In another stunning blow to a reeling California Republican Party, Red County publisher Chip Hanlon was served with a harsh and detailed order by the SEC. The order alleges fraud and misrepresentation, with repeated failures to follow other orders to disclose hundreds of thousands of dollars in negative judgments. Hanlon's Delta Partners claimed over a billion dollars in assets under management, while the actual assets were below 25 million, and as low as nine million.
Red County grew from Matt Cunningham's local Red County blog in Orange County to be a major communication tool for Republicans, with a national edition, regional editions, and seven local versions just in California. The blog was considered important enough that Meg Whitman paid Red County $110,000 for Hanlon's services. Red County describes itself as among the most elite and powerful political websites in existence.
Hanlon is closely allied with existing Orange County Republicans like lobbyist and OCGOP chair Scott Baugh and lobbyist Curt Pringle. He has also been in step with rising leaders like Don Hansen in Huntington beach and Jim Righeimer in Costa Mesa.
Update:
As of this morning, still no comment at Red County, although Chip Hanlon's bio has disappeared into the memory hole. Flash Report is still strangely quiet. Surprisingly, the best mainstream story so far is at the Orange County Register, where the story came from excellent real estate reporter, Jon Lansner, instead of the sycophantic political writers.
Below the fold, read sections of the actual SEC order.
Do you remember the 2008 primary, when all of the nation's media was in love with talking about how California's Republicans were sooooo liberal. And remember how us Democrats here in California laughed at that notion? Well, here's some proof.
Some math/political nerds at the University of Chicago did some analysis of the two parties in each state Legislature and compared them with other states and the Congress. I'm clearly not doing the math of that justice, but you can find the full details at the author Boris Shor's blog. Apparently he has a paper coming out soon that will explain a lot more about how he got to these numbers.
But for a general explanation, left is liberal and right is conservative, with 0 being the base. As you can see California's legislative Dems are amongst the most liberal, and are about the same as several other states that you'd expect to see us tied with: New York and Washington, and some that you wouldn't Utah and Arizona. But to those who say that you'd expect California Republicans to be moderate: hear me now and believe me later: They are as wingnut as you get.
No other state is even close to our wingnut Republicans. They are waaaay to the right of even states like Georgia and Wyoming. No other state is really even close.
Some will blame this on districting, but I will instead point them to the simple fact that we Californians have self-sorted ourselves better than any other state. Democrats hang out in certain counties, and Republicans in others. And the Republican primary electorate consistently organizes around the most conservative candidate.
And so we get our right-wing Republicans in the Legislature and nothing actually gets done to help the state. Yay, us!
UPDATE: On a related note, the Republicans have now reached a new low in popularity across the nation.
In 2006, the Schwarzenegger campaign uncorked an ad almost immediately after the primaries showing Phil Angelides walking backwards, the assumption being that he would take the state backwards as well. One of the ads liberally quoted Angelides' rival for the Democratic nomination, Steve Westly, using the bruising primary against the winner. "What if Steve Westly was right?" the announcer says, after citing Westly's rhetoric in claiming that Angelides favored $10 billion in new taxes. Steve Westly wrote most of Arnold Schwarzenegger's early strategy and even his campaign spots, as Angelides was defined by his opponent swiftly.
Steve Poizner basically bestowed the same gift on eMeg Whitman over the weekend. The ads about Whitman's failure to register to vote for 28 years write themselves, but Poizner took the liberty of making the ad. If Republicans know how to do one thing well, it's go hard negative, and this ad will probably be very effective to the GOP primary audience. It will also be effective as a "here's what Republicans say about Meg Whitman" ad next year, should see prevail in the primary. Poizner actually reiterated his call for Whitman to drop out of the race "for the good of the party" over the weekend at the Republican convention in Indian Wells. The issue received major pickup throughout the media.
And Whitman did herself no favors at all with some of the worst damage control you'll see in politics, as she repeated like a mantra this line about how "there is no excuse for my voting record," completely avoiding any specifics about why. If she manages to win the primary, expect to hear this audio right through to next November. It's cringe-worthy.
I'm guessing the Republican Governor's Association just tried to pull back their invitation to Meg Whitman to come to any of their gala events.
This is terrible crisis management, of course. And it suggests that the general election would be no kinder on eMeg. But it's not like the split in the US Senate race, with serial non-voter Carlyfornia going up against wingnut conservative Chuck DeVore (The LA Times gets this wrong by trying to impose a blanket comparison). The Yacht Party grassroots has figured out that they have no candidate in the Republican primary, and regardless of who wins they probably won't be all that excited to work for the top of the ticket.
For activists such as Mike Spence, past president of the conservative California Republican Assembly, such centrist talk inspires unease following what they said was Gov. Arnold Schwarzenegger's betrayal of the Republican base.
Spence called the Republican governor a failure and blasted him for breaking his promises to conservatives by, among other things, approving the biggest tax increase in state history earlier this year. Schwarzenegger has also championed traditionally liberal causes such as Assembly Bill 32, which requires the state to reduce greenhouse-gas emissions by about 25 percent by 2020.
"After the governor, people are cautious about who they support," Spence said.
Of course, this could be true of the Democratic grassroots as well, depending on circumstances. I think the only certainty in next year's elections will be the low turnout, as a slice of both sides stay home for their own reasons. But the Yacht Party's cast of characters look particularly uninspiring.
