Speaker's Commission
State Seal

Phil Angelides testifies before
the Commission

Steve Peace testifies before
the Commission

Commission Meeting #6 Minutes

June 23, 1999 State Capitol, Sacramento


1. Call to Order/Introductions:
Chairperson David Abel called the meeting to order at approximately 10:20 a.m.

In attendance:
David Abel
David Allgood
Luis Arteaga
Martha Davis
Joel Fox
William Hauck
Norman King
John Maltbie
Chuck Nathanson
Randy Parraz
John A. Perez
Jean Ross
Dwight Stenbakken
Steven Szalay
Dean Tipps
Ron Unz
Carol Whiteside

Welcome: Commissioner Chair Abel welcomed the Commission back to the State Capitol for the second time and launched the meeting with brief comments by Commissioners Szalay and Hauck.

Commissioner Szalay concisely described the work of the State Controller's Task Force on State and Local Finance. He noted that the Task Force has met four times in 1999 and hopes to release a report in September. It has formed sub-committees, including Accountability, Revenue and Taxation and Land Use. The Task Force includes representatives of labor, local government and the business community and has been tracking the progress of the Speaker's Commission as part of its own work.

Commissioner Hauck commented on the State Budget, which recently had been approved by the legislature. He noted that it included language calling for a measure to be placed on the November 2000 ballot to deal with local government finance issues. He speculated that Senate Constitutional Amendment (SCA) 9, introduced by Senator Steve Peace, might prove to be the vehicle for this measure. Hauck noted that this situation placed some time constraints on the work of the Commission.

(Subsequent to this meeting, some or all of the language referred to by Commissioner Hauck was impacted by the Governor's line-item veto actions.)

2. Presentation: State and Local Government Finance from the Legislature's Perspective: Chair of the Senate Budget Committee, Senator Steve Peace (D-El Cajon), discussed the growing interest in fiscal reform issues in the legislature. He began by noting that state and local finance is not an issue separate from other governance issues facing California, notably infrastructure and tax structure.

Sen. Peace said that local government officials appear to have two compelling interests: independence (the absence of coercion) and stability of capital. He described these as competing goals that must be balanced.

The Senator talked about what he learned on his late-winter "tour" of California during which he held hearings on fiscal issues. According to figures he cited, revenues have largely kept pace with the increase in population over the last 30 years. However, expenditures in certain key areas, including education and services to low income residents, have not. He pointed out that revenues are up 53% but the population under age 18 and below the poverty level is up 178%. Counties and schools bear the brunt of this disparity. He also noted that public expectations for local services are significantly higher than they were 30 years ago.

Sen. Peace stated that the local reliance on sales taxes has had a homogenous negative effect on economic growth by encouraging low-paying retail job formation. This leads to shrinkage of the proportion of the working population in higher-paying jobs, thus shrinking the tax yield per capita if we assume a constant tax rate. This leads to the question of how to reward municipalities for choosing to accommodate high tech and manufacturing jobs that do not produce sales taxes in any appreciable amount.

According to the Senator, increases in the cost of housing have the effect of reducing the value of workers' paychecks. This is another negative effect on economic growth. He cited the local preference for revenue generating retail development over housing and the imposition on new housing development of fees to pay for infrastructure and schools as factors that have fueled a housing shortage accompanied by exaggerated costs.

Sen. Peace emphasized that California needs to address its tax structure. He said the discussion needs to be "de-localized" even though local decision making remains and important factor. He urged elected officials to work on creating a better tax foundation that would provide incentives for reduced pressure on infrastructure and lower the tax burden.

Pointing to a current anomaly in California's tax system, the Senator noted that sales taxes are not deductible from federal income taxes. Because California is the biggest federal "tax donor" state, Sen. Peace said we need to maximize deductibility from federal taxes for state taxpayers. He offered the reduction in the Vehicle License Fee (VLF) as an example of how the state most recently has failed to do this. He suggested that it would have provided more relief for taxpayers if auto sales were exempted from sales taxes and the deductible VLF remained as was.

Peace urged that officials should not let the political atmosphere surrounding issues like the VLF reduction create undue fear of having a real conversation about tax policy. He noted that, during his tour, he'd received an encouraging response to his questioning of local officials whether they felt they could have an open debate in their communities on tax policy at the present time. In five of the six venues the answer was "yes." Only in Oakland, where Proposition 13 did not win a majority in 1978, was the answer "no." The Senator drew from this the conclusion that communities that supported Proposition 13 are ready to discuss the issues.

According to Sen. Peace, the forces are aligning to bring about a meaningful discourse on tax policy. The Governor is looking to stabilize local government revenues, the business community recognizes the long-term damage being done and local governments are, as noted above, ready to talk. The Senator opined that no one present that day would offer the current state tax structure from scratch, because it has led to over-taxation, inadequate revenues, bad distribution of revenues and bad decision making.

The Senator concluded his presentation by discussing the situation deriving from the new State Budget as it existed prior to the Governor's actions in signing it. He described it as a two-step local government relief program, with one-time ERAF relief in the '99-00 Budget, plus the proposed ERAF freeze and property tax administration cap linked to the November 2000 ballot measure. He urged locals to wear both their fiduciary and citizen hats to keep the discussion from becoming an academic exercise that would be dysfunctional in the political context. He also urged the Commission to hold more of its meetings in the Capitol where they had the potential to attract the attention of lawmakers and administration officials.

Commissioner Hauck asked about what process the Senator foresaw to create the ballot measure called for by the legislature's Budget. Mr. Peace suggested that the legislature should initiate a process after the Budget is signed, perhaps holding some hearings around the state during the July legislative break. He also suggested it could wait until the interim that begins in September after the legislature adjourns until January.

Commissioner Whiteside asked if Sen. Peace was looking at revenue redistribution or simply restructuring the tax system. She also wondered if he wanted to take on the entire sales tax package or focus on the portion that impacts local governments. Peace replied that both were preferable, if possible, because of the non-deductibility of the current sales tax. He said he did not have a specific proposal in mind at this point because he felt he could play a more useful role in the process by refraining from any prejudgments. He also advised the Commission against constraining itself by asking questions that are too narrowly framed, instead urging them to seek to minimize the impact of taxes while maximizing the benefit to services, schools and land use decision making.

Commissioner King stated a contention that the sales tax does not overproduce low wage jobs in locations where the retail market is already saturated. Senator Peace countered by saying the sales tax under-creates high wage jobs. He cited a situation in the Otai Mesa area where BMW had chosen to locate a factory in South Carolina after San Diego officials failed to show any interest in bringing BMW to their community because it wouldn't generate immediate revenue.

Commissioner Allgood asked the Senator to quantify the annual revenue outflow to the federal government. Peace estimated it at $70-80 billion. Allgood asked how that would change if California changed its tax system to replace the sales tax with a tax deductible on federal tax returns. Peace estimated that it could reduce the outflow by up to 28%.

Referring to the recent VLF and business tax reductions approved by the legislature and the Governor, Commissioner Ross noted that the cuts have approximately equaled the ERAF shift. She asked if the legislature would be willing to give up the ability to grant tax relief in order to make local governments whole, offering a _-cent sales tax swap with VLF as an example. The Senator replied that business community support would make the difference because the legislature now has enough former local officials in it who understand the need.

Commissioner Fox mentioned the need to also consult voters and figure out how to explain the Budget surplus to them. Sen. Peace brought up the way the surplus has been allocated this year, boosting education, social service and park spending along with local government relief and an accelerated second-stage reduction in the VLF. He opined that a proposal to raise taxes would not fly but a genuine redistribution that achieve aforementioned goals had a chance, especially if accompanied by a net reduction of taxes.

3. Presentation: Smart Investments - The Debt Affordability Report Update: State Treasurer Phil Angelides presented and discussed an advance copy of his update to the annual Debt Affordability Report prepared by the Treasurer's office. The statutorily required report is submitted annually to provide an analysis of the State's debt position and capacity - a look at how much the State can afford to borrow for infrastructure investment. The Treasurer felt that the current interest in government finance and infrastructure issues justified his updating the report out of the normal time frame.

Mr. Angelides began by noting that the next 20 years would bring 5 million new jobs, 12 million more people and 4 million new households to California, more growth than the state experienced from 1850 to 1950, and more than in the '50s, '60s and '70s combined. He asked how we can grow in ways that preserve the environmental quality and natural attractiveness that are such major assets to the state, noting that present patterns would not meet the need. The Treasurer pointed to congestion, poor air quality, housing unaffordability and jobs/housing imbalance as indicators of that.

The Treasurer went on to emphasize reinvestment in urban areas and more sustainable patterns of growth on the suburban fringe as desirable goals. He stated that it was unhealthy to have most Californians doing well economically while some communities lag way behind. Figures he cited suggest that the number of people living below the poverty line grew by 28% in the '90s and that 20% of them are children. This increase was concentrated in the economically disadvantaged communities of the state.

Mr. Angelides cited as California's central challenge the goals of enhancing the economy and preserving the environment. The State's public investment policies should be geared to achieve that. The new report looks at investment prospects over the coming ten years, beginning with the premise that the State lacks a meaningful investment plan at this point. He stated that there has not been sufficient discussion of governing principles for public investment. He suggested that gearing policies to the demands of government agencies and the percentage of the State Budget represented by debt service did not constitute an investment plan.

The Treasurer opined that public investment must support livable communities, revitalizing urban neighborhoods and encouraging sustainability in the suburbs. The continued expansion of the fringe while urban communities are, in essence, discarded, would hurt the economy and quality of life for everyone. He suggested striving for more transportation options, a better mix of housing, and closer proximity of jobs to housing as desirable goals.

At this point, Mr. Angelides cited some State processes that are undergoing change, or should. He said the State's affordable housing finance process has been changed from a lottery to a prioritized system favoring smart growth goals and helping struggling communities. He suggested that the State Infrastructure Bank follow suit.

Linking infrastructure issues with other policy areas, Mr. Angelides went on to espouse moving away from conventional views of investment choices. Continuing to expand conventional highways, water facilities, power plants and prisons could be wasteful when there are ways to reduce the need for new facilities. He pointed to the City of Los Angeles' success in water conservation, reducing water usage to 1970s levels even with major population increases having occurred.

The Treasurer recommended the creation of strong, credible regional plans as part of a State Capital Planning Process. He noted that private, regional entities such as the Bay Area Council have been leading the way.

Angelides also advocated the empowerment of communities by requiring only a majority vote to approve capital investments. He likened the current 2/3 requirement to requiring landslides and suggested that many of the elected officials who adamantly support the 2/3 threshold have never achieved it in their own election results.

Commissioner Whiteside opened the ensuing discussion by saying she was please to hear a State official use the term "region." She added that areas like the Central Valley have unique characteristics that require a regional perspective. Commissioner Davis said that "Smart Investments" is a timely report. She noted the ongoing talk about the need to do planning but added that a serious effort would be required to establish a process. Commissioner Szalay added that the investment planning effort needs to be connected with the state/local finance reform process.

The Treasurer replied that his interest in regions begins with the need to empower them to assess, identify and finance their needs, especially in housing and neighborhood improvements. He said it was wrong to assume the State can do investments completely "top down."

Commissioner King advocated a fundamental change in the approach to transportation investment. He asserted that no amount of money or building will solve congestion problems without changing individual behavior patterns and the pricing policies that influence them.

Mr. Angelides agreed, noting that it would be imprudent to assume that gasoline will remain cheap forever. He noted the need to match land use with greater transportation options.

Commissioner Hauck, a member of the Governor's infrastructure task force, said that the task force is calling for an infrastructure plan and expects legislation to enable or mandate its preparation. He predicted that the State Infrastructure Bank will have a positive long-term impact, fueled by flexibility and good funding. Consequently, he concluded, the talk about improved infrastructure planning was not a pie-in-the-sky discussion.

4. Presentation: Recent Public Opinion Polling on Government and Policy:
Presenter Mark Baldassare of the Public Policy Institute of California in San Francisco has been conducting polling and focus groups on various political and policy matters since before the 1998 general election. He appeared before the Commission to present a sampling of his findings, several of which appeared to be relevant to the work being done on fiscal reform.

According to Mr. Baldassare, the public believes, by a 2-to-1 margin, that the state is moving in the right direction in terms of the economy and quality of life. The most important issue in the eyes of participants is education and the schools. State and local government finance registered with 2% of those questioned (though it was acknowledged that the issue was unprompted).

Traffic, growth and pollution, generally considered to be important issues in California, showed up most strongly on a regionalized basis. Approximately one-third of all participants cited traffic as an important issue, but it rose to about 50% in the Bay Area. 25% cited growth as an issue. In general there was a recognition that it will occur and that the infrastructure is inadequate to deal with it.

The research indicated that many people are "tuned out" to politics and government. Only 20% acknowledged following politics, and 33% for government. When asked early in 1999, about 50% of those polled could not identify the new Governor.

Additionally, despite the low percentage of people actually paying attention to government, many respondents continued to feel that government is wasting public dollars. Many also lacked confidence in the Governor and legislature to get the people's business done, with only 11% showing support. Conversely, a majority of respondents felt that the initiative process was the way to do the people's business.

Regarding Proposition 13, Baldassare found that the average Californian does not see it as having had a harmful effect. Some 25% of respondents did feel it to be harmful, the same percentage that felt the 2/3 vote requirement should be reduced to a simple majority. Abetted by the public's unfamiliarity with the fiscal process, no majority emerged in favor of shifting fiscal control from the state to local governments.

Mr. Baldassare then summarized the issues that emerged in focus groups held in recent months:
California is a great place to live.

  • There is a concern regarding schools, traffic and local issues.
  • There is a mistrust of elected officials.
  • Few people understand how government works. Sum There is a reluctance to raise taxes.
  • There is a reluctance to lower the 2/3 vote threshold.
  • The state is unprepared for the growth it faces.
  • There is a need and desire for strong leadership.

The group discussions indicated that people want to be more involved and connected and expressed a desire for more public outreach and community vehicles such as town forums. In general they want accountable and responsive government.

It was also clear that the public is "disengaged" on state/local finance, related to its lack of understanding of government. Nevertheless, there was interest in learning how state/local finance issues will impact problems at the local level. People felt that improving quality of life is more important than changing Proposition 13 merely for technical or governmentally self-interested reasons.

Commission Chair Abel mentioned Senator Peace's statement that it appeared the public might be ready for an open discussion on fiscal issues. Mr. Baldassare questioned the validity of Peace's conjecture. Mr. Abel countered by noting he had attended a couple of Mr. Baldassare's focus groups and had not sensed hostility to discussing fiscal issues. Baldassare said that the polling data was more valid and indicative of public opinion on this issue.

Commissioner Maltbie wondered why traffic was listed consistently as a key issue from region to region but only rated at 2% statewide. Baldassare replied that traffic is an issue with high local recognition where it is a problem, but that conditions varied enough around the state to keep it from registering statewide.

Commissioner Ross asked about methodology, inquiring which issues were "prompted" by the pollsters, and how. She referred to the state and local control of property taxes as well as the level of confidence in local officials as examples. Mr. Baldassare said that most of the respondents appeared to know little about the fiscal issues other than what they learned from the questions. He also opined that the higher level of trust exhibited in local officials did not appear to connect with state/local finance in the minds of the respondents.

Commissioner Tipps said that government comes across as arrogant in the relatively minimal amount of information it shares with the public. He noted that a former Governor vetoed a bill requiring an explanation of how public monies are spent to be included in the voter pamphlet. He then asked if Baldassare's work included anything that related to this "information gap." It did not, was the reply, but a future phase of the research scheduled to go on through the 2000 elections could include that. Baldassare said that neither the State nor local governments are forthcoming with explanations, forcing the public to take a leap of faith, something which it seems decreasingly interested in doing. Commissioner Tipps commented that "even rearranging the deck chairs is difficult when we don't want to tell people where they are now." Commission Chair Abel noted that having an open discussion on issues could impact that situation in a positive way.

Turning to practical matters, Commissioner Nathanson asked whether Baldassare felt the public was educable on state/local finance issues. He noted that Senator Peace had framed the issues differently than the polls and focus groups had, focusing on lowering the tax burden as opposed to who controls the revenues. Baldassare said the discourse would not be easy but that the public could be educated if the information connected to their daily lives and how local problems could be fixed in light of the challenges facing the state.

Commissioner Arteaga asked about California 2000, a public outreach effort Baldassare is assisting, and whether it has developed a strategy and identified messengers yet. Baldassare indicated that local officials were emerging as likely suspects, though the strategy was far from finished.

Commissioner Allgood noted that fiscal issues are "low salience" issues and wondered how the Commission will be able to communicate its proposals to voters on these kinds of issues. Baldassare acknowledged his lack of expertise on that subject. Commissioner Tipps added the opinion that an effort needed to be made to make information flow better, noting that marketing is about repetition. Commissioner Whiteside offered that it was wrong to focus on what government needs. Instead, she said, people want to know what government will do for them. She suggested that the private sector would be helpful in carrying the message.

Commissioner Fox asked how Senator Peace's message about tax deductibility would sell, noting that it did not seem to influence the Proposition 13 vote in 1978. Baldassare opined that the public likely would be confused and that the reaction could depend a lot on who supported the proposals and who did not. Commission Chair Abel asked if the support of the Howard Jarvis Taxpayers Association would help and Mr. Baldassare concluded that it would.

1. Discussion: Mission and Problem Statement:
Commissioner staff consultant Fred Silva of the Public Policy Institute of California, led a follow-up discussion on the third draft of the Mission and Problem Statement.

Commissioner Nathanson suggested that the presentations from Peace, Angelides and Mark Baldassare suggest that most of the issues discussed in the M&P may not resonate with the public. Commissioner King asked for a work plan, and Mr. Silva agreed to prepare one. Commissioner Whiteside suggested using the Mission & Problem Statement contents as guiding concepts.

Commissioner Unz re-stated his feeling that the difficulty the Commission faces is packaging the ideas for the voters. Commissioner Allgood offered that perhaps they could be cast as preparing for the 21st Century, worded in a pro-active form and forward-looking language.

Getting more specific, Commissioner Szalay recommended amendments to section 3, the State/Local relationship section, as follows:

"The state and local finance system is too complex, difficult for citizens to understand, and prevents government officials from being held accountable for their results.

    e. The relationship between the state and local governments has deteriorated substantially over the past twenty years. Growing concentration of power in Sacramento since the passage of Prop. 13 in 1978 has removed independence from counties, cities and special districts. The result is a seriously strained relationship featuring distrust and acrimony. The state-local relationship needs to become more of a partnership through better-defined and balanced roles, responsibilities and mutual accountability."

Commissioner Ross suggested mentioning the constraints imposed by voter-imposed initiatives, as well as the provision of adequate and accountable public/community serivces. Also, she said, the Commission needs to define what constitutes a "service."

Commissioner Fox recommended adding something about stability for communities and taxpayers. He also opined that the existing phrase about providing "adequate authority" is perfect in that it doesn't say anything.

Mr. Silva promised that staff would create a "menu" to discuss at the next couple of meetings.

Commissioner Hauck said the fiscal reform issues are now on the burner, but they aren't "cooked" yet. If a solution can be devised in conjunction with Capitol leaders and presented to voters in a way they relate to, the makings of a public campaign would be in place. Commissioner Perez added that the constituency in the Capitol building is the first important constituency for what the Commission is doing.

Commissioner Stenbakken asked that staff think about how to implement any proposals the Commission comes up with.

Speaking to macro strategy, Commissioner Unz said that a sweeping proposal that steps on a lot of toes might succeed best, one that catches the imagination of the public better than incrementals that could be ignored. For the latter, he opined, if there are a small number of people in vehement opposition, it's hard to enact change. More people need to know they'll gain more than they lose in the end. Commissioner Allgood replied that the problem with bold initiatives imposed upon an ignorant public is that it leads to "sound bite politics."

Carl Mussen, monitoring the meeting for absent Commissioner Carl Anthony, asked about the pertinence of Treasurer Angelides' ideas on regional planning to the Commission's work. While acknowledging a relevance, Mr. Silva suggested that he would probably stick to state/local finance-related proposals in the menu staff would prepare. Commissioner Nathanson countered with the opinion that sticking to a narrow state/local finance focus would box the Commission in. He suggested that a changed focus to include the tax system and quality of life might be necessary.

Commission Chair Abel commented that the seeming disinterest in fiscal issues shown in the Public Policy Institute's polling and focus groups might be due to how the questions were framed. He suggested that if people were offered a choice between having Caltrans bureaucrats plan for growth and having local officials do it, it might have resonated better. Commissioner Unz replied that most voters probably do not distinguish between government agencies. He noted that the Los Angeles Charter Reform proposal was important only to a few people and understood by fewer still, yet a successful campaign was mounted to pass it. Mr. Abel noted that some coalition building was undertaken in that effort and that it had been of value.

Commissioner Maltbie referred to Mr. Baldassare's comments about the public's desire for responsiveness and accountability. He offered that it had to be determined what services they felt were relevant and it had to be communicated how much they pay for those services. Commissioner Szalay termed this a need to translate. He added that the Governor's Infrastructure Task Force had already concluded that state/local finance had to be addressed before infrastructure could be addressed.

Grappling with the marketing challenge, Commissioner Arteaga suggested that the popularity of education with voters required looking at ways to make it relevant to the fiscal discussion. Commissioner Allgood replied that selling these kinds of issues was going to require unique creativity.

1. Presentation: An Environmental Tax Shift:
Representing the non-profit research institute Redefining Progress, Dr. Gary Wolff described a tax reform proposal based on a thorough reconsideration of the purpose of taxes and distributed a new institute publication he co-authored, "Greening the Golden State: A Tax Reform for California's Future."

The environmental tax shift would involve establishing or increasing taxes on resource use, waste, pollution and some land, accompanied by an equal reduction in taxes on work, sales, profits and structures. Dr. Wolff suggested that this re-orientation would expand the options for local finance and reduce competition for retail dollars. It also could reward regional cooperation, de-incentivize sprawl, resource use and resource waste that increase the cost of local services. He also offered that it could make property tax reform politically feasible.

Dr. Wolff then got more specific, laying out three scenarios. The first was an energy and transportation tax shift that would increase the gasoline tax and revoke the sales tax exemption for gas, electricity, water, steam and heat. Second was a resources and pollution tax shift, taxing the carbon content of fuels, water, solid waste, fertilizer, pesticide and lime. Third was a property tax shift, taxing structures less and buildable land more.

Wolff noted that there are arguments against these kinds of shifts. For example, environmental taxes are perceived as regressive, hurting low-income taxpayers disproportionately. Dr. Wolff argued that controls could be placed on the tax to provide relief to low-income people who tend to use fewer resources than the wealthy anyway.

Another he cited was the oft-heard argument that new taxes will automatically harm the economy. Dr. Wolff responded that the revenue recycling represented by tax shifts would offset the impacts of the new taxes and possibly even improve the economy. Finally he noted another common complaint, that a new tax system would be too complicated. "Compared to what?" was the Doctor's reply. "A new system could just as easily be simpler."

Dr. Wolff noted that these tax shift proposals spoke to several aspects of the Commission's draft Mission and Problem Statement. He went on to say that the taxes proposed for increase were on commodities that currently are inexpensive for individuals but costly for society as a whole. He said the proposal advocated labeling them as costly and making them more expensive for everyone. The shift of property taxes from structures to buildable land was intended to make it less lucrative to sit on vacant land in urban areas while over-building on the suburban fringe.

Commissioner Unz commented that the package of scenarios seemed complicated but that sometimes there is an inverse relationship to explaining complex ideas to voters.

Commissioner King lauded the proposals, calling them responsible and better than continuing to waste resources and play catch up by trying to fix problems after they're created. He said the increased gas taxes are not necessarily regressive, with high-mileage drivers being hit hardest, and high-mileage drivers tending to be middle class and up. Commissioner Ross disagreed, stating firmly that increasing the gas tax is regressive. Dr. Wolff reiterated his belief that the impact on low income persons could be moderated.

Commissioner Nathanson suggested that there could be problems with using increased taxes to reduce behaviors that generate a lot of revenues. Dr. Wolff said it is already well known that taxing work reduces work, so there still may be some point to addressing that situation since the benefit of a worker to society transcends how much he or she is paid. He added that the scenarios do portend some lost revenue as a result of discouraging behaviors, but the rates could be set to avoid taxing the behaviors out of existence. Additionally, most of these commodities are so much a part of the economy and society that eliminating them is unlikely.

Commissioner Unz said that between raising revenue and redirecting behavior he leaned toward revenue. Redirecting behavior can create a clash of people's priorities. In order to evaluate the priorities, some testing for the intensity of voters' beliefs needs to be added to testing for their superficial inclinations. Unz added that he felt these tax shift proposals probably would be best as subsets to other, more major issues in the fiscal reform hierarchy.

Commissioner King turned back to the value of changing behavior, stating that the questions should be how and how much? He opined that using the tax system to reduce problems made it less necessary to consider using regulation to do so. He added that the fear of regressivity gets in the way of changing the high-consumption behavior of high-income persons, noting that the top 20% of earners use 40% of the resources, while the bottom 20% use 7-8%.

King went on to raise the question of how to divide the equity issue from the consumption issue, underscoring Dr. Wolff's assertion that there are ways to protect or subsidize those who need help instead of discounting commodities for, or subsidizing, everybody to protect the poor. Commissioner Davis concluded the discussion by adding her belief that the equity issue is key.

Commission Chair Abel then reminded the Commission that the next meeting was scheduled for Wednesday, July 28 in Ontario. The meeting was then adjourned at approximately 2:45 p.m.


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