As Conservatives play games with the former President's legacy, what would Ronald Reagan do in today's California?
I probably wouldn't have known it was "Reagan Day" but for the helpful tweets of @GeorgeRunner. The former legislator and current member of the Board of Equalization isn't really much of a tweeter, but on occasion he gives us such helpful words as "Happy Reagan Day!" after a few weeks of silence other than an announcement of his "e-newsletter." (By the way, if you call it an "e-newsletter," you are doing it wrong.)
Anyway, I thought I would take a moment to remind Mr. Runner and his #tcot friends about a few facts of the Gipper's tenure here in California. In a blog post, Bruce Bartlett, a Reagan domestic policy adviser, points out some of the false tax mythology:
Reagan's record on raising taxes began almost the moment he entered politics. Elected governor of California in 1966, he inherited a large budget deficit from his predecessor, Pat Brown. Although a conservative, dedicated to shrinking government, Reagan nevertheless found the magnitude of spending cuts that would have been necessary in 1967 to be beyond reach. This led him to endorse a $1 billion per year tax increase, equivalent to a $17 billion tax increase today - an enormous sum equal to a third of state revenues at that time. Journalist Lou Cannon recounts the circumstances:
"No amount of budget reductions, even if they had been politically palatable, could have balanced California's budget in 1967. The cornerstone of Governor Reagan's economic program was not the ballyhooed budget reductions but a sweeping tax package four times larger than the previous record California tax increase obtained by Governor Brown in 1959. Reagan's proposal had the distinction of being the largest tax hike ever proposed by any governor in the history of the United States."1] ([CG&G Feb 2011)
Let's stop with all the beatification and think about what really happened 45 years ago, and what is happening now. Like Reagan, Gov. Brown inherited a big deficit from his predecessor. Schwarzenegger's mish-mash of policies left the state without direction and with a huge deficit to show for it. Brown the Younger in his third time has a similarly daunting challenge as he did in 1978 after Prop 13 and as Reagan did in 1978. And like Reagan, he understands the impracticality of a cuts-only budget solution. And the tax increases that Brown is proposing today is less than half of the Reagan 1967 tax increases.
Runner and his fellow Republicans need to really take a deep look about their presidential saint and how he was able to objectively look at a situation and be more than ideologically dogmatic. Perhaps then we could really govern the state, and the GOP could return to relevance.
While tax season is gearing up, the state government is now running low on cash reserves. Controller John Chiang announced today that without payment delays and other tactics, the state will run out of cash in March:
California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today.
The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.
But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on. (SacBee)
To some extent this happens every year. Last year we had to borrow $10B to tide us over until tax revenues came in. And heck, Chiang thinks this year will only be $5.4billion. The world is getting better, hooray.
Unfortunately, with the continuing high demands on state services, this is really to be expected. And, Chiang, as he has always done, will have to find a way to balance the state's checkbook. Fun job, isn't it?
While Brown works to cobble together a centrist coalition, the corpse of Howard Jarvis speaks.
by Brian Leubitz
Jerry Brown is putting together quite the interesting coalition for his tax revenue measure. He's got some labor support, of course, but he's been claiming support from some large companies that usually go by "Big" and followed by the name of some industry. He's got some Big Oil, some Big Healthcare, yada, yada.
Hearing this, the corpse of Howard Jarvis was none too pleased. So, they've gone ahead and begged their Big Business friends to resist Jerry Brown's "cajoling."
"We know that Governor Brown, just through the power of his office alone, can cajole and perhaps even threaten vulnerable businesses," the groups said in an open letter. "It is therefore not lost on us that, under certain circumstances, modest support to help the governor place his measure on the ballot might be viewed a lesser of two evils or, more likely, as an insurance payment. However, on behalf of citizen taxpayers and the small business community, we appeal to your sense of doing what is right for all of California." (SacBee)
This really is quite remarkable. Though HJTA didn't exactly get along with Gov. Schwarzenegger, they never really went this far with him. By this far, I mean insinuating that Brown is threatening companies in order to solicit funding for his revenue measure. Not that Arnold ever did that, because, special interests had no power on him. He could resist them with his massive musculature. Until he couldn't.
But this is more a sign of desperation than anything else. If Brown is able to pull significant resources and support from some of the traditional funders of anti-tax campaign, it will be an exceedingly difficult fall campaign for HJTA and its allies. Because you know you are doing well when you try to quote Benjamin Franklin about hanging together or hanging separately. (I say try because it is quite possible that Franklin didn't actually come up with the phrase.) The quote is even more out of touch considering the desperate state of many of Californians most needy who have been devastated by the continuous cuts to services.
California voters are against cuts, mixed on taxes.
by Brian Leubitz
When the Republican realized that they could make some electoral gains from becoming the "Second Santa"with their tax cuts, they knew they were on to something. They didn't have to be the bad guys promoting spending cuts, and their tax cuts would somehow net just as much revenue because the magic "Laffer curve" would make everything better. And if it didn't work, well, the Democrats would have to cut spending and do the dirty work.