Since it referenced me, let me start by shouting out to fellow Calitician Lucas O'Connor, writing on the front page of MyDD:
Since approximately the morning after election day in November, Dave Dayen has been writing over at Calitics about the dramatic Congressional pick-up opportunities in California that were missed in the Obama wave. Specifically, Obama carried 42 of California's 53 districts (I won't even begin right now to get into the state leg breakdown which is also a debacle), including eight districts held by Republicans in Congress. Well all of a sudden this week, the whole world is waking up to the Dayen gospel.
Not only is the current statewide Republican registration of 31% a historic low, but for the first time there is not a single congressional, state senate or assembly district that has a majority Republican registration.
Apparently Bob Mulholland sent out a press release waking up to these facts last week. Now, I'm not going to hate on Mulholland for finally getting with the program. But let's make ourselves clear - this was true in 2006 and 2008 as well, and yet the state party failed to capitalize, by their own admission. So it's going to take more than one press release to show a commitment. Republicans have obviously become repellent to the broad majority of Californians, and they're too busy trying to recall each other to notice. It's upsetting that we haven't used this unpopularity in the past two election cycles, and I hope that the CDP can catch up with the curve.
They can start with effective recruitment. John Garamendi, who spoke to Greg Lucas as if he's still a gubernatorial candidate but who by all accounts will be running for Congress, ought to be pushed to run in the 3rd District, where he is the largest landowner and where there is currently no viable candidate to beat Dan Lungren in a district that is trending Democratic, instead of the 10th, where there are multiple viable candidates. Recruitment is an often-unremarked-upon but crucial element to winning elections.
Speaking of which...
• CA-04: This CapAlert piece certainly makes it sound like Charlie Brown might challenge Tom McClintock once again.
At the Jefferson-Jackson dinner at the Blue Goose Fruit Shed in Loomis, Brown and his wife, Jan, were honored as photographs flashed of Brown and supporters during four years of campaigning. The production was accompanied by songs from Bruce Springsteen's "No Surrender" to Neil Young's "Long May You Run."
And then Brown stirred huge cheers when he hinted he might have the stamina for one more try for Congress in 2010.
"We'll see what happens over the next few months - and whether you'll have the opportunity to get into any pictures again," Brown said.
In an interview, Brown said he is still mulling his prospects. He said he expects to decide by this fall.
We're big fans of Charlie here at Calitics, and should he run again we'll stand with him. McClintock would have the power of incumbency and a red-leaning district but the rumblings I'm hearing out of there signal that residents and local pols aren't all that enthused by the new Congressman's performance.
• CA-32: The LA Times weighs in with an overview of the 32nd race to replace Labor Secretary Hilda Solis set for May 19. They list Judy Chu and Gil Cedillo as the front-runners (though Emanuel Pleitez is profiled) and suggest that the race is a harbinger of the changing, minority-majority face of Southern California politics. They also mention the Betty Tom Chu controversy, as well as some allegations on the Cedillo side.
Judy Chu supporters suspect that Republican Betty Tom Chu, a Monterey Park councilwoman and a political opponent of Judy Chu, entered the race to confuse voters and harm the chances of her distant relative by marriage. Tom Chu said last week she did not have time to discuss her candidacy, but earlier told the San Gabriel Valley Tribune that she is running because she could not support any of the other candidates and wanted to offer voters an alternative.
Apparently motivated by concerns that the large number of Latino candidates in the race would split the vote in that group and give Judy Chu the edge, there also were signs of jockeying.
Democratic candidate Francisco Alonso, a former mayor of Monterey Park, and a campaign official for Democratic actor/filmmaker Stefan "Contreras" Lysenko each said Cedillo called them shortly before filing closed and urged them to drop out. A Cedillo spokesman said the state senator was merely inviting the others to "work together" with him and did not intend to discourage them from running.
Over the weekend, Cedillo won the endorsement of the LA County Young Democrats, while Chu garnered the endorsement of the state Democratic Party.
I'm a but surprised that they rejected everything on the ballot, but I think the bare fact of tax increases in the budget has colored their opinion on all the measures (which is fine with me, if they want to look a gift horse in the mouth).
SACRAMENTO - The California Republican Party on Saturday voted to oppose all six ballot proposals in next month's special election, saying voters must reject higher taxes.
The vote by the party's executive committee followed a lively, hour-long debate that focused on Proposition 1A. The measure would create a state spending cap and bolster California's rainy day fund, two concepts Republicans have long promoted.
But those provisions were overshadowed by triggers in the measure that would extend the sales and income taxes adopted by the state Legislature.
Party chairman Ron Nehring said the vote symbolized his members' dissatisfaction with the entire budget deal struck by the governor and lawmakers in February to close the state's budget deficit, then projected to be nearly $42 billion.
There's a serious divide and a lack of trust between the electeds and the grassroots on both sides of the aisle. And the urgent pleas to pass the initiatives just makes things worse, in my opinion, because defending them inevitably sends you down some blind alleys. Check out Speaker Bass' attempt, which includes one glaring dichotomy.
"If we don't pass these measures, when we begin to negotiate next year's budget, we will have a $14 billion hole instead of an $8 billion hole," Bass said.
People have become confused, she said, over critics' statements that measures 1D and 1E will take money from children and mental health programs funded through Props. 10 and 63. Bass said the new measures will tap into the prior propositions' reserve funds and divert the money into very same programs that the propositions were intended to serve: core children and mental health programs.
"If these measure fail, we will have to cut children and mental health programs," Bass said. "We are not using all the reserves but some of that money, which will otherwise just sit in the reserves."
Really, Madame Speaker? Wouldn't Prop. 1A divert billions to "just sit in the reserves"? Are you not in favor of that now, because I get confused. How can you coherently argue against the value of cash reserves in programs with stable revenue sources and for the value of cash reserves in the unstable revenue-sourced overall budget? The more the leadership talks about these ballot measures, the more they trip themselves up.
