to collect property taxes would cause the planes to leave the state, especially since ALL of our neighboring states are more taxpayer-friendly in this regard. The desert communities where most aviation repair facilities are located could have become virtual ghost towns. In addition to the social costs of destroying an industry, state and local treasuries would have suffered tremendously, with little or no offsetting gain from increased taxes, since most aircraft were expected to leave to avoid the property taxes. Perhaps this decision was a result of the realization that this is one industry that literally can pick up and fly away. The truth is there are very few industries that have to be based in California. A state’s business-job climate does make a difference.

ECON 101

More Economic News for the Holidays

More interesting news from the Federal Bureau of Labor Statistics. Their December release shows a great divergence between the household survey numbers and the survey that tracks company payrolls. The payroll method is also called the establishment survey; this has long been the most widely trusted number. The establishment survey indicates we only created 112,000 jobs during November. According to the household survey, which relies on calling households and asking people if they are working or seeking work, 439,000 new jobs were created in November. What accounts for this divergence?

Consider that the payroll survey does not count independent contractors, or others who are self-employed, the household survey may be more accurate. There is a growing chorus of economists who believe the payroll survey is losing track of workers because it is not capable of tracking the explosion of self-employment made possible by technology. More and more people are finding ways to shun the kind of traditional work roles the payroll survey tracks. A summary of the federal data is available here. CRO




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