And, unsurprisingly, it worked. It has clearly worked in California, where Prop 13 and its anti-tax brethren have wreaked havoc on the state. For a few decades we were able to hide much of this through some huge bubbles and creative accounting, but that is a thing of the past. And so we have a huge deficit, a dysfunctional tax system, and a government that only allows cuts. What's a Republican to do to keep up his role as a second santa?
Well, blame it all on "waste, fraud, and abuse." It's a simple lie that, when repeated enough, becomes mantra to the media and, eventually, the general public. Take the latest PPIC poll and the latest finding:
Most Californians (59% adults, 55% likely voters) believe state government could cut spending and still provide the same level of services.
"There remains a strong belief that the state government could spend less and provide the same services even as Californians notice local service reductions from state spending cuts and show early support for a tax increase," says Mark Baldassare, PPIC president and CEO. (PPIC)
When the budget first got bad a few years back, perhaps there was a bit of fat to trim around the budget. Some unnecessary expenditures here and an unsuccessful program there. Not enough to fix the budget, but a few billion could be saved without fundamentally changing the role of government.
Those days are gone. Cuts to government expenditures mean direct cuts to services. There is simply no way to provide the same level of services for an ever decreasing amount of money. Go take a look at your local government offices and then compare it to the offices of your local bank corporate office. There are no fancy waterfalls and lavish breakrooms offering wide selections of Odwalla and Rice Krispies, there are just a dwindling level of state employees working ever harder to keep up. Teachers are spending large chunks of their paychecks to provide supplies for their classrooms and their students. Cuts to CalFire put firefighters in very real danger and mean more damage to California homes.
And yet, a strong majority of Californians are living in a world where we can somehow make painless cuts? Do they know of any of these painless cuts? Do the Republicans? Have they ever presented any of these so-called painless cuts?
But while 40 percent of adults and likely voters prefer closing the state's budget gap with a mix of spending cuts and tax increases-the approach Brown has proposed-similar proportions (35% adults, 41% likely voters) prefer closing it mainly through spending cuts. That being said, when read a summary, 72 percent of adults and 68 percent of likely voters favor Brown's initiative proposal.
Interestingly, the PPIC data also shows much stronger support for raising the highest income tax bracket(74% adults, 68% likely voters) than the sales tax. The sales tax is opposed by 69% of adults, 64% of likely voters. That particular question raises the specter of competing tax measures, the "Kardashian" tax and Brown's own measure. There is still a lot of time before signatures are due, and Brown has been working to shut down any other revenue measure. Whether he is successful or not will still take a while to know, but may end up dramatically changing the odds of his own measure.
While there have been efforts at public education on the budget by state politicians, it is a monstrous task, especially when there are players on the other side actively promoting misinformation. But, at every opportunity, progressives must be sure to emphasize the point that waste, fraud, and abuse is not an answer to all of our budget woes and to explain the real budget situation.
The Governor's line was pretty much as expected. He is planning on making some rather grievous cuts, but feels that we need some revenues to balance out the system. He promoted his measure and spoke of the temporary nature of the increases. I would think that temporary is a word that you will be hearing many times as we head to November.
2) HSR
Governor Brown has always been a supporter of HSR, and the recent troubles have done nothing to dissuade him that now is the right time to start building. The state will be putting up $2B for the first segment, which the Governor calls a good deal no matter what else is built. However, he went through the old quote book to come up with some good fodder for why we need HSR:
Critics of the high-speed rail project abound as they often do when something of this magnitude is proposed. During the 1930's, The Central Valley Water Project was called a "fantastic dream" that "will not work." The Master Plan for the Interstate Highway System in 1939 was derided as "new Deal jitterbug economics." In 1966, then Mayor Johnson of Berkeley called BART a "billion dollar potential fiasco." Similarly, the Panama Canal was for years thought to be impractical and Benjamin Disraeli himself said of the Suez Canal: "totally impossible to be carried out." The critics were wrong then and they're wrong now.
3) Education
Brown has been something of critic recently of the overabundant testing scheme in place under NCLB. Today was no different:
In California we have detailed state standards and lots of tests. Unfortunately, the resulting data is not provided until after the school year is over. Even today, the ranking of schools based on tests taken in April and May of 2011 is not available. I believe it is time to reduce the number of tests and get the results to teachers, principals and superintendents in weeks, not months. With timely data, principals and superintendents can better mentor and guide teachers as well as make sound evaluations of their performance. I also believe we need a qualitative system of assessments, such as a site visitation program where each classroom is visited, observed and evaluated. I will work with the State Board of Education to develop this proposal.
We'll see what becomes of this, but reducing testing won't make the Arne Duncan and the Dept of Education happy. However, it is the right choice for California. We spend too much time teaching to tests in what is becoming an ever-shorter school year.
You'll be able to watch a replay of the speech soon, I'll post a link to that when I get it.
First, let me apologize for not "going dark" today, but since the state of the state is today, I hope the "Stop Censorship" logo on the front page will clearly state my opposition to SOPA/PIPA. Hey, if it works for Google, right?
Anyway, in a few minutes, the Governor will be giving his state of the state speech. The Republicans have already "responded" to the Speech on the intertubes, but apparently they put those behind a password until the speech to complete the illusion or something. Not to defend them on this, but to most Capitol watchers, the meat of the speech is not much of a mystery.
The governor will outline how the economy of the state is improving, which it is, but at a rate that has not kept up with the state's demand for services from an already slashed budget. In order to combat that, he is going to ask the people of California to approve his revenue measure that will temporarily increase the sales tax by half a cent and levy a higher tax on upper income earners.
His budget already takes this measure into account, basically providing two alternatives. One that attempts to preserve K12 funding while still continuing the slash and burn of our social safety net. The other budget, which assumes no additional revenue, cuts billions of dollars from K12 and would likely mean big teacher layoffs and a still shorter school year.
Dan Schnur and other Republicans are calling this a ransom note from the Governor. But as Brown said, that's where the money is. If we don't have money, we can't pay for education. The facts are there, we need additional revenue.
Decision of Nicholas Berggruen's good government committee means one less possible revenue measure
This morning, CalBuzz released polling data showing the revenue measure of the Think Long committee to be trailing two other measures. CalBuzz posited that they would probably just go along with Brown's when push comes to shove. And, well, I guess the push came quickly, as this afternoon they just announced that they won't be pursuing their measure for the time being.
Therefore, we have decided to proceed as follows:
1) Continue communicating the necessity and benefits of the Tax and Revenue Reform Plan and engage a diverse range of stakeholders, with the goal of releasing draft ballot-measure language for comprehensive public and fiscal review during 2012, for the purpose of filing the strongest-possible measure for the November 2014 ballot.
2) In the meantime, a high-turnout election is a terrible thing to waste. California voters deserve the opportunity in 2012 to begin the long process of reforming state government. Therefore, in the coming days, we will be announcing our intention to partner with other organizations by generously supporting one or more reform measures that have already been filed for the 2012 elections, consistent with our Blueprint.
My guess would be that Berggruen will write a check to Brown's campaign and then participate in the gentle nudging of the other measures to the side.
New Poll shows Millionaire tax fares best, while Brown is forced to re-file initiative
by Brian Leubitz
Not an entirely good news day for Jerry Brown's attempt to get some revenue in the system. First, he is forced to refile his measure because of drafting errors:
Gov. Jerry Brown is taking a mulligan, tripped up by a typographical error and forced to re-file his ballot initiative to raise taxes.
The Democratic governor on Friday filed paperwork with the state for "The Schools and Local Public Safety Protection Act of 2012- ver. 2." The measure is identical to one Brown filed in December, the governor said in a filing with the attorney general's office, "except that we have corrected a typographical error that resulted in two numbers being transposed."(SacBee)
While this is a bit of annoyance for his efforts to get the measure onto the signature gathering process, his team has allowed plenty of time. I can't imagine there will be any major issues caused by the re-filing.
The other big news comes from a leaked poll from the center-right Think Long Committee (funded by rich dude Nicholas Berggruen). The results of a seemingly well-considered scientific poll, just published by CalBuzz, show that the CFT/Courage Campaign "Millionaire's Tax" leads the pack at a 70/30 split. Brown's package is ahead by 62-37, and Molly Munger's taxes for education just above water at 51-45. Think Long's own proposal to extend the sales tax to service was ahead 57-30.
I would have to agree with the Buzzers sentiment that Think Long would probably defer to Brown eventually, especially armed with these numbers. As I mentioned before about Molly Munger, she is a bit of a wild card. Whether she intends to move forward on her income tax increase for education will play an important role in the fall campaign for these measures.
The CFT/Courage Campaign measure has some broad grassroots support, and has received some positive media attention. However, whether the progressive coalition can come up with enough money to get it on the ballot is an open question.
Illinois slips below California in Moody's credit ratings
by Brian Leubitz
Sometimes you just have to celebrate small, even microscopically small achievements. I think this would be one of those small ones:
After being stuck in the ratings basement since 2009, California's credit rating now ranks better than Illinois, according to Moody's Investors Service. Illinois was slapped with an A2 rating last week, worse than California's A1. Moody's penalized Illinois for unresolved pension liabilities and delayed payments. (SacBee)
Hooray, we're #49 in one of the three major credit ratings. Of course, much of this discussion is baloney for a number of reasons. As Robert pointed out in 2010, we actually have a much lower debt to GDP ratio than any of the European countries of concern. It is currently hovering around the 5% mark, hardly crisis levels.
And then there is the underlying guarantee enshrined in our Constitution. As Treasurer Lockyer wrote in the LA Times:
California has never failed to make its bond payments on time and in full, not even during the Depression. And there is no chance we will smudge that pristine record.
Payment of debt service is constitutionally protected, with bond payments required even when the state is operating without a budget. Debt service has second call on general fund dollars, right behind education. Under the California Constitution, making sure bond investors get their money is a higher priority than providing healthcare to kids, protecting the environment and keeping our communities safe.(LA Times)
Lower than expected revenues and higher expenditures create additional budget pressure
by Brian Leubitz
These are not exactly the figures that the Governor wanted to see right now: Disbursements exceeded projections by $2.65 Billion and revenue was $165 million below the Governor's latest estimate from his budget proposal last week. That is $1.4 bil below the most recently passed budget. All in all, some nasty numbers.