(Registration is an important feature as we look for opportunities to get to 2/3. Thanks for organizing all this data! - promoted by Brian Leubitz)
The Secretary of State has just published new voter registration statistics. Compared to the February 10 update, there were 115,300 fewer voters in California on March 20--46,445 fewer Democrats, 41,538 fewer Republicans and 23,295 fewer decline-to-states. Democrats now make up 0.03 percent more of the electorate than they did in February (now 44.55%), while Republicans make up 0.03 percent less (now 31.10%) and Decline to States have remained virtually unchanged (at 19.99%).
At the county level, Republicans have lost ground to Democrats in 36 counties, and gained on Democrats in 21. One county, Napa, has remained perfectly unchanged. The Republican registration advantage in Orange County, for example, has shrunk from 12.21 percent in February to 11.84 percent now. Similar leftward shifts (percentage-wise) are occurring in San Mateo, Alpine, Yolo, Sierra, Tuolumne, San Bernardino, San Francisco and Imperial counties. The only comparable Republican gains are in Kings and Madera counties. If the Orange County rate of Democratic relative growth continues (it most certainly won't), Democrats will outnumber Republicans in Orange county by 2012.
In the State Senate, there are 14 districts where the incumbent party has been losing its relative share of voters since February--nine currently held by Republicans (SD-01, SD-12, SD-14, SD-15, SD-17, SD-18, SD-29, SD-33, SD-35) and five by Democrats (SD-05, SD-16, SD-25, SD-26, SD-39). Only SD-12, SD-15 and SD-17 are competitive. All three of those are held by Republicans and all three already have Democratic registration majorities. SD-12 is the only one of these seats that is up in 2010 and is almost certainly the only 2010 Senate race that will be even close to competitive (Democrats have a 14.04 percent registration edge). SD-04 is theoretically possible to flip if we get a very, very strong Democrat (Republicans have an 11.05 percent registration advantage); but we'd probably wind up with a Democrat like Bob Nelson or Evan Bayh who'd vote against the budget anyway. Our best chance at 2/3 anytime soon is for Maldo or Strickland to quit.
CapAlert gets around to covering the issue we covered on Wednesday - how legislative vacancies on the Democratic side embolden the Yacht Party and make it more impossible to pass a decent budget. What amazes me is that they get a Yacht Party leader to go on the record about it:
To this day, Ridley-Thomas' seat remains unfilled. Democratic Assemblyman Curren Price of Inglewood finished first in the primary last week and is expected to take his place in the upper house after a May 19 runoff.
Of course, that will create a vacancy in the Assembly, which will likely last until early October by virtue of the state's election-scheduling laws.
"Every vote we pick up, it is exponential for the Republicans," said Assembly GOP leader Mike Villines. "It gives us a lot of ability to move the debate and navigate to issues that we care about."
This is Yacht Party logic - they actually think a vacancy is a PICK-UP for them. It's the logic of an extortionist. No sane person other than someone trying to exploit would agree that a less-than-full legislature for years on end makes sense from a public policy standpoint. That's why we could significantly reduce the time of the merry go-round AND save millions of dollars in special election costs by instituting Instant Runoff Voting for special election seats.
But the Yacht Party has no intention of fixing the policy. They want to laugh as they see legislators walk out the door.
In Northern California, Rep. Ellen Tauscher has accepted an Obama post in the state department, though still faces the confirmation process.
Sen. Mark DeSaulnier, D-Concord, has already declared for the seat, and Assemblywoman Joan Buchanan, D-Alamo, is said to be considering a run.
"Joan Buchanan should run for Congress," said a laughing Villines, hoping for yet another vacancy in his house. "She'd be an excellent congresswoman."
"It creates a better dynamic than having the ability of the liberal-controlled Legislature to just steamroll its own desires," Villines said.
A better dynamic in the sense of being a fake dynamic, where the elected will of the voters is not reflected in the ability of the legislature. I can't think of a better argument to repeal two-thirds than these two quotes.
The latest report of registration, current up to February 2010, shows that voters have continued to register Democratic in higher numbers even since the general election. There are now 17.3 million registered voters, 74.4% of all eligible adults, and Democrats have a 2.32 million vote advantage over Republicans. By the percentages, the state consists of 44.52% Democrats, 31.14% Republicans, and 19.99% decline to state, with smaller parties rounding out the rest of the voters.
2010 is the last year before a new census and new district lines, so the district-level numbers only apply for the next election cycle. Still, a close reading makes clear where Democrats should be focusing their registration efforts and resources for the next year.
In Congress, there are two Republican-held seats where Republicans hold less than 40% of the registration share, seen as a key dividing line. Those are Dan Lungren's CA-03 (39.7% Republican-37.7% Democratic) and, surprisingly, Buck McKeon's CA-25 (39.7% Republican-39.2% Democratic), which has changed dramatically over the past few years and could be ripe for a well-funded, legitimate challenger. Obama won that district 50-48 as well. With only 351,421 registered voters in CA-25, there are additional non-voters waiting to be registered there to tighten up those numbers even further. CA-19 also has a shortfall of voters which could lead to a tightening of the rolls.
In the State Senate, the only even-numbered seat (the ones up for election in 2010) that deserves a focus is SD-12, where Jeff Denham is termed out. There are 47.5% registered Democrats and 33.1% registered Republicans. Democrats in that region are fairly conservative, and so there may not be a progressive coming out of that district, but there's no reason on Earth why Democrats shouldn't own that seat. Especially since there may be 100,000 unregistered voters out there.
As for the Assembly, the numbers look good in AD-05, AD-26 (Dems have a 42-39 lead in registration), AD-30 and AD-36, with a few other marginal possibilities based solely on the voter reg. numbers (AD-38, AD-63, AD-64, and AD-65 come to mind). There is absolutely a path to pick up three seats and a 2/3 majority in the Assembly, if the net is cast wide enough.
Of course, oftentimes Democratic officials focus too much, in my view, on voter registration statistics, and shoudl recruit good candidates and give them the resources they need to compete instead. But in this off-year, registration stats offer an opportunity to determine where to target. You can dig through them yourself at the Secretary of State's page.
Voting for the budget and facing retirement has seemed to liberate Bakersfield-area Senator Roy Ashburn. He shared coffee with a couple local reporters and dished about the behind-the-scenes budget process, confirming a lot of expectations:
In the wee hours of the Thursday before the budget vote - which had to have been Thursday, the 12th - the Senate Republican caucus met.
One of the senators pointed to four others and basically outed them for coming to his office and asking him to vote for the budget- when they didn't have the guts to do it themselves.
Ashburn wouldn't name names.
Ashburn also said senators went to state Sen. Abel Maldonado, R-Santa Maria, and asked him to put pet projects into the budget. That as Republican senators railed against overspending. Maldonado wouldn't do it, Ashburn said.
What you have with the Yacht Party is a group of lawmakers afraid of their own base. They glorify the importance of simpletons like John & Ken* to almost mythic levels, so that if they dare to step out of their comfortable ideological shells and help move the state from the brink of financial collapse, they believe it would be the end of their careers. So like all sniveling creatures, they would rather have somebody else do the heavy lifting so they could maintain their pose of anti-tax purity. And at the same time, they have the gall to ask the same people to slip in tasty goodies for themselves and their districts, so they can have all the benefits of compromise with none of the costs.
I'm going to sound like a broken record, but this is again the fruit of a dysfunctional process that enables Yacht Party cowards to extract as much as possible and maintain maximum leverage over negotiations despite their small minority. The conservative veto must end, and democracy must be restored to California.
* - Just to add to the John & Ken stuff: James Rainey, the LA Times' media critic, slaps them around a bit:
It's all the fault of those no-good illegal immigrants. Yes, the price tag that comes with a huge influx of noncitizens is rightly part of the public discourse. So why muddy the waters with some confounding information?
John and Ken wouldn't make that mistake. They make sure to mention the taxes the newcomers don't pay and the bills they run up in public hospitals. Who needs to mention the taxes they do pay, or to waste time worrying about the lower prices and convenience we all derive from their low-wage labor?
Then, please, protest the cost of state workers. It's beyond righteous to worry about the payroll growing, when everyone else is cutting back. But certainly don't remind your listeners (at least that I've heard) that the fastest-growing state job category is prison guard and that their support of tough sentencing helps explain why that part of the state budget keeps growing by leaps.
And certainly don't suggest that an economic downturn -- affecting virtually every government and business in the world -- played any role in ruining the state's finances. It's much more fun to pin it on that special someone. Gov. Arnold Schwarzenegger "had five years to fix the problem and it got to $42 billion," KenJohn said the other day. (Sorry, I'm name-lumping. But when the two get all worked up, I can't tell their voices apart.) [...]
It should be no surprise that "California Psychics" is a frequent advertiser on the program of late.
The business offers the services of tarot card readers, clairvoyants, astrologers and the like. "I think, most of all," one satisfied customer says in the ad, "I felt validated."
It seems to me that's what John & Ken are selling too. A bit of hocus-pocus and validation of their listeners' anger with a story that doesn't bother with all the messy details.
The Yacht Party wrapped up their convention in Sacramento yesterday, and while they didn't censure the members of the caucus who voted for tax hikes, they did deprive them of support in future elections. There's a problem with this, of course - only Dave Cogdill and Anthony Adams are running for their seats in the next election, as everyone else is termed out. In addition, what this really prevents is slate mailers, not really anything else. It doesn't prevent mailers that candidates can buy a spot on, or funding from individual members of the party, etc. This measure is good for the "heads on a stick" crowd but not for much else. You can already see the Yacht Party trying to run away from the insanity they've enabled for 30 years.
Shortly before the voice vote, a banner reading "The Six Losers" was unveiled listing lawmakers who voted for the budget. State Republican chairman Ron Nehring quickly closed curtains to cover the sign, which was displayed behind the table of party executive officers.
Hilarious.
I eagerly await seeing how the suicide cult reacts to a gubernatorial candidate who will try to buy the election. Meg Whitman is certainly an economic conservative but differs with the base on a few social issues. Unlike with an Assembly or Senate candidate, the state party delegates will have no chance of holding the purse strings over someone like Meg Whitman.
Ms. Whitman predicted that her campaign could cost $150 million, much of it coming from her own fortune. (Forbes most recently estimated it at $1.4 billion.)
This doesn't make her unbeatable, even in the primary - Ms. Whitman, say hello to Al Checchi. But it does mean that the base will have less leverage and less relevance.
I'm reading the accounts of delusional maniacs from across the state with not a little bit of bemusement. The lack of economic thought is matched only by the lack of recognition that Republicans got far more out of this budget than they deserved to get, thanks to the anti-democratic 2/3 requirement. Here's a sample of this Algonquin Roundtable:
"The Republicans should have stood their ground," fumed 70-year-old Tony Dragonetti. "Abel Maldonado is sick, and so are the other Republicans who voted for this. They give the you-owe-me crowd everything they need, but the poor slob who is working day after day paying taxes gets nothing." [...]
"I think they could have held out. There are a lot more cuts they could have made," said Steve Pyle, 61, who said he was so unhappy with the country's direction that he seriously was considering moving to Australia. "They could start by getting rid of all the illegal immigrants and the teachers unions." [...]
"I don't believe everything would have stopped if this budget wasn't passed," Sanders said. "I support what the Republicans did."
Local GOP activist Adele Harrison predicted new taxes would push the state and country into a depression [...]
Terry Carter, 65, just smiled behind the counter and kept pouring coffee. The boisterous regulars have helped keep him in business for 22 years. As for his own opinions, he keeps those to himself.
"Sometimes the smartest thing you can do is listen," he said.
Well, that depends on who you're listening to. For example, listening to talk radio is most definitely NOT the smartest thing you can do. I've been tuning in to a lot of this down in Southern California, and the ignorance abounds. A typical commenter is a well-off suburbanite bitching about $700 bucks in new taxes for their $126,000 salary (that was an actual conversation). Roger Niello, one of the Yacht Party's own who voted for the budget, got hammered on a Sacramento station.
John in Sacramento warned, "You're going to bankrupt the state with taxes."
And Dave in Cameron Park told Niello he was "outraged that you, as a Republican, caved in and voted with Democrats." [...]
"You should have let (California) fall off a cliff," John from Sacramento told him. "Then, we pick up the pieces and put this state together, the way it used to be." (emphasis mine)
But I'm not sure it's such a force anymore. The John and Ken show ended Thursday with the two musing that "somebody should do something about this" and asking listeners to find each other to fight against the turncoats. In other words, they're not going to lead it. Ultimately, these are lazy people shouting at the end of the bar. Independents have turned dramatically against them, and the leader of the party won't show up at their convention. I don't know that they're entirely coordinated, after years of mismanagement and an almost broke state party apparatus, to even pull off the enforcer role. If someone like Anthony Adams survives a primary challenge, that would be a powerful signal that the Yacht Party is all sound and fury, signifying nothing.
"We are at the incredible gut check point for what happens next in American civilization," Sanford said in the introductory address for the state party's three-day Sacramento convention [...]
"Would you be willing to lose? Would you be willing to support folks who may likely lose," Sanford told the gathering at the Capitol Hyatt. He went on to say that it was paramount for party members to support the GOP "at a time when it may look like a losing cause" because their efforts will be "pushing the ball forward in the larger conservative movement."
The California Budget Project has done a preliminary report on the "solution" (and I'm glad they put it in quotes) reached yesterday and expected to be signed by the Governor today. They demystify the fact that this is, once again, a short-term fix that will actually worsen our budget situation in the future. The $42 billion dollar hole from this year is a direct result of constant short-term fixes over the past several decades, pushing off the problem until the current legislators are out of office. Even in this budget, it is balanced through $6 billion in borrowing, which might as well be magic since we have the worst bond rating in the country.
The worst part of this is the spending cap, which could cripple future budget and severely ratchet down state services well beyond demand or even the rate of inflation and population increases. We have seen from other states how this is a hammer on the heads of the least of society and it must be fought in the May 19 special election. But the CBP is just as perturbed about the massive tax cuts, at a time of a $42 billion dollar deficit, to large multinational corporations:
Give multi-state corporations the option to choose between two different formulas for determining how much of their income would be subject to tax in California. This provision would be in effect in tax years beginning on or after January 1, 2011 and would cost $650 million in the first full year of implementation, eventually increasing to $1.5 billion annually. This provision provides no benefit to small businesses that only operate in California.
The tax breaks for movie companies and new construction home buyers and for hiring new workers (which history has shown doesn't end up increasing employment but increasing employer chicanery with their payrolls) are all temporary, as are the tax increases. The only PERMANENT tax in the entire plan is this giveaway to giant corporations like Exxon. This is why Richard Holober claims that big business is the "only winner" in this budget.
The worst of the business tax cuts is a permanent change in the formula for calculating the income tax for multi-state and multinational corporations. This produces an initial big business tax cut of about $700 million a year. The State Senate analysis estimates the recalculation will eventually yield a corporate tax reduction - and state revenue loss - of $1.5 billion a year. This is not tax fairness. Combined with the tax hikes on everyday Californians, it is redistribution of income away from workers and consumers and into the pockets of our state's biggest businesses. And it provides no tax savings for the mom and pop businesses that we usually count on to provide the camouflage for these corporate welfare schemes.
Another major sin in this budget are the agreements secured by Republicans to essentially increase greenhouse gas emissions by relaxing environmental regulations for large diesel vehicles. This is another example of Arnold Schwarzenegger being a complete hypocrite, running around the country painting himself as the "green governor" while ramming through a provision directly contrary to that.
Like the budget itself, AB 8 XX was not the subject of any public hearings. The measure's scaling back of emission controls was one of many concessions sought by Republicans in order for three of them in the Assembly and three in the Senate to vote for the budget.
Since there were no public hearings on the measure, it was easy for the GOP to side with the construction industry and ignore the majority of its members who want California to reduce greenhouse gas emissions and improve air quality.
A 2006 statewide by the Public Policy Institute of California found that 62 percent of Republicans strongly support state action to ratchet down greenhouse gas emissions. So do 73 percent of Democrats and 70 percent of independent voters.
That same poll found that two-thirds of likely voters for rolling greenhouse gas emissions back to 1990 levels by 2020. That is the legislation that became AB 32.
Finally, there is $5.8 billion that will be on the ballot for voters to agree upon, including a privatization of the lottery (which assumes a $5 billion sale... who is lining up to buy the California Lottery?) that would be a net loss of revenue for the state in the long-term, and $800 billion in raids from various voter-approved funds for things like mental health treatment. Considering how unpopular the legislature is these days, there is no guarantee that any of these will pass, which will leave another hole to fill by June.
These are just some of the details that reinforce the object lesson that major fundamental reforms, in particular repealing the 2/3 rule, are desperately needed. None of the above measures help the state. They were put in to placate a fanatical minority who is emboldened by a conservative veto. Sign the pledge to repeal 2/3.
So Abel's tears found a floor, and the deal is now done. It's a terrible, terrible deal. Let's first focus on what Maldonado got, which is less than meets the eye.
• He got his open primary legislation on the ballot, but not until June 2010. Arnold was interested in it, and so it was likely to get on that ballot anyway. This won't help Maldo in 2010, which was probably a condition of the deal. Considering that it affects Congressional races as well as legislative ones, I expect Nancy Pelosi to go all in trying to defeat and I don't expect it to pass. Open primaries have lost on the ballot in the past.
• The constitutional amendment banning legislative pay increases during deficit years passed; the amendment cutting all legislative pay during a late budget failed.
• The 12-cent gas tax increase was cut, replaced with a slight increase to the state income tax, federal stimulus money (which was always going to fill in because it was more than budgeted for) and $600 million in unspecified line-item vetoes from the Governor, which are going to be ugly. Let's just say that the huge corporate tax cut is not the first place Arnold's going to look.
Now, that's what Maldonado got. Among the other goodies in this budget, besides the corporate tax cuts and the privatization of state highway projects and the rest, are:
• A $10,000 tax credit for homebuyers, but only if they buy new construction. So a "developer bailout" when there is all kinds of existing inventory sitting on the market and lowering property values inside communities. And now there's an incentive for them to stay there. Great.
• Rental car companies can pass VLF increases on to customers, which they probably would have done anyway, but this makes it even easier.
• One provision allows for the delay of retrofitting of heavy diesel equipment, which will maintain poor air pollution in at-risk communities, and let's face it, kill people. Don't believe me, take it from the Chairman of the Air Resources Board, Mary Nichols: "There are people who will die because of this delay."
Dan Weintraub is right - this is a budget the GOP can be proud of, because it's a profoundly conservative budget. Because they hold a conservative veto over it. And they get the best of both worlds - they don't have to vote for the budget en masse so they don't have to own it. In short, the hijacking worked. And that's a function of process, not personality.
As Jean Ross says, "If this year's budget negotiations don't increase public support for reducing the vote requirement for approval of a budget and tax increases, it is not clear what will."
...there are two initiatives that have entered circulation that would repeal 2/3 for budget and taxes, and replace it with an arbitrary 55%. It should be majority rule. But it's about to gather signatures. Budgets and bad policies can eventually be changed if the process is changed.
So there is going to be a reconvening of the State Senate today at 10am. I know, that's what they said yesterday. But the plan from Sen. Steinberg is to keep the Senate on the floor until 27 members vote for passage and the crisis is (temporarily) averted. Meanwhile, 20,000 layoff notices and the closure of $3.8 billion in state public works projects will take place today. Things like projects to eliminate arsenic in Live Oak in the Central Valley. You know, dispensable things. And the Times has a bead on the three Assembly members who plan to vote in favor - Roger Niello, Anthony Adams and Minority Leader Mike Villines. This is a representative sample of the countervailing forces that Yacht Party members have to deal with.
Adams, a bearded 37-year-old who was elected in 2006 after working for San Bernardino County as its legislative liaison to Sacramento and Washington, has said he would provide the Assembly's third GOP vote.
"It's unconscionable that we let this state go over the cliff," Adams said in an interview. "My job is to get the best possible deal for Republicans."
Adams faces reelection next year, and his support for the budget package has antitax advocates interested in lining up a challenger in the GOP primary. And because he represents a swing district, Adams must also worry about a general-election challenge from a Democrat.Adams said he had not asked for specific concessions for his vote, or for assurances that he would get assistance to fend off election challenges.
"I'm not trying to find some soft landing," he said, "although my wife is going to kill me if she hears that."
They are not rewarded for their vote, and they fear their own "head on a stick" party members more than the opposition. And so you get this gridlock.
It occurs to me that what Steinberg is doing is what progressives have asked Harry Reid to do in the US Senate for years now. When GOP obstructionists threaten to filibuster key legislation, we always say "Make them filibuster! Make them stand up in the well of the Senate and talk endlessly about how we can't afford to provide health care for children, or how we have to offer more tax cuts to the wealthiest 1%. Let the whole country see it!" Well, we're basically doing that. The 15 members of the Yacht Party caucus in the Senate will be locked down and forced to reiterate their arguments indefinitely.
Problem is, the whole country won't be seeing it, the whole state won't be seeing it, in fact almost nobody will be seeing it. This is the true failure of a lack of political awareness in California, and a lack of political media. The pressure points are nearly impossible to hit. A lot of lawmakers will get tired and need to "bring your toothbrush," as Steinberg said, but there's precious little drama outside of Sacramento. And yet the decisions made in that chamber will undoubtedly impact the entire national economy, not just us.
But that is also good, in a sense, because it means that a sliver of opinion makers descending on the phone lines of the legislature can seen like an army. I'm going to reprint the email alert that Brian sent out last night, which you may have received, because I think he captured the situation perfectly. The leadership is making them filibuster. Now it's up to us to put on the pressure.
Just a thought or two on this whole mess while we wait for the Senate to reconvene. While I didn't think it was the best strategy to announce a deal and start voting on it before there was an actual deal in place (although the rumor that Dave Cox reneged on a handshake deal changes my perspective a bit), Darrell Steinberg seems to have backed into a strategy of playing Yacht Party obstruction out very publicly, so that the essential insanity of their anti-tax, sink-the-state agenda can be well-described by what's left of political state media. So George Skelton does the math and refutes the Yacht Party assertion that cutting spending alone can solve the budget crisis, and Dan Walters manages to describe the situation accurately.
And we all sit at our computers and type out our "even Dan Walters and George Skelton believe" articles, eternally hopeful that this is the corner-turning event, that the public will find the right people to blame for the sorry state of affairs, and punish them repeatedly forever more. Only it's wishful thinking. First of all, I hate to break it, but nobody reads George Skelton and Dan Walters. They are opinion leaders to about .001% of the electorate. Second, there was another audience watching Sacramento this weekend, and they were the bondholders, who would be crazy to allow California to borrow one more red cent from them given the political fracturing (and this budget calls for 1.1 trillion red cents, or $11 billion dollars, to be borrowed). Even if this passed tomorrow there would need to be lots of short-term debt floated to manage the cash crisis until new revenues actually reached state coffers, and with the bond rating the lowest in the country and the dysfunction being played out, I don't see it happening.
The other point is that this is, let's face it, a bad deal for Californians. Among the sweeteners thrown in the deal to attract that elusive third Republican vote are a $10,000 tax break for home buyers to re-inflate the bubble and set the state economy up for an even bigger crash; weakened anti-pollution laws that will cost the state additional public health and environmental cleanup spending in the long-term; a potential budget cap that will make it impossible for public schools and social services to meet demand; and much more. The tax changes, which are short-term except for a huge break to multinationals, tax things that we want to encourage in a downturn, work and consumption. What the federal government is offering to spur demand and get the economy moving again is exactly what the state government will be cutting to balance the budget. That's not an argument to kill it, but it's a reflection of reality.
So there will be at best a kind of zero-growth stasis, and at worst a further crumbling of the local economy, with shrunken revenues likely to require another round of this by summer. Ultimately, the media cannot help the Democratic Party solve this problem. The bill is coming due for 30 years of anti-tax zealotry and the belief that we can provide whatever citizens need without paying for it. There isn't a light at the end of the tunnel. That some opinion leaders are coming around about 20 years to late doesn't wash the blood from their hands. And that the Democratic Party is finally thinking that they should maybe fight against the 2/3 requirement that has relegated them to a functional minority in Sacramento since is was instituted doesn't absolve them for 30 years of inattention.
It gives me no pleasure to bear the bad news, but there's no wake-up call on the horizon. Even all 38 million Californians coming to the same "Hey, GOP is suxxor" conclusion at the same time doesn't change structural realities. Those must be fought for over years if not decades, and it is not defeatist to wonder whether it's too late.
A day after Calitics called the roll of the Yacht Party on the budget deal to be voted upon tomorrow in the State Senate, Shane Goldmacher does the same and comes up with just three Republicans who haven't signaled a no vote:
The field of potential Republican votes for the budget compromise in the Senate -- widely viewed as the most challenging caucus to corral support -- has narrowed so significantly that only three members have yet to throw cold water on the tentative deal.
That happens to be the bare minimum of Republican votes needed to pass the $40 billion-plus budget plan.
Those three are Senate Republican leader Dave Cogdill, Sen. Dave Cox of Fair Oaks and Sen. Roy Ashburn of Bakersfield.
Neither Ashburn, Cox OR Cogdill said they would actually vote for the budget, by the way. You can read all of the statements at the link. It should be noted that normally, the Senate would need only two Republican votes to pass, but since Mark Ridley-Thomas' seat is vacant (he was elected to the LA County Board of Supervisors in November) until the March special election, it takes three.
That basically means that full caucus unity is needed from the Democrats, and these three votes would have to come through, for the budget to pass. And we know that Lou Correa is wavering.
GOP conservatives were incensed at the notion of a colleague supporting tax hikes, while labor and environmental groups were mad at what they consider Democratic concessions.
"If we're going to win elections in 2010, we have to say that we're the other party ? that we're going to stop tax increases," said Jon Fleischman, a conservative blogger and a vice chairman in the state Republican Party.
Jeanine Meyer Rodriguez, spokeswoman for the state council of Service Employees International Union, representing 750,000 workers statewide, was upset by spending restraints and billions in budget cuts in the proposal.
"We're making it clear to all the legislators that if they vote for this, they're not representing our members," she said.
This morning's Republican press release painted the budget as a necessary evil, so the skids are being greased for passage. Still, with nobody owning the bill and lots of variables, it's entirely possible that it goes down tomorrow. Given some of the details, I'm not convinced that's a bad thing. But clearly, tomorrow should be... interesting.
I think we may be a little premature in calling this budget a done deal. Dave Cogdill says it's the best the GOP could get, but won't even commit to voting for it HIMSELF:
"My deal, one more time, has always been that I would try my best to get it to a position where I felt it was as good as I could get and I was willing to release my members," Cogdill said in a brief interview in the hallway outside his office. "That's where I am. So I'm not guaranteeing any votes; it's up to them (his members) to make that decision."
"But I've negotiated it to the point where I think it doesn't get any better," Cogdill said.
Asked if he specifically would support the package, Cogdill hedged, "We're waiting to see all the language and all of that so I'm not ready to commit who the votes will be at this point."
