Monthly Archives: September 2011

Suggested readings on campaign finance, disclosure, food security, computer fraud & more

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Look busy and check out some of this good reading.

• From Public Citizen and the Harvard Law School, “Fulfilling Kennedy’s Promise: Why the SEC Should Mandate Disclosure of Corporate Political Activity“, September 2011.

The report traces the recent history of campaign disclosure, and sees the SEC’s role as critical. Here’s an interesting point made:

…research in several past and ongoing studies suggests that companies seeking an advantage through lobbying and campaign activities may not be doing their shareholders any favors. Rather, corporate political activity overall may reflect the interests of the managers of the companies, or on a risk-adjusted basis may be less beneficial than other purposes to which shareholder funds could be put.

• “Independent Spending in Washington, 2006-2010.” How has Citizens United v. FEC changed the face of state elections? National Institute on Money in State Politics.

Overall, independent spending that targeted state races consistently paled in comparison to the direct campaign contributions made during the study period. In total, the $41 million spent independently was just 16 percent of the $258 million raised in direct campaign contributions. And while contributions raised directly by candidates have increased since 2006, there was little to no change seen in independent spending between the comparable 2006 and 2010 elections.

Although Washington requires detailed reporting of independent expenditures, intermediary PACs are often created that make finding the original contributors more tedious. The Institute created a diagram, called Taking the Low Road, to display how difficult it can be to follow money from donors through “shell” PACs to the races they targeted.

• “Goodbye to All That: Reflections of a GOP Operative Who Left the Cult,” Truthout.org.

Fair warning!

I left because I was appalled at the headlong rush of Republicans, like Gadarene swine, to embrace policies that are deeply damaging to this country’s future; and contemptuous of the feckless, craven incompetence of Democrats in their half-hearted attempts to stop them. And, in truth, I left as an act of rational self-interest. Having gutted private-sector pensions and health benefits as a result of their embrace of outsourcing, union busting and “shareholder value,” the GOP now thinks it is only fair that public-sector workers give up their pensions and benefits, too. Hence the intensification of the GOP’s decades-long campaign of scorn against government workers. Under the circumstances, it is simply safer to be a current retiree rather than a prospective one.

If you think Paul Ryan and his Ayn Rand-worshipping colleagues aren’t after your Social Security and Medicare, I am here to disabuse you of your naiveté.[5] They will move heaven and earth to force through tax cuts that will so starve the government of revenue that they will be “forced” to make “hard choices” – and that doesn’t mean repealing those very same tax cuts, it means cutting the benefits for which you worked.

• Fact Sheet from the U.S. State Department, “U.S. Engagement in the Pacific,” September 7, 2011. The report ticks off areas of “engagement,” a lot of which seems to involve military officials on Pacific Island tours. But State also says we’re pushing on climate change, women’s empowerment, and food security, among other things. Read the brief descriptions and make up your own mind.

• “Household Food Security in the United States, 2010,” USDA Food, Nutrition and Consumer Services.

The USDA study indicated that in 2010, 17.2 million households in America had difficulty providing enough food due to a lack of resources. The number of food insecure households in 2010 was relatively consistent with statistics released in 2008 and 2009….

Food insecurity rates were substantially higher than the national average for households with incomes near or below the current federal poverty line ($22,350 for a family of four), households with children headed by single women or single men, and black and Hispanic households. Food insecurity was more common in large cities and rural areas than in suburban areas and other outlying areas around large cities.

• “Cybercrime: Updating the Computer Fraud and Abuse Act to Protect Cyberspace and Combat Emerging Threats.” Statement of Mr. Pablo A. Martinez, Deputy Special Agent in Charge, Criminal Investigative Division, U.S. Secret Service, before the Senate Committee on the Judiciary.

The Secret Service has continued its collaboration with Verizon on the 2011 Data Breach Investigations Report (DBIR) to identify emerging threats, educate Internet users, and evaluate new technologies that work to prevent and mitigate attacks against critical computer networks. Researchers from law enforcement and the private sector examined roughly 800 new data breaches. The results from the Verizon study show that two of the noticeable trends in cybercrime over the past couple of years involve the ongoing targeting of Point of Sale (POS) systems as well as the compromise of online financial accounts, often through malware written explicitly for that purpose, with subsequent transaction fraud involving those accounts.

• “Downward Mobility from the Middle Class: Waking Up from the American Dream,” The Pew Charitable Trusts.

So much for the dream.

This report shows that nearly 40 percent of black men raised in middle- class families fall from the middle in adulthood, double the number of white men who do so. In contrast, there is not a notable gap in downward mobility between white and Hispanic men, nor between women of different races.

Lots of details about the downward pressures and what kinds of people are most likely to be falling behind.

Four Seasons banquet servers entitled to back pay, federal court rules

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The Four Seasons Resorts on Maui and Hualalai, on the Big Island of Hawaii, must repay food and beverage service employees the portion of service fees that was diverted to other corporate uses without being discussed to customers, Federal District Judge Helen Gillmor ruled recently.

According to WaiterPay.com:

In the lawsuit, Four Seasons did not dispute that the resort customers are billed an 18 to 22 percent service charge, and that it retained a portion of the service charge that was not distributed to employees. Judge Gillmor ruled that “Four Seasons failed to clearly disclose to at least some customers that service charges would not be remitted in full” to the servers, and therefore they were liable to the servers for unpaid wages, under Hawaii law.

A trial will determine the amount of back wages the company must pay.

A Google search turns up a lot of recent news about Hawaii’s Four Seasons resorts, but I didn’t see any mention of this case.

Gillmor’s decision ripped into a series of defenses thrown out by Four Seasons, including claims that it did not actually employ the banquet servers because “day-to-day” operations of the two resorts were handled by 3900 WA Associates, LLC (Maui) and Hualalai Investors, LLC.

Four Seasons states that these entities each separately controls its own payroll, has its own revenues, issues its own financial statements, makes its own human resources decisions, and has its own human resources department.

But the court rejected the argument, citing evidence that Four Seasons was contractually responsible for operating the resorts, and employment agreements drafted by Four Seasons and stating, “in capitalized letters, ‘I AM A FOUR SEASONS EMPLOYEE.'”

The class action lawsuit was originally filed in November 2008. A legal issue in the case was referred to the Hawaii Supreme Court, which issued a ruling in March 2010 which allowed the case to go forward.

The case is just one of several legal claims brought to enforce a state law on tips passed by the legislature in 2000.

Reporting on state economic projection left readers/viewers confused

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Yes, yesterday’s projections by the Council on Revenues were confusing. But reporting added to the confusion.

Here’s the lead from Governor Abercrombie’s press release:

The Council on Revenues (COR) today projected a lower economic forecast for the current and upcoming fiscal years.

But news reports all highlighted a projected increase in revenue growth from 11% to 14.%.

And it was all confusing enough readers could be excused for wondering whether it was good news or bad news.

Here’s the headline and subhead from KITV’s report.

Council On Revenues Projects 14.5% Economic Growth

Projection Based On Downgraded Growth 9.5%, Projected Revenues Increase 5%

So, let’s see…growth projected at 14.5%, but really only 9.5%? And despite 14.5% growth, “it all adds up to about $120 million less coming into the state.”

Okay. I was dizzy after that story.

The Star-Advertiser did modestly better.

The state Council on Revenues Tuesday issued its quarterly general fund forecast, predicting revenue growth of 14.5 percent in the current fiscal year that ends June 30, 2012, up from 11 percent predicted in July.

Revenue in the next fiscal year is expected to climb 6.5 percent, up from 6 percent in the previous forecast, with more modest growth forecast in succeeding years.

Increases are due primarily to temporary tax law changes that are expected to bring in more than $600 million over the next two fiscal years to help balance the budget and end the previous administration’s practice of delaying tax refunds.

Isn’t the first paragraph (14.5% revenue growth) contracted by the second paragraph (6.5% expected revenue growth)?

And the third paragraph refers to “increases,” but this doesn’t appear to refer to the increases in the prior paragraph.

The third graph also refers to “temporary tax law changes that are expected to bring in more than $600 million,” although the story goes on to finally clarify that this was the legislature’s estimate, which the Council on Revenues has rejected.

Pacfic Business News didn’t do any better.

The council raised the growth forecast for the current fiscal year, which began July 1, to 14.5 percent, an increase from the previous forecast of 11 percent, said council Chairman Richard F. Kahle Jr.

The council is forecasting growth for Fiscal Year 2013 to be at 6.5 percent, which was an increase from the previous forecast of 6 percent, he said.

However, the 3 percent growth forecast in FY 2014 and 5 percent for each of the three years after that, were downgrades from the previous forecasts of 6 percent for each of those years, he said.

Now I’m dizzy enough that I should sit down.

Civil Beat’s Nanea Kalani was the only one who presented it in an understandable fashion, immediately breaking down the 14.5% into its different components.

The Hawaii Council on Revenues upgraded its tax revenue forecast for the current fiscal year to 14.5 percent growth from 11 percent, despite sluggish job growth and “tremendous uncertainty” with the U.S. economy.

The group said its forecast is made up of three parts: pure economic growth; lingering effects from last year’s tax refund delay; and impacts from new tax laws that took effect in July.

The group decided Tuesday on an underlying economic growth forecast of 5.2 percent for the current fiscal year. That compares to a negative 0.9 percent growth for the fiscal year that ended June 30.

Another 4.3 percent of the growth forecast is attributed to the lingering effect of delaying tax refunds in July 2010.

The remaining 5 percent of the forecast is tied to tax law changes made by the Hawaii Legislature earlier this year.

Razor wire on state’s shopping list for APEC

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It’s one of those Tuesdays that feel like a deferred Monday. It makes Friday seem a lot closer.

In any case, I thought it might be time to stop and check out the State Procurement Office.

A few items of interest found there, as usual.

• The State Department of Transportation is requesting an exemption from bidding requirements for as-yet unknown projects with as-yet unknown costs in order to provide “goods, services, and construction” in advance of the APEC meetings in December.

Examples of some of the goods, services, and construction that may be required, but not limited to the following: the rental or purchase of concrete barriers, fencing, or razor wire; the delivery and placement of concrete barriers, fencing, or razor wire; trucking service; traffic control service; electrical repairs; plumbing repairs; graffiti removal; painting service; landscaping service; street sweeping service; trash removal service; security guard service; purchase of fuel; and the purchase of meals.

Unless adequate lead time is given, “a single quote will be used as long as it is reasonable.”

Coincidentally, the “Eating in Public” project has just launched an anti-APEC web site with an array of useful protest items (check out the “spec sucks” t-shirts, for example).

• In mid-May, there was a leak that required emergency repairs in the hallway next to the Senate Sergeant-at-Arms office in the State Capitol basement. In requesting approval for the emergency repairs, DAGS described it as “a slip hazard at a high traffic area and the leak could not be contained.” It took four contractors and $24,870 to make the repairs.

• The Hawaii Convention Center at the edge of Waikiki is preparing to shut down all events during a 10-week “black-out” period between January 12 and March 22, 2012, in order to make an estimated $9 million in priority repairs. DAGS is proposing to go outside of routine procurement procedures in order to (hopefully) select a contractor with a track record of finishing time-sensitive projects like this one.

The repairs and improvements include rebuilding the lobby water feature, repair corrosion in the sail structure, repair the roof membrane around the sail structure and ballroom, do waterproofing on the 4th floor rooftop garden to stop water from leaking into stairways, more waterproofing in various areas to stop leaks and water damage, etc.

And so it goes on this Tuesday morning.