By Wayne Lusvardi

The last thing billionaire Michael Dell would have done if he wanted to avoid paying property taxes on his purchase of the Miramar Hotel in Santa Monica in 2005 was to buy a share of the operating company instead of the real estate.

But that is not how the Los Angeles Times is reporting Dell’s 2005 purchase of a share of the operating company of the Miramar Hotel for $200 million.  The Times reports Dell got away with an estimated $1.14 million property tax dodge due to a purported loophole in Proposition 13 for those who buy a part interest in a company.

The typical legal arrangement between a separate landowner and hotel operating company is a Triple Net Lease that shifts the payment of property taxes onto the tenant or operator and not on the landowner. According to Investopedia, a Triple Net Lease is:

“A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease.  Structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.”

But Dell bought a 91.5 percent share of the hotel operating company anyway. And by doing so he probably incurred the obligation to pay $1.48 million in property taxes. Moreover, he did not avoid any additional property taxes due to a purported tax loophole in Proposition 13.

If a Triple Net Lease were in place in 2005 between the underlying landowner, Maritz and Wolff, and the hotel operator, Fairmont Hotel and Resorts, then buying a 91.5 percent share of the operating company would have resulted in Dell being obligated to pay property taxes instead of avoiding them.

Under a Triple Net Lease, Dell would have been obligated to pay 91.5 percent of the then existing $1,616,686 in property taxes on the property in 2005, which would have been $1,481,098. A Triple Net Lease makes the tenant or operating company, not the landowner, responsible to pay the property taxes.

“A Cheap Shot”

According to former County Tax Assessor Charles B. Warren in Pleasant Hill, California, there are two major competing legal structures for hotel ownership. One is full ownership and control of the marketing and reservations, the operations, and the real estate.

But more typical of a situation like the Miramar Hotel, where there is a separate landowner and a single hotel operator, is that there is a Triple Net Lease in place.

Warren said, “Many major hotels are, in effect, like a McDonald’s franchise. Sofitel, Hyatt and Westin provide the customers via their reservation platforms (like airline ticketing agreements) and may penetrate to some depth within the particular hotel operation to assure brand control.”  Warren elaborated that it was “definitely a cheap shot by the Times” to report Dell dodged taxes without confirming if there was a net lease in place.

We don’t know for sure what arrangements were in place for the Miramar Hotel in 2005 and neither does the LA Times. But it would have been unusual to not have a Triple Net Lease arrangement between a separate landowner and the hotel operator.

What is a Triple Net Lease?

In a Triple Net lease the tenant or building operator pays all the property taxes, insurance, and maintenance expenses and the landowner pays nothing.

This type of leases is also called a “NNN Lease,” which stands for “Net, Net, Net” or “Triple Net” signifying the following real estate expenses assumed by the tenant:

N — Property tax

N — Insurance

N — Maintenance

The rent the landlord receives from the tenant is pure net rent: the leftover rent after expenses are paid.

A Triple Net Lease arrangement between the landowner and the hotel operating company of the Miramar Hotel in 2005 would have looked liked this:

Times Underestimated Taxes

The Times additionally calculated the wrong property taxes on the Miramar Hotel property in 2005.

Anyone can look up the current property taxes on the Miramar Hotel online and adjust the tax backward 2 percent per year to estimate the property taxes in 2005 under the formula provided by Proposition 13. The City of Santa Monica also has all the financial data and property taxes for the Miramar Hotel available online.

The Times erroneously estimated the hotel property taxes as $860,000 in 2005. This was calculated by multiplying the $200 million purchase price for the business times Michael Dell’s 43 percent interest ($200,0000,000 x 0.43 = $86,000,000).

But by not also calculating his wife’s 49 percent interest, the amount of property tax assessment is underestimated and misleading. If Dell’s wife’s interest in the business is also calculated, then there would only have been only $70,000 of a supposed tax underpayment.

The Times says the property taxes should have been $2,000,000 based on a 1 percent tax rate applied to Dell’s hypothetical $200 million purchase of the hotel real estate in 2005.

If the Times’ mistake is corrected, the total 2005 property taxes on the Miramar Hotel were $1,618,686, not $860,000.  And Dell’s total 91.5 percent share of those taxes would have been $1,481,098.

If we assume that Dell should have bought the hotel property for $200 million (instead of the operating company for the same price), then Dell’s tax obligation would have been $2,230,770, not $2,000,000 as misreported by the Times.

But if there was a Triple Net Lease in place, then Dell would not have avoided taxes at all but assumed the obligation to pay the taxes when he bought the lion’s share of the hotel operating company.

The table below summarizes:

A) The Time’s erroneous calculation of property taxes Dell avoided: $1,140,000;

B) A corrected calculation of the taxes Dell would have dodged if he bought the business and there was no Net Lease: $0;

C) Dell’s share of the taxes if he bought the hotel business with a Net Lease: $2,230,770.

Estimated Taxes Avoided for Miramar Hotel Under Different Purchase Scenarios

By Katy Grimes

The Caltrans Bay Bridge debacle is worse than just a case of embarrassment for government infrastructure projects. The bridge is unsafe, according to engineering experts across the country, after the discovery that a third of the of the 96 massive, high-strength steel rods, installed for seismic safety, cracked under pressure when the nuts affixed to the rods were tightened.

Under construction for more than a decade, the Bay Bridge project has not only taken much longer to build than planned, but cost overruns have escalated the total cost to build it to a whopping $6.4 billion. And that’s not the half of it.

According to CBS San Francisco, retired Bechtel metallurgist Yun Chung recently prepared an unsolicited 32-page report stating that Caltrans engineers “were ignorant to the threat of hydrogen embrittlement — a process in which high strength metals, such as steel, become brittle and fracture due to hydrogen exposure.” He said Caltrans “fell on its face.”

Chung, who specialized in high-strength steel analysis for the nuclear power industry, reported that Caltrans only focused on the hydrogen effects during the production process.

This is the result of the close alliances between government and public employee labor unions which make the purpose of the work appear secondary to union interests, even when public safety is involved.

1989 Loma Prieta earthquake

The Loma Prieta Earthquake, 7.1 on the Richter Scale, which caused the Oakland Bay Bridge to break, took place 24 years ago in 1989.  During the 15-second earthquake, the freeway buckled and twisted, causing the support columns to break. The upper freeway deck crashed onto the lower deck; 41 people were crushed to death in their cars.

Today, 24 years later, the Oakland Bay Bridge is still under construction.

In 1989, George H.W. Bush was President, Margaret Thatcher was Prime Minister of the United Kingdom, the Soviet Union finally left Afganastan, the Exxon Valdez spilled 11 million gallons of oil in Alaska’s Prince William Sound, and students from Beijing, Shanghai, Xian and Nanjing protested in Tiananmen Square.

Mortgage interest rates hit 15 percent, and California’s minimum wage was $4.25.

1989 seems like a lifetime ago. And Caltrans has been working on the Bay bridge the entire time.

Free market infrastructure successes

Immediately after the Loma Prieta earthquake in 1989, the civil construction bridge building contractor, C.C. Myers of Rancho Cordova, rebuilt two damaged bridges on Highway 1 near Watsonville under budget, and ahead of schedule.

Caltrans allowed only 100 days for completion of the project, and offered Meyers cash incentives to make the project happen under budget, and ahead of schedule. Meyers finished the job 45 days earlier than the Caltrans deadline, and earned $1 million in incentives.

That’s the free market at work.

Myers rebuilt the Santa Monica freeway the same way after the 1994 Northridge earthquake.

1994 Northridge earthquake

In 1994, the Northridge earthquake in Southern California, 6.7 on the Richter Scale, damaged four bridges on the Santa Monica Freeway in Los Angeles. Myers’ successes with the projects after the Loma Prieta earthquake made his company a natural for this project.