Not a guarantee at all. This still could be torpedoed when the votes come in. In fact, Abel Maldonado, thought to be the most likely Yacht Party member to vote yes, had this to say:
"All I can say is that there's still another $1 million for John Chiang for furniture in this budget so it's an easy vote 'no' for Maldonado," the Santa Maria Republican said.
That's a reference to the recent spat between Maldonado and state Controller John Chiang over furniture purchases.
Doesn't seem like a deal to me. And Maldonado is an idiot, because the Controller budget was appropriated before Chiang showed up and was probably agreed to by him at the time. But this isn't about intellectual consistency. It's about looking for any excuse for the Yacht Party to hide from their responsibilities.
...oh, and the whole thing could be sunk by Lou Correa. Awesome.
Update by Robert: Someone needs to ask Abel Maldonado why he thinks chairs come before children.
Labor and environmental groups have asked California Attorney General Jerry Brown to investigate whether Republican state lawmakers are engaging in illegal vote trading during budget talks.
"It's a serious question and we're reviewing the matter carefully," Brown responded Thursday.
The California Labor Federation, State Building and Construction Trades Council, Sierra Club California and the Planning and Conservation League wrote to Brown on Wednesday - and sent a copy to U.S. Attorney General Eric Holder, too - citing reports that the Legislature's GOP leaders are withholding votes on a state budget while attempting to win votes on unrelated matters.
[...]
It asserts this violates California Penal Code Section 86, prohibiting lawmakers from giving or promising to give "any official vote in consideration that another Member of the Legislature shall give this vote either upon the same or another question.
Join the Facebook Group to stand with unions and environmentalists in asking that Jerry Brown investigate.
A $5-million plan to replace 78 wood piles that support the pier is among the hundreds of California projects that stand to benefit from the federal stimulus measure. In fact, the first major initiative of the Obama administration could deliver as much as $63 billion to the state.
Some of the money would help ease California's budget crisis, although officials in Sacramento say it would cover only one-quarter of the nearly $42-billion deficit [...]
The $63-billion projection for California -- provided by the Center for American Progress, a liberal think tank with ties to President Obama -- includes about $44 billion to help pay for things such as infrastructure projects, healthcare for the poor and increased unemployment benefits.
The remaining $19 billion would cover the cost of the individual tax cuts to Californians.
To be fair, the story does make clear that state and local government relief would only directly impact about 1/4 of the budget hole. But I think it's dangerous to throw around $63 billion when there's still going to be a need for tough solutions on revenues and cuts in the budget. That number throws in the kitchen sink - it includes tax cuts to individuals and businesses, unemployment insurance extension, food stamp benefits, everything. The fact that more people have money to spend may positively impact the bottom line if California catches some of that cash in sales taxes, but the story - and really the projection by CAP - makes it sound like California will be handed a $63 billion dollar oversized novelty check. This will only serve to aid the radical Yacht Party agenda, allowing them to say that California just got a bailout so there's no need for tax increases. Every sane person knows that the federal windfall will help but not fix the budget, and talk of $63 billion like it's a sugar plum fairy really hurts the ability to make that fix happen.
For example, when citizens all over the state don't get their tax refunds in the coming months, with taxpayers on the low end of the income scale feeling the greatest effect, and they read stories about $63 billion flowing to the state, who do you think they're going to blame? And I'm sure the Yacht Party will be around to direct that blame, too.
It's fairly irresponsible to headline "$63 BILLION!" when we know only $10 billion of that will directly hit the budget.
Jim Sanders reports that tax increases are on the table for the Yacht Party, but only with additional long-sought concessions. This actually is a shift because taxes weren't even on the table before, but not much of one.
The GOP caucus realizes a tax hike will be part of any budget pact but could support it only if agreement were reached on permanent program cuts, a hard spending cap and other issues, lawmakers said.
"The reforms have to be there," said Assemblyman Anthony Adams, R-Hesperia.
"(We must be able) to tell constituents, 'Look, we had to raise taxes, we had to go forward, but we've fundamentally altered the way in which Sacramento is going to be budgeted - and we will not have these problems again because of it,'" Adams said.
Obviously the wavering from business groups who are frightened by the prospect of the state's looming insolvency is driving this. But let's take a look at what the Yacht Party wants as an exchange for their support on taxes, which would probably be regressive ones like sales tax hikes instead of the progressive tax solutions needed like eliminating loopholes for businesses and upping the top marginal rates on the wealthy.
They want a spending cap. They've wanted it for some time. In fact, it already EXISTS, and it has for 30 years. But the Yacht Party wants tighter restrictions. The CBP blog has provided a chart showing what they really want.
The chart shows how much state spending would have had to been cut in the past decade to comply with the kind of cap that Republicans have offered in the past.
Our analyses found that such a cap would have limited total state spending in 2008-09 to $39.7 billion below actual budgeted levels. The General Fund's share of the necessary reductions would be $31.2 billion. What would it take to cut $31.2 billion out of the General Fund budget? Eliminating all General Fund support for higher education; the judiciary; child support services; health care services; resources - including fire protection; and environmental protection. Maybe that's why the campaign to modify California's original cap was led by then-Governor George Deukmejian, then California Chamber of Commerce president Kirk West, and then-California Taxpayers Association president Larry McCarthy.
So the price exacted for revenue increases is an end to basically every service California provides. At that point, who needs the revenue increases?
Of course, the Yacht Party would have to get voter approval for a spending cap, so it's a gamble for them. But this movement should not be confused with a serious desire to actually serve the needs of a struggling citizenry.
