There are a lot of opinions being debated about the proposed AT&T/T-Mobile USA merger. From where we stand here in California, it really boils down to two things: jobs and access. Bill Burrato in a Guest Op-Ed in the Pacific Coast Business Times got it right. Whether you live in Ventana or Ventura,
"AT&T's recently announced plan to acquire T-Mobile is great news for the Central Coast."
Pointing to the increase of telecommuting, Buratto goes on to say:
"Businesses today are becoming more and more dependent on effective and reliable broadband speeds and seamless coverage throughout the community. Now, it is more common for business to be done by using virtual and electronic communications services. The use of state-of-the-art information technology to conduct business is no longer a competitive advantage, it is a necessity.
The good news is that we no longer have to be tied to our offices. However, we need to make sure that small and large businesses are able to be flexible and mobile when it comes to conducting business wirelessly. Two major technology providers like these coming together would mean that the communications that are at the very core of success for all of our businesses will be more reliable, faster and effective."
This editorial in The Detroit News by Orjiakor N. Isiogu, chairman of the Michigan Public Service Commission, very nearly perfectly sums up our argument.
Like HDTV before it, 4G-LTE wireless holds incredible promise for consumers and device manufacturers alike. But today there is insufficient wireless capacity to support millions of 4G-LTE devices, and demand is rising ever faster. According to Cisco Systems, mobile traffic is expected to increase 26-fold by 2015. By 2015 the majority of Internet traffic will be via mobile devices - a reality unthinkable just two years ago.
That's why LightSquared's venture is significant. It would substantially increase America's broadband wireless capacity while providing next-generation high-speed wireless data and voice to areas previously underserved. In addition, the company plans to market its nationwide network on a wholesale model, allowing any number of new competitors to enter the market. Many observers have hailed this proposal as a key part of President Obama's plan to increase high-speed Internet adoption nationwide, while also increasing competition in a consolidating wireless industry, all at zero cost to taxpayers, thanks to a planned $25 billion investment by the company.
More competitors in the market will mean lower prices and better service for consumers, along with expanded wireless broadband options. Another key benefit will be the economic benefit associated with building out a national network, including the creation of an estimated 15,000 jobs per year. Public safety could be enhanced by this network as well.
Simply put, whether you're somewhere in urban Michigan or rural California, an expanded wireless network means more competition, lower prices, and better service. And we're doing it all at zero cost to taxpayers.
For real - it is. And the truth is, that while all of this debate about the AT&T/T-Mobile merger is important, worthwhile and necessary, it's also something of a red herring. Because at the end of the day the problem that the merger was initiated in part to address, the problem that will ultimately prevent new competition, stifle innovation and shut down the incredible potential to create jobs and grow the economy through broadband investment remains.
And that problem is SPECTRUM.
And if there's something we know a little bit about, it's the need for more spectrum.
Check out this very excellent article written by Jeff Kagen at E-Commerce Times, "Let's Solve the Real Wireless Problem: Spectrum Shortage" http://www.technewsworld.com/s...
Few topics today are generating as much discussion as the seemingly insatiable demand for mobile data and how our country is going to keep pace with it. The United States has set a national goal to provide 98 percent of Americans with broadband access within the next five years. LightSquared is stepping up to help make this a reality. We are contributing $14 billion in private investment over the next eight years to build a nationwide wireless broadband network using 4G-LTE technology integrated with satellite coverage. This represents a $14 billion private sector-not government-investment in America's infrastructure.
The deployment and management of the LightSquared network will, in turn, create new jobs. We expect to generate more than 15,000 direct and indirect jobs in each of the next five years. And that's just the beginning of what the LightSquared network will help bring to California and across the country.
LightSquared will offer network capacity on a wholesale-only basis. This is a dramatic departure from the current vertically integrated model in the wireless industry, and it will open the broadband market to new players such as retailers, cable companies, and device manufacturers, to name a few. This means that end users - consumers like you - will enjoy the benefits of innovation, increased competition, and choice.