C.C. Myers, Inc. won the contract to replace and replace the freeways with one caveat: the work had to be completed in 140 days. But this was L.A., notorious for congested freeways. The State of California offered Meyers $200,000 per day as a bonus for every day ahead of schedule the project was completed. Meyers’ company finished the job in 66 days, 74 days ahead of schedule, and received a $14.8 million bonus for his outstanding work.

Experts said Myers managed to perform what would have taken Caltrans 18 months of work, in only 66 days.

C.C. Myers is a shining example of the free market. “Six years ago, C.C. Myers and his team proved dramatically that if bureaucracy will simply get out of the way, we can build highways cheaply, quickly and safely,” Rep. Tom McClintock said in year 2000 at a press conference, commenting about the rapid opening of the freeways.

Bay Bridge debacle

Compare these two fantastically successful projects with Caltrans’ handling of the Oakland Bay Bridge project —  years behind schedule and billions of dollars over budget, along with all of the other malfeasance, dishonesty, payola, and shadiness I wrote about recently in, “Despite Caltrans boondoggles, acting director to be confirmed.”

“In March, anchor bolts meant to secure seismic equipment on the new bridge broke — an event attributed partly to water-induced corrosion,” the Sacramento Bee reported. “Caltrans similarly failed to take basic precautions to protect many skyway tendons from water even after the agency completed its study. Those lapses and others, said nine leading experts in the corrosion of bridge tendons, introduced uncertainty about the durability of the skyway.”

“Experts said that while a total collapse seemed unlikely, if Caltrans miscalculated corrosion estimates a major quake could cripple sections of the skyway.”

The Bee continued: “Experts agreed that strong skyway foundations and piers, plus the factor of safety — ’10 percent extra tendons,’ according to Caltrans — make a disastrous collapse of the bridge improbable, even in a devastating quake.”

But if tendons are more corroded than Caltrans’ study indicates, said Hawkins of the University of Illinois, a massive temblor might render one or more sections of the skyway unusable.

Another looming question, experts said, is whether taxpayers have purchased the $6.4 billion bridge they were promised, or a structure that will require costly repairs relatively soon.

Caltrans Director Matthew Dougherty was just reconfirmed by the Senate. It’s under Dougherty’s watch and decades in management at Caltrans that many mishaps, corruption, mistakes and cover ups have taken place.

Caltrans officials know C.C. Myers would have had this project wrapped up years ago, delivered under budget and ahead of schedule.  It is not too late to bring them in to clean up this mess.

By John Seiler

Government cons us into believing it “helps” people. It really exists to help itself — and hurt those that want to reduce its immense powers.

My colleague Steven Greenhut just visited Washington, D.C., and reported on how rich the area is. At least $4 trillion of our tax dollars flow through D.C., so it’s not surprising that a lot of it sticks there.

When I was growing up in Michigan in the 1960s, the counties North of Detroit were the richest in America because the auto executives and engineers lived there. In recent years, the richest counties have been those surrounding Washington, D.C.

That tells the story of American right there: Money was shifted from those producing things, such as steel and cars, to those producing government: lobbyists, lawyers, congressmen, social workers.

‘What do you expect?’

And government gets really mad when it’s criticized. Former Rep.  Ron Paul explains:

“’What do you expect when you target the President?’ This is what an Internal Revenue Service (IRS) agent allegedly said to the head of a conservative organization that was being audited after calling for the impeachment of then-President Clinton. Recent revelations that IRS agents gave ‘special scrutiny’ to organizations opposed to the current administration’s policies suggest that many in the IRS still believe harassing the President’s opponents is part of their job.

“As troubling as these recent reports are, it would be a grave mistake to think that IRS harassment of opponents of the incumbent President is a modern, or a partisan, phenomenon. As scholar Burton Folsom pointed out in his book New Deal or Raw Deal, IRS agents in the 1930s where essentially ‘hit squads’ against opponents of the New Deal. It is well-known that the administrations of John F. Kennedy and Lyndon Johnson used the IRS to silence their critics. One of the articles of impeachment drawn up against Richard Nixon dealt with his use of the IRS to harass his political enemies. Allegations of IRS abuses were common during the Clinton administration, and just this week some of the current administration’s defenders recalled that antiwar and progressive groups alleged harassment by the IRS during the Bush presidency.

“The bipartisan tradition of using the IRS as a tool to harass political opponents suggests that the problem is deeper than just a few ‘rogue’ IRS agents—or even corruption within one, two, three or many administrations. Instead, the problem lays in the extraordinary power the tax system grants the IRS.

“The IRS routinely obtains information about how we earn a living, what investments we make, what we spend on ourselves and our families, and even what charitable and religious organizations we support. Starting next year, the IRS will be collecting personally identifiable health insurance information in order to ensure we are complying with Obamacare’s mandates.

“The current tax laws even give the IRS power to marginalize any educational, political, or even religious organizations whose goals, beliefs, and values are not favored by the current regime by denying those organizations “tax-free” status. This is the root of the latest scandal involving the IRS.

“Considering the type of power the IRS excises over the American people, and the propensity of those who hold power to violate liberty, it is surprising we do not hear about more cases of politically-motivated IRS harassment. As the first US Supreme Court Chief Justice John Marshall said, ‘The power to tax is the power to destroy’ — and who better to destroy than one’s political enemies?

“The US flourished for over 120 years without an income tax, and our liberty and prosperity will only benefit from getting rid of the current tax system. The federal government will get along just fine without its immoral claim on the fruits of our labor, particularly if the elimination of federal income taxes are accompanied by serious reduction in all areas of spending, starting with the military spending beloved by so many who claim to be opponents of high taxes and big government.

“While it is important for Congress to investigate the most recent scandal and ensure all involved are held accountable, we cannot pretend that the problem is a few bad actors. The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process, thus the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.”

By Steven Greenhut

The Obama administration has gotten itself into a fix between its contradictory stories about the Benghazi incident, reports of the IRS targeting conservative groups, and the Justice Department’s grabbing of phone records from AP reporters. There are few things more fun to watch than arrogant political leaders — folks who spend their lives bossing everyone around — getting a comeuppance.

My favorite take wasn’t from any serious commentator but from comedian Jon Stewart, who noticed that the president routinely claims ignorance about embarrassing events by saying that he learned of them while watching the news: “I wouldn’t be surprised if President Obama learned Osama bin Laden had been killed when he saw himself announcing it on television.”

I take a bipartisan approach to Washington, DC’s political scandals and find myself savoring them all, regardless of the party that is in control of the White House. Any sane person would conclude that all administrations and bureaucracies essentially are corrupt given that they thrive on the exertion of power over other people. We know about the corrupting influence of power, and DC has become like ancient Rome that way. It’s a magnet for those seeking favor, money, or a big title administering some pointless program.

I visited DC last week and was astounded at the booming economy, the endless new construction, the astronomical prices, and garish displays of wealth everywhere — not to mention the haughty attitudes of every pissant assistant to the whatever. That’s what Other People’s Money buys you. When Ronald Reagan talked about the Shining City on the Hill he was speaking metaphorically about America, but the new shining city is DC — funded on the backs of all those Americans who blithely vote for people who promise to solve their problems.

Lesson

That’s the main lesson from this latest mess: the federal government is an untamable beast. These superficial scandals are nothing compared to the things we will never learn — i.e., the way the CIA conducts its business overseas.

Still, there are so many things to savor as President Obama circles the drain. Obama has always exuded an intellectual arrogance. Yet if he’s so smart, why would his Justice Department target reporters? The national media has fawned over the president, but the quickest way to end that love affair is to go after their personal records.

Unfortunately, many people insist on seeing every scandal in terms of partisanship. Conservatives are aghast, as they should be, at the thought of an IRS auditing groups based on their political views. That is eerily totalitarian. But where would they have been had a Republican administration done the same thing to liberal critics? I doubt the activist groups would be sending out the alarmist direct-mail pieces if the latest Bush were still president.

The best news from the ongoing drama is that people on the left and right see problems here. Let’s use that as a foundation for a renewed civil-liberties coalition that understands that there are many bright red lines in which the government — regardless of who nominally is at the head of it — does not cross. That’s easier to do when one realizes that our supposedly limited government is so limitless in its size, power, and taxing ability that no president can control it.

When pundits complain about excess partisanship, what they usually are really saying is they are tired of all the political fighting. Yet political fighting is good — it’s a sign of differences of opinion and assures that important issues get debated, however clumsily, in the public.

In Sacramento, California, the Republican Party has imploded and there is little worry about partisanship. But the state’s Democratic Party is now engaged in policies so secretive that even liberal-oriented pundits are getting concerned. No one has the power to say no, so the Democrats are ramming through every manner of dangerous bill.

The new health-exchange law shields most contracts under a veil of secrecy so that public money can be dispensed to friends and cronies without the public learning about where it is going. Democratic leaders have embraced a gut-and-amend frenzy — proposing dozens of bills with placeholder language that will be stripped away at the last minute with new and completely different language inserted. This circumvents normal debate and oversight.

Not just Democrats

This is not a Democratic problem per se, but a government problem. And local governments are arguably even more dangerous to our liberties. In Bakersfield recently, after Kern County sheriff’s deputies beat to death a young father (after being called to the scene for a minor incident — public drunkenness), they grabbed the cellphones of bystanders who were recording the incident. That’s right out of a police state.

Government is about power and force. Many people charged with power over others will abuse it. That’s human nature. Unfortunately, the nation’s founding ideals — limited, accountable government, with separated powers and checks and balances — have been fading away. Government is so big that even the president and the attorney general claim they have no idea what their departments are doing. I almost believe them.

We need to rebuild a coalition of civil libertarians of the left and right who agree to some basics, on some bright red lines that no government should cross. We need to provide a unified, bipartisan front on behalf of individual liberties and against any official from any party who would trample them. Maybe we can learn that constructive lesson from the administration’s unreconstructed behavior.

By Katy Grimes

Brown released his May Budget Revision last week. And as usual, there were some gaping holes in it.

California Common Sense has had a couple of days to absorb the document and has some observations.

California Common Sense, described as ”opening  up the financial black box of state government,” is a non-partisan non-profit, dedicated to opening government to the public through data-driven policy analysis. CCS has tackled some big issues in California, especially the state’s growing unfunded pension debt.

Here’s what they found with Brown’s budget revise:

By Chris Reed

On Friday, I noted that the state budget scrum always involved a series of hardball power plays that exposed as fiction the idea that the California Democratic Party and the most powerful forces on the state’s political left stood for “social justice.”

The trigger for this observation were the reports that unions were staying silent about pushes to restore the cuts in social services disproportionately used by the poor and the needy. Why all this balking? All the public employee unions are entering contract negotiations. The leaders of the dominant faction of the party of “social justice” define social justice as more money for them.

Over the weekend saw another example of hardball power politics that reflected I’ve-got-mine attitudes, not a desire for social justice. The issue was Jerry Brown’s push to award slightly more money to schools that have high numbers of English-learner students. If you buy the widespread but very disputable theory that more money means better schools — as the social justice types almost always do — then a slight divergence of funds to struggling students is a no-brainer. Rich districts have more fat in rough times than poor districts. Poor kids need more help, etc.

When ‘social justice’ = bringing home the bacon

But that’s not what “social justice” means to Democrats from west Los Angeles County or the Bay Area or any district with a well-regarded school district or two. For these Democrats, suddenly social justice means bringing home the bacon, the Sac Bee reports:

Gov. Jerry Brown had hardly finished presenting his annual budget revision last week before state Sen. Ted Lieu lit up on Twitter with a burst of criticism of a major part of the plan, a bid to shift more state aid to poor and English-learning students.

‘Instead of working together to help all kids,’ said Lieu, D-Torrance, Brown’s funding formula ‘pits teacher against teacher, community against community, parent against parent.’”

Senate President Darrell Steinberg, D-Status Quo

The article goes on to note that skeptics include Assemblywoman Joan Buchanan, D-Alamo, and Senate President Darrell Steinberg, D-Sacramento. More:

“In many ways, resistance to Brown’s proposal to overhaul California’s school financing system is a function of simple math.

“Though a majority of California’s more than 6 million schoolchildren live in urban and rural districts expected to benefit from Brown’s proposal, all but a handful of lawmakers who will vote on the measure represent at least one school district identified by the Department of Education as a potential loser. …

“Brown was on the defensive last week, laboring to ‘clarify some common misperceptions’ about his plan. He said the most controversial part of his proposal — to provide money to especially needy districts at the expense of wealthier ones— would amount to just 4 percent of total spending, with the rest distributed on a per-pupil basis partly to all students and partly to disadvantaged students statewide.

Gov’s idea — Dems help disadvantaged — meets reality

This is funny — the governor forced to downplay the cost of a model “social justice” proposal to win over Democratic lawmakers. Still, at least while doing so, Jerry Brown delivered a seemingly mild observation that actually amounts to a pointed zinger.

“Asked if he thought he had done enough to mollify resistant lawmakers, Brown said, ‘I think the idea in a Democratic Legislature of helping the less advantaged is very persuasive.’”

One would think. One would think. At least if one were dumb enough to still believe that California’s elected Democrats believe in the 1960s version of social justice, not the shabby modern iteration.

What I wrote a few years back about Sacramento remains as starkly true as ever:

“When times are bad, unions pressure Democrats to always make social services for the poor be the first target of budget cutting, preserving public employee compensation by any means possible.

“When times are good, they pressure Democrats to save extra revenue for them. In the revenue boom that lasted from 2003-2007, social services spending went up by barely the rate of inflation, while spending on schools (teacher unions) and prisons (guard unions) went up at least four times as fast.”

Representing just whose interests?

Is that what rank-and-file Democratic voters want?

Doubftul. Very doubtful.

By John Seiler

California Republicans never miss an opportunity to miss an opportunity. But listen up, because here’s one you shouldn’t miss: Advance and initiative to cut the state income tax by 1 percentage point.

Right now, Californians and other Americans are enraged at the IRS assault on the Tea Party and other conservatives and libertarians. Even liberals are up in arms. Taxes and the Taxman are unpopular.

So take advantage of it.

The CA GOP should formulate an initiative to cut the state income tax. Start small, say cut 1 percentage point from the tax. Keep it simple. Don’t have different rate cuts for different groups. The same for everybody: 1 percentage point off the rate.

It would be a winning issue at the polls. And it would be a winning issue for GOP candidates.

Slogan: “1 percent for California families.”

Democrats will say, “Oh, you’re helping the rich, who need to pay their fair share. They should pay 13.3 percent of income instead of a measly 12.3 percent.”

Forget that jibe. The focus should be on the middle class, which pays an incredible 9.3 percent beginning at about $55,000 of income. So if your family income is, say, $80,000 — barely into the middle class in exorbitantly expensive California — your overall tax rate is something like 6 percent. So, cutting that down to 5 percent would mean a savings of about $800 a year.

Call it the “$800 middle-class tax cut.”

Or: “The California family tax cut.”

Democrats will wail that it will take money from the poor, the schools, the handicapped.

Retort: “Just reform the $100 K pensions that are bankrupting the state and the money easily is there.”

Retort 2: “Tax collectors are harassing people for their political and religious beliefs, let’s give them less to mess with.”

Come on, guys, get creative for a change. California Republicans should be known for more than sticking their heads in the beach stand or moving to Texas.

And keep demonizing the IRS and other tax collectors.

By Chris Reed

As I’ve written about repeatedly, the California media simply refuse to break away from the green narrative that fracking is new, dangerous and potentially catastrophic. All three assertions are belied by 60-plus years of fracking. Greens only started griping about fracking when information technology made it so much more efficient over the past decade that it made alternative energy seem like a far dumber alternative.

For this reason, I thought I would print in its entirety what Jerry Brown said about fracking in California at his Tuesday press conference outlining his revised 2013-14 state budget. Raise your hand if this is the impression you got from California’s mainstream media coverage of fracking. OK, none of you raised your hand. Back to the transcript:

“Reporter: …There’s a fairly healthy debate about hydraulic fracturing, fracking of oil. Some people say it could be a big boon to the economy, could be a boon to tax dollars in the state. There’s an intense debate about. Where do you stand on the issues?

“EGB: … I stand on intelligent analysis of the issues. We have a very good division of Oil and Gas, they are reviewing it, the Legislature has several bills. This is not about just saying, ideologically, yea or nay. It’s about looking at what could be a fabulous opportunity. But we want to make sure about the aquifers, some people are talking about earthquakes, a lot of different things, what are the chemicals, what do we know. And in addition, climate change is real. Now, the reason why I have some sympathy for oil drilling in California is because 98 percent of the people are using oil that is imported. And until we get them in electric cars or walking or riding on bikes, we need oil. But, we’ve got to get off it. Climate change is very real, it has passed 400 parts per million maybe, is serious stuff. So, I have to balance my strong commitment to deal with climate change and renewable energy with what could be a fabulous economic opportunity.

“And if you remember about oil drilling, oil drilling in Long Beach, which was really pioneered I think when my father was Governor, poured I don’t know how many billions, into higher education. So this could be good, but there are issues, and I want to look at them. I don’t deal with this thinking ‘oh the sky is falling in’ or, ‘Utopia has arrived.’ We’ve got to look at it. These are hard questions and we are going to look at them with a thoughtful way.

“Reporter: Sounds like you disagree with the moratorium, then?

“EGB: Well, let’s see the evidence. First of all, I don’t think they are ready to go yet. There’s a lot of technical engineering issues. So I think we have time to do it right.

“Reporter: Governor, what about the possibility of an oil severance tax?  Particularly given the potential Monterey Shale.

“EGB: Look, we just got a nice tax. 55 percent of the people voted for it and I think we ought to take a deep breath and show how we are spending it in a wise way, before we start looking around at ways to fill up more money. By the way those people who talk about oil tax – good luck. The last time we had one the oil companies spent almost 50 million dollars fighting it. Ideas that in the abstract may seem appealing, when you put them on the ground, they don’t work quite as well.”

When will CA media catch up with reality?

Read between the lines, and it sounds like the governor sees fracking as a great opportunity and doesn’t take the doom-and-gloomers all too seriously.

Which biegs this question: When will California mainstream media coverage of fracking begin to catch up with, yunno, reality?

By Chris Reed

Say what you will about The New York Times, but at least it’s not in denial about fracking the way The Los Angeles Times is.

Friday’s LAT coverage of new U.S. Interior Department rules for fracking on 756 million acres of public and Indian lands depicted the rules as being strongly objectionable to both enviros and the energy exploration industry.

The NYT coverage made the industry whining seem more pro forma and offered this essential point that the LAT couldn’t bring itself to point out:

“The 171-page proposal is the first significant regulation issued under the new interior secretary, Sally Jewell. Ms. Jewell worked in the oil industry in the late 1970s and proudly said that she fracked a few wells in Oklahoma.

“Ms. Jewell said in a conference call for reporters that the administration would continue to lease large tracts of public and Indian lands for oil and gas development and that it was critical that rules keep pace with technology.

“Anticipating criticism from environmental advocates, she said: ‘I know there are those who say fracking is dangerous and should be curtailed, full stop. That ignores the reality that it has been done for decades and has the potential for developing significant domestic resources and strengthening our economy and will be done for decades to come.’”

NYT quotes Obama Cabinet member; LAT quotes flack

The L.A. Times’ account put in the “fracking is safe and has been around forever” context by quoting an oil industry trade association spokesperson. The NYT quoted THE SECRETARY OF THE INTERIOR!

Quite a gigantic difference. But than the LAT’s Neela Banerjee and Wes Venteicher and their editors can’t have Times’ readers knowing the Obama administration likes fracking, can they? It doesn’t fit the West L.A.-Marin County-NRDC narrative.