"While we saw positive numbers in November, December's totals failed to meet even the latest revenue projections," said Chiang. "Coupled with higher spending tied to unrealized cost savings, these latest revenue figures create growing concern that legislative action may be needed in the near future to ensure that the State can meet its payment obligations.
In case you were asleep for the past few years, we have a revenue problem with our budget. Namely, we don't have enough cash coming in to pay for our state's priorities. Gov. Brown is hoping to clear the field for his own measure, but it seems he has a lot of work to do on that front judging from the news of the day.
First, Molly Munger dropped half a million dollars on her own measure that aims to raise $10 billion for schools. Her measure raises the entire tax structure in a progressive fashion. You can read more here, but this is the type of measure that progressives would ordinarily support. However, given the need for budget flexibility, there will be substantial pressure on this measure to get out of the way.
However, Molly Munger is no lightweight. She's a veteran civil rights litigator who also happens to be the daughter of Warren Buffet's longtime business partner, Charles Munger. Her brother, Charles Munger, Jr, spent a bunch of money ($12mil) on Prop 20 to get Congressional redistricting into the commission. Molly Munger has not indicated how deep her pockets on this one will go, but if she's willing to put up $500K, will she drop the other million or two to get it on the ballot? As Peter Schrag has said, shepherding this thing through the whole process will be quite the challenge for Ms. Munger.
The other big news today was the joint LAO/Dept. of Finance estimation of the Governor's proposed revenue measure. Suffice it to say there are a few problems:
The Democratic governor is counting on a voter-approved tax increase on sales and the wealthy to generate $6.9 billion for the 2012-13 budget. But the nonpartisan Legislative Analyst's Office says Brown's plan would raise only $4.8 billion in the first budget cycle.
The Analyst's Office and Department of Finance included their separate projections in a joint letter to Attorney General Kamala Harris that is required for ballot preparation. (SacBee)
In other words, more uncertainty for a Capitol building that is rife with it now. Of course, trying to project the economy right now is somewhere between ridiculously hard and impossible right now, but the $2.1 billion gap is larger than the Gov. would have liked to see right now. We'll have to see what kind of contingency plans the governor makes for this extra whole that he now will have to make up.
Might we see "Return of the Triggers"? If the Governor thinks that the $6.9 estimate is worth gambling on, the situation ends up being remarkably similar to where we found ourselves last year, waiting on cash to come in. One would hope that the triggers don't become a regular feature of our budget cycle, but it might be, once again, the easiest way out of a box.
Or, you know, some other random number will pop out of the sky in a few days and the whole scenario will change. Heisenberg pretty much rules Sacramento these days.
Top 2 Creates Interesting Scenarios Within Republican Assembly Caucus
by Brian Leubitz
The headline itself sounds like insanity. But with only a month until candidate filing opens it is looking increasingly like Republicans may realize they have to choose between keeping a few RINO pets or face extinction.
We all know the situation in the Senate, where Republicans are pinning their hopes of keeping Democrats below 2/3rds on a handful of seats along the Central Coast. They are so worried they have launched an expensive referendum challenge in hopes of getting more favorable lines from the Supreme Court. Members of their Caucus must think they are in trouble as they resemble rats on the proverbial ship with both Senators Blakeslee and Strickland announcing they will not be running for re-election.
The Assembly is more interesting. Most analysts believe that Democrats cannot reach two-thirds in that house in 2012. But looking at the Republican frontrunners they may not have to. In AD 77 there is Brian Maienschein, a former San Diego City Council member who is well liked by local labor and who the Flashreport had labeled as too moderate to be considered a real Republican.
In AD 61 they have Bill Batey. Besides being a Moreno Valley City Councilmember, this guy is pro-choice, fine with gay marriage and won't sign the no-tax pledge. And yes, he says he is a Republican.
In AD 8 they have Peter Tateishi who is a by-the-book Republican. But leadership is so worried about his ability to win the seat they have been quietly encouraging local developer Jon Bagetelos to run. Why quietly? Because among his moderate credentials, Bagetelos is a major backer of Sacramento's Democratic mayor Kevin Johnson. Bagatelos lost an Assembly race once before to a conservative Republican and this time is trying to quietly set himself up before the tea party people figure out who he really is.
Then you can throw sitting Assemblymember Jeff Gorrell in the mix. The only reason he hasn't been branded a RINO yet is that he hasn't had the chance to vote due to an extended military deployment to Afghanistan. But once he is back and if he has some other moderate voices to give him cover, expect Gorell to go up on votes for taxes, labor, choice and marriage equality.
So unlike the Senate where Republicans are putting up a vigorous fight, if something doesn't change by the time candidate filing closes Assembly Republicans may simply hand Democrats the two-thirds votes we need to advance our agenda no matter what happens in November. Where is Republican leader Connie Conway? Are the conservative members of her Caucus giving her a pass because they would like to remain at least sort-of-relevant? Or are they asleep at the wheel as she pulls the wool over their eyes? Given Assembly Republicans penchant for dumping their leaders, I guess we will know soon enough.
Cuts would deal with triggered cuts and $13B 18 month deficit
by Brian Leubitz
What some are calling a "ransom note" others call the terrible truth. Jerry Brown's budget proposal sets a dark scenario for the state. And yet, somehow we have gotten to the point that a dystopic future with three less school weeks is somehow optimistic.
Gov. Jerry Brown unveiled his new budget plan, calling for a painful $4.8-billion cut in public school funds if voters reject a proposed tax hike that he hopes to put on the ballot in November.
Despite the possible reduction - the equivalent of slashing three weeks from the school year - the spending blueprint Brown released Thursday is a relatively optimistic document. It assumes he will have to close a $9.2-billion deficit, a vast improvement over last year's $26-billion gap.
Half of the deficit would be wiped out through the temporary half-cent sales-tax hike and increased levies on the wealthy that Brown wants voters to approve - or by the schools cuts. The remainder would be eliminated with reductions in welfare, Medi-Cal and other programs. (LA Times)
The plan calls for cutting three thousand state workers at a time when jobs are already scarce. It calls for additional Medi-Cal cuts, which frankly, I didn't think possible and might end up in court. And at this point our welfare system is essentially dead. So, optimism abounds.
"It's the most expensive ransom note in California political history," Dan Schnur, a former aide to Republican Governor Pete Wilson and now director of the Jesse M. Unruh Institute of Politics at the University of Southern California in Los Angeles, said yesterday in a telephone interview.
Which is really rather rather funny because how often legislative Republicans have played the ransom game. Try doing a search on Calitics for ransom note, you get lots of results. Like this one from March with their 57 requests. Or this one from 2009, where Sen. Hollingsworth wanted to do Intuit's bidding and get rid of a tax simplification tool. The hits just keep on coming.
But here's the thing, education is 40% of the budget, and we can't pretend that we can keep making cuts forever without touching education. Call it whatever you want, but unless we get revenues, it ain't going to be pretty. Telling voters the truth isn't a ransom note.
If you care to look, it seems that the Sacramento press corps (all three to five of the hardy souls) have just written either a wrap up of 2011 or a preview of 2012. You basically get a few points with slightly different order depending on the writer(s), but here are a few points worth noting:
1) Jerry Brown is just Jerry Brown
That isn't to say he's any worse than any other governor that we could have ended up with, but that he's not some super hero who can ride in to save the day. Even with all of his experience, he can't magically do Jedi Mind Tricks on the Republicans to somehow be reasonable. I think there was a lot of hope this time last year that Jerry Brown, with all of his experience a generation ago, would be the adult in the room for the bunch of children in the legislature. But I suppose sometimes the delinquents win.
2) 2012 will be a make or break year for Brown and California generally. Or not.
This is sort of a funny one. Because, really, the same thing has been said about our situation for the last four years or so. Really, ever since the worst of the budget mess began, we have been playing with fire. So, in that sense, yes, every year is really important, but somehow we've been able to find some way to make the cuts, cuts, cuts and more cuts into our budget to avoid any real decision-making. Yes, those cuts are a real decision, but more in the passive sense. We have left the decisions for a few whims of whomever gets the last word at the dais of the respective budget committees, or whomever manages to catch the leaders at an opportune moment.
They say that budgets are a statement of our priorities. But I hope, for all of our sakes, that isn't true of the past five years. Is it really our priority to make the school year shorter? Or to abandon our sick and elderly? Or to cut fire protection services? It is hardly any robust statement of priority when there is a gun at your head. Our system is so skewed towards one particular priority, taxes, that we have lost all sense of everything else.
Perhaps this is the year that changes that, but from the statements of Sen. Steinberg and Spkr Perez, I wouldn't expect much from the Legislature. They seem content to wait back for the Novemeber election and to satisfy the budget deficit ($13B-ish) with cuts alone until then.
"My view is you always have an open door and outstretched hand, but I don't think we do anything as our main strategy that requires a two-thirds vote," Steinberg said. "We're gone down that path far too many times."(SacBee)
So, perhaps we'll see a fairly standard legislative year. Maybe something happens with pensions, but more likely, we are in a holding pattern until something is determined at the ballot box with a revenue measure of some sort in November.
3) New Districts and Top 2 Will Bring Changes to Composition of Legislature
At the very least, we will see something new here. There will, most certainly, be several Dem-on-Dem elections in November. Laura Richardson and Janice Hahn, Howard Berman and Brad Sherman seem destined for some expensive races. There may be a few Rep-on-Rep, but the numbers and costs will likely be far fewer. The thing is that there is usually enough Democratic support to get one Dem in a deep Red district top 2, but that isn't always the case in some of the Bluest seats. Or to flip that, the Deepest Blue is darker than the deepest red.
Now, as to the districts, well, there is still the question of the Senate district referendum. There is still no word as to whether it will qualify (but expect some sort of word within a few weeks as to whether they will need a full count verification). But, with the signatures out there, the sponsors of the referendum (GOP Senators for the most part) are trying to get some other map more to their liking. The Supreme Court will likely decide on that fairly soon as the SoS needs to prepare for the elections.
There is a very real chance that the Democrats get 2/3 in the Senate (and take away whatever power the Senate GOP caucus had), but it is extremely unlikely that the Assembly Dems are able to do the same. (Cali_girl_in_texas has the over/under at 50). I'm skeptical that situation would really bring all that much change. Democrats would just be paying more attention to the Assembly. Just a few different, slightly more radical, people in the position of blocking action.
Well, it's about time to get rolling into a new Legislative year, should be fun!
Another round of cuts is hardly worth celebrating, but Brown seems to have at least saved the 175 day school year.
K-12 school districts were at risk of losing as much $1.5 billion - the equivalent of seven instructional days - under the budget Brown and lawmakers enacted earlier this year. But they will face a smaller $79.6 million reduction in general funding. That should avert massive reductions in the school calendar or other drastic measures for most districts.
"It turns out the cuts are far less than they would have been," Brown said.
Districts will still face a $248 million elimination of school bus funding, however. Jill Wynns, president of the California School Boards Association, said districts will cut somewhere other than buses because they are mandated by federal law to provide transportation for students with disabilities.(SacBee)
Also getting big cuts? Higher education. UC, CSU, and the community college system all lose $100 million. Community College Chancellor Jack Scott has indicated that will mean a $10/unit fee increase for community colleges, and UC and CSU will likely see another round of fee hikes.
Director of Finance to hold meeting at noon regarding the "trigger cuts"
by Brian Leubitz
Today's the day. If you remember back to the disaster that was last year's budget there was a $4B mystery source of revenue that was basically a cross your fingers and hope real hard kind of thing. The legislature then asked the Controller (John Chiang), the Legislative Analyst (Mac Taylor) and the Director of Finance (Ana Matosantos) to track how much revenue was coming in, and then if that $4B did not come in, "pull the trigger" on cuts of up to that amount that were already determined.
Well, today is that day, and Matosantos, Brown (and formerly Schwarzenegger's) Director of Finance has to decide how much will be cut for the 2012 part of the current fiscal year. Don't expect much good news, as the Controller's office already released data indicating that we weren't going to hit that target. Oh...and we spent more than we projected.
After accounting for November revenues, total year-to-date general fund revenues are now behind the budget's estimates by $1 billion, but expenditures for the year are over projections by $1.95 billion. It turns out that during a bad economic period, people need more services, but in the current climate in Sacramento, getting the legislature to approve the revenues for those services is an impossible feat even for somebody with the experience of Jerry Brown.
And so we go to the people, I suppose. According to a new PPIC poll, Californians are not particularly interested in a cuts only budget.
A new poll shows 60 percent of California voters, weary of state spending cuts and unsettled by the prospect of more, are ready to support Gov. Jerry Brown's plan to raise taxes. ... When asked about those automatic spending reductions, part of the budget package signed last summer, a plurality of likely voters - 45 percent - say they would prefer a mix of spending cuts and tax increases to address the shortfall, according to the poll.
Brown, a Democrat, is seeking to raise the statewide sales tax a half-cent and increase income taxes on people who make $250,000 or more a year. He opened a campaign committee last week, and his political adviser, Steve Glazer, has started fundraising for the effort.(SacBee)
There is a long time between now and November 2012, and a lot of painful cuts remain no matter what happens at the ballot box. But as we continue this slow motion take-down of the California Dream, we'll need to consider what our values really are. Perhaps we really are a state that is only concerned about our present day self-interest, but I have higher expectations for Californians. We can, and will, break out of this viscous cycle of cuts.
I was going to make this post about the Governor's approval numbers, but he just made it a little bit more interesting by releasing an "Open Letter to the People of California." Quite auspicious sounding, but what it really is his revenue plan. Here's the meat of that plan:
My proposal is straightforward and fair. It proposes a temporary tax increase on the wealthy, a modest and temporary increase in the sales tax, and guarantees that the new revenues be spent only on education. Here are the details:
Millionaires and high-income earners will pay up to 2% higher income taxes for five years. No family making less than $500,000 a year will see their income taxes rise. In fact, fewer than 2% of California taxpayers will be affected by this increase.
There will be a temporary ½ cent increase in the sales tax. Even with this temporary increase, sales taxes will still be lower than what they were less than six months ago.
This initiative dedicates funding only to education and public safety--not on other programs that we simply cannot afford.
This initiative will not solve all of our fiscal problems. But it will stop further cuts to education and public safety.
This is basically what we have heard in the past, a hike on the highest earners along with a sales tax, and all of it dedicated to education and public safety. Red meat for both parties, a little tough on crime with a little teaching. Or, in other words, this package seems built from the ground up to win on the ballot. Polling numbers show broad opposition to additional education cuts, and without revenues, those are simply inevitable. While this package probably isn't exactly what we would draw up in a perfect world, the California system of government is anything but perfect. His language in this open letter is political-speak not intended for progressives. It is full of statements about how we can't afford programs (see the quote above) and how awesome it is that are spending levels are at percentages not seen since the seventies.
We could pick at the email, his talking points, and the specifics of the proposal. But Brown and his partners are building something that they think can win at the ballot, represent good policy in the long term, and help us out of the current budget crisis in the short term. It's not exactly an easy shot to wrap up those three objectives with a nice shiny ribbon.
And perhaps he has the juice to push the measure across the finish line. Today's Field Poll shows the Governor's approval ratings pretty much right at where he has been for most of his term, in the upper 40s. The current figure of 47% is down from 49% in September, but still within the margin of error of that survey. However, his disapprove numbers have continued to creep up as "undecideds" jump off the fence and create a 36% disapprove figure.
There are a number of reasons why Californians would begin to grow wary of the Governor, but the budget, as ever, looms large.
"The public is, I think, bracing itself for additional spending cuts, and that's never a good situation, either for the governor or a state Legislature," poll director Mark DiCamillo said.
With state revenue falling below projections, the Brown administration is expected this month to announce highly unpopular, automatic spending cuts in service areas including schools. Nearly two-thirds of Californians consider the trigger cuts, part of last summer's budget package, a bad idea, including majorities of Democrats, Republicans and independents, the poll says.(SacBee)
The trigger cuts were a device of sorts to get a budget done, and from discussions in Sacramento, not a whole lot of people liked them there either. But they enabled the Legislature to get enough votes from the two Democratic caucuses to pass the odious budget. However, as the majority budget rules don't include revenue, we are still faced with the same difficult situation as we had at the beginning of the year: convince a Republican to think beyond the four walls of his own career, or continued austerity. Both Democrat and Republican voters are far from excited on the triggers, but with revenues continuing to fall below projections, they are likely to be triggered early next year.
Brown's revenue proposal will help fill in many of those cuts, but won't kick in until the end of next year. It is far from ideal, but with a recalcitrant Republican caucus it is what we have. The measure is being submitted to the AG's office today and will be circulating with plenty of time to get it on the November ballot.
Read the full "Open Letter to the People of California" over the flip.
Asm. Anthony Portantino has had his run-ins with Assembly leadership. Many of them, some of which resulted in getting tossed in one of the so-called "doghouses" and getting his office budget cut. The spat got really nasty when the Rules Committee demanded a rather large cut from his office and accused him of overspending. Portantino then took it upon himself to release his budget records and demanded that the rest of the Assembly do the same.
That was a few months back, and since then the Senate has released most of their records but the Assembly is holding back. Perhaps it is part of the Portantino feud, or perhaps it is just to be consistent with years past. Nonetheless, a Sacramento judge issued a tentative ruling yesterday ordering the Assembly to release the records.
Earlier this year, Assembly administrators had claimed that the records were confidential under provisions in the Legislature Open Records Act that exempt "preliminary drafts, notes or legislative memoranda" and "correspondence of and to individual members of the Legislature and their staff."
On Thursday, Frawley said the Assembly "improperly withheld" the records and chided the lower-house for its "somewhat ironic" view of the open-records law, with legislative lawyers arguing for "a narrow interpretation that significantly restricts the public's right to inspect legislative records."
"The records requested by the news organizations indisputably contain information relating to the conduct of the public's business," Frawley wrote. "The records all reflect how Assembly money is budgeted and spent, which is critical to an understanding of the Legislature's operations."
The judge strongly rejected the Assembly's argument that the records qualified as confidential "correspondence" under the open-records law.(LA Times)
Tentative rulings are rarely changed, and the Assembly has apparently seen that it really isn't worth the PR hit to continue this fight, at least for now. Yesterday they announced that they won't be protesting the ruling at the hearing with the Judge. However, they can still appeal, but again that is hardly without risks. The longer this goes on, the more (negative) attention it gets. And with an approval rating hovering around 10%, that's really the last thing the Legislature needs.
While we might not get the records right away, expect to see them fairly soon. Heck, who knows, maybe some interesting information is hiding out in those budgets.
Governor aims to increase highest tax bracket and sales tax for a limited time
by Brian Leubitz
If nothing else, Gov. Brown is ambitious this go-round. While his pension plan is slowly simmering in the Legislature, he knows that we really can't continue to function with cuts-only budgets. With the impending decision by Director of Finance Ana Matosantos on whether to pull the triggers in the last budget deal, we are looking at billions more of holes in the budget to fill. (And at this point, the only question that is out there is how much of the triggers will be pulled.)
Brown has mentioned that he will be bringing something to the ballot in terms of revenue, but it seems that there is serious movement on it now. He's been meeting with labor and his supporters too work on a plan that they can agree to get on the November ballot.
In the latest proposed fix for California's fiscal crisis, Gov. Jerry Brown is expected to announce a multibillion-dollar tax initiative in the coming days, asking voters to raise levies on upper-income earners and increase the state's sales tax by half a cent.
The levies would expire at the end of 2016, said sources with direct knowledge of the plan. The governor's office has been fine-tuning the tax measure for weeks with its labor allies. It hopes to file language with the attorney general's office as early as Friday so it can start gathering the signatures needed to place the measure on the November 2012 ballot.(LA Times)
The plan would buy four-five years of time in order to both reset the budget and hope that the economy recovers. Over the past six months there have been a raft of proposals being discussed from various organizations, and the most sure way to losing on all of them is having more than one tax measure on the ballot. If this does hit the streets fairly soon as anticipated, other potential measures will probably die quietly.
Until we see the details on this measure, I'll reserve full judgment. I do not like the inclusion of sales taxes, one of the most regressive taxes, but they do seem to be the most likely to pass. Other than taxing the 1% that is. Expect further details by next week at the latest.
If you look up "tone deaf" in the dictionary right now, you might find a photo of Nicholas Berggruen. He's the billionaire investor who founded the "Think Long Committee for California" last fall to revive corporate friendly "reform" policies. In news that should shock nobody at all, their tax proposals involve shifting the burden away from the rich and corporations and onto what's left of the middle class. From Capitol Alert:
A coalition backed by some of the biggest names in California politics and a billionaire financier is readying for the ballot a sweeping overhaul of the Golden State's tax system....
Californians would pay sales tax on all services except health care and education starting in July 2013.
The tax hike would boost state revenues by about 11 percent starting in 2013-14. The money would help retire debt in the first year and later go toward K-12 schools, higher education and local governments.
The state would also simplify the personal income tax system in 2014, charging no tax on income up to $45,000 for joint filers; 2 percent on income between $45,000 and $95,000; and 7.5 percent on income above $95,000.
The state would eliminate all personal income tax deductions except those on mortgage interest, property taxes, charitable donations and research and development. The sales tax rate on goods would drop by half a percentage point.
On average, taxpayers at every income level would pay more due to the new service tax. Households with adjusted income below $20,000 would pay $71 more annually, though they may be eligible for a sales tax rebate.
The plan lowers the corporate tax rate from 8.84 percent to 7 percent. It also raises taxes on out-of-state firms by requiring them to pay based on their share of sales in California.
In short: corporate taxes go down, income taxes go down for everyone but especially for the rich, and the sales tax goes up (in fact if not in rate). The middle class - what's left of it, at least - would shoulder the burden of taxation in California even more than they already do.
The article itself is strangely written, as if Torey Van Oot and Kevin Yamamura agreed to obscure the true nature of the proposal by not describing how the personal tax rates change from the present day. Here's the current personal income tax rates for joint filers:
$96,058 and up: 9.3% (with a 1% surcharge for incomes over $1 million)
$76,008 to $96,058: 8%
$54,754 to $76,008: 6%
$34,692 to $54,754: 4%
$14,632 to $34,692: 2%
$14,632 and under: 0%
Under the Think Long plan, all the rates would go down, but the rich would see a big drop from 9.3% to 7.5%. And yet as the article notes, with the sales tax changes the overall impact would mean that everyone else pays more. Because the income tax would only kick in at $45,000 for joint filers, it's the middle class that gets hit hardest.
It should come as no surprise that a billionaire's proposal for California is to give himself and his wealthy friends a huge tax cut and screw everybody else in the process. I am not at all opposed to asking the middle-class to pay more, everyone is going to have to pay a bit more to reverse California's slide into the abyss. But that should be a progressive solution that includes asking the rich to pay a LOT more than they currently do, not asking them to pay less.
It's also rather stunning to see this proposal come out as Californians have begun taking to the streets to protest policies exactly like this that favor the 1% at the expense of the 99%. Berggruen and the members of the Think Long Committee that are giving him cover have either not paid any attention to the Occupy movement or do not think it has much influence.
Still, it is difficult to see how this proposal stands a chance of passage. Voters aren't stupid - they might like the income tax cuts, but will revolt at paying more sales tax, especially as they see the rich and corporations getting a big tax cut.
The proposal takes California in the wrong direction. There's no doubt the state is in crisis. College is becoming unaffordable. K-12 schools may have to cut a week off of the school year. Millions are without guaranteed health care. Unemployment is at 11.7%. To solve those crises, government needs to step in and rebuild the middle class by providing free college, by massively investing in K-12 schools, by providing free and universal health care to everyone, by directly hiring people who need work, and by building out a 21st century infrastructure that will save money by reducing dependence on oil.
Making that happen requires going after the wealth currently controlled by the 1%. Income tax rates on them need to go up - way up. Higher tax rates on the rich and on corporations will actually spur economic growth by rebuilding the middle class, giving people the space and support they need to innovate, create jobs, and repair their balance sheets.
If Berggruen wanted to actually do something to help California, he would take the $20 million he is pledging to spend on this shockingly regressive proposal and instead invest it in an initiative to raise taxes on the rich, on corporations, and to fix the state's unfair property tax system. Instead he's using it to help himself and his friends get even richer.
This proposal is worse than a joke - it's an insult. It should be denounced early and often.
As Conservatives play games with the former President's legacy, what would Ronald Reagan do in today's California?