With his State of the Union address, President Obama delivered an important message that Congress and the American people need to hear: our nation's leaders must pass legislation that creates American jobs now.
America, our shining city on a hill, has been blessed with great fortune in our proud past, but as the President noted, every generation faces new challenges and new opportunities. We must be bold and forward looking, never forgetting that America's prosperity has always relied on hard work, solid education, and well-maintained infrastructure. We're a nation that has always thrived when we've built things - the light bulb, the automobile, the Internet, and the GPS. We need to build things again. We need to Make It In America
Lots of people want to live in California. This is a good thing. Conservatives try to portray this as a bad thing. Let me explain.
George Will repeats the conservative narrative that people and companies leave California because of taxes and regulations. He writes,
It took years for liberalism's redistributive itch to create an income tax so steeply progressive that it prompts the flight from the state of wealth-creators: "Between 1990 and 2007," Voegeli writes, "some 3.4 million more Americans moved from California to one of the other 49 states than moved to California from another state."
Over the weekend, while fire raged in the Angeles National Forest, over in the San Fernando Valley they were inundated with water. A water main built in 1914 broke and flooded Ventura Boulevard in Studio City throughout the weekend. While it reopened on Monday, today a second break on the same water main hit another section of Coldwater Canyon Avenue and produced maybe the ultimate piece of imagery - a fire truck consumed by flood. I don't think the truck was headed to La Cañada, but the inference is made anyway.
You cannot write 1,000 words on our crumbling infrastructure that capture the subject better than this. A state without the revenue to heal itself becomes a state where fire trucks sink in a flood caused by unattended 100 year-old pipes. The layers of meaning just fall into one another. This is the picture of a state that cannot fix itself.
Now that everyone is back from Netroots Nation and enjoying the success of the Standing Up For The Public Option effort to reward congresscritters who have promised to vote against health care reform that doesn't include a public plan, I'd like to take a moment of your time to talk about something really boring:
Infrastructure! I know, even the word conjures up images of long hearings in beige rooms to determine the proper rate of increase and carrying capacity in the local water and sewer assessments.
But infrastructure is critically important. And ActBlue is one of the most important pieces of infrastructure for the the netroots and grassroots. I've from time to time disclosed in comments that I work with ActBlue on a volunteer basis. I'm actually on ActBlue's Board of Directors, and I did the initial legal research to help ActBlue operate in California and Oregon state races.
I give a lot of my time to ActBlue because I think it's a critically important organization. And now the board members are also doing a bit of fundraising for ActBlue, and I'd like the Calitics audience to consider contributing a bit of their hard earned cash to Actblue.
It's hard to choose the most cruel or the most thoughtless among Arnold Schwarzenegger's line-item cuts added to the budget revision. But you could make a case for the slashing of all state funding for domestic violence centers, for a savings of about $16 million dollars. LAist profiles one center, in the Santa Clarita Valley, that will probably now have to close:
The Domestic Violence Center in the Santa Clarita Valley is the only agency that provides domestic violence services in the 200-square mile valley. As a result of Schwarzenegger's cut, which is immediate, they've lost 45%, or $207,222.00, of their annual funding, which they say will force them to close their doors later this year unless the community supports them with donations. In 2008, they served over 1,000 victims of domestic violence.
"As the Center's Executive Director, I think about every client who has come through our doors and their horrific stories of abuse - I cannot help but cry when I think about what the loss of our services will mean to victims," said Executive Director Nicole Shellcroft in a statement. "Those who walk through our doors have suffered through broken bones, beatings, strangulation, food deprivation, arson, torture, genital mutilation and unspeakable sexual violence. They have been thrown down flights of stairs, have been victim to violent physical attacks during pregnancy and have even faced the prospect of murder. Victims seek our services to escape incredible violence aimed at them and their children."
This is what we are talking about when we say that people will die from the decisions made by Arnold Schwarzenegger and the Legislature. The $16 million in cuts represent a pittance of the budget and far less than the $2 billion dollar annual tax cut for the largest corporations in America instituted back in February. But, we are told, those businesses would flee the state if they were forced to contribute a fair share of taxes for the commons that they use, so instead, women and their children will have practically nowhere to turn to save themselves from spousal abuse.
It turns out that some businesses are dismayed enough to consider leaving California - not because of the lack of tax breaks, because of all of the budget cuts and the impact on the workforce.
Wilbur D.Curtis invented the globular glass coffeepot, that staple of coffee counters everywhere, in 1940. Since then his son and grandsons have turned Wilbur Curtis Co. into a manufacturing concern that earns revenue approaching $100 million by turning out commercial coffee brewing equipment from a sprawling factory in Montebello.
But their long history in California doesn't exempt the Curtis family from the costs and hassles that give this state its reputation as one of the hardest places in the country to do business [...]
Yet it's plain that the state government has failed in precisely those areas where it can make a difference. Laws' main concern isn't strictly how much money the state spends -- it's that the bucks don't go where they count.
His two biggest issues are education and infrastructure. "We pay a fortune here to educate people on basic things like writing and math skills that they should have learned in high school," he says. The company, whose workforce is mostly Latino, also provides training in English as a second language -- including for some employees who came through the public schools [...]
Then there's that lifeblood of any firm whose products can't be shipped through cyberspace -- transport.
Traffic congestion in the L.A. basin has become a round-the-clock hassle. Laws says one of his biggest customers, a coffee company with a national reach, opened a local facility here to be near its own big customers, only to find that navigating the overstressed road system drove its costs to twice its expectations.
And these complaints about infrastructure and education exist before budget revisions that would decimate the future of higher education for a generation of students, and only harm the ability to create the infrastructure necessary for densely populated areas in the 21st century.
We're picking away at safety net programs and increasing the danger and suffering for a whole class of citizens, while protecting the largest corporations and the wealthiest campaign contributors. And the actual lifeblood of job creation, the small business community, would rather see investment than the current hijacking of state government by those who want to dismantle it.
I'm telling you, this special election campaign resembles the Bush-Cheney "9-11 9-11 9-11 Terrist comin' to kill you in your beds!!!!1!" 2004 campaign more with each passing day:
As he launched a radio ad campaign Tuesday for his budget measures on the May 19 ballot, Gov. Arnold Schwarzenegger said failure to approve the package would worsen the state's already-dire fiscal crisis.
"If they don't pass, we will be facing a $50 billion problem," Schwarzenegger said at a meeting with Daily News editors and reporters. "It will mean massive cuts in education, hospitals, prisons. These are things people don't want to see cut."
$50 billion. How does the Governor arrive at that figure? He includes $16 billion dollars for the two years of regressive taxes that would be washed out in 2012 and 2013 if Prop. 1A fails. He includes an expected lawsuit from education interests to force payment of $9 billion in raided Prop. 98 funds if 1B fails. He includes the $6 billion that would not fill budget gaps from the last budget if Prop. 1C-1E fail. And then... I don't know, that's only $31 billion, I guess $50 billion sounds like a nice big number.
You can put it on posters!
This is not the first time the Governor has flat-out made up numbers to win an election. That was his road to victory in 2006, when he lied about Phil Angelides' tax programs. The True Lies are back, and sadly I don't expect a soul to call him on it.
Let's partially accept the Governor's premise and agree that we would have a deficit caused by cutting two years' worth of tax increases in 2012 and 2013. Is he suggesting that the legislature would be barred from acting on anything for 3-4 years until that future problem arises? He might as well say we have a $200 billion dollar problem, extrapolating out to 2050.
The "doomsday scenario" only exists if you accept the premise of the conservative veto. Only then does California risk going over the cliff. A responsible, functional legislature that has the ability to reflect the will of the people of the state is in no danger, which is why the only reforms anyone should be voting for are the full repeal of the 2/3 requirement for budgets and taxes.
I will quickly tire of these nonsense efforts to scare people into backing another layer of restriction onto an already failed budget process. Hopefully the voters feel the same way.
UPDATE: This is amazing. Shane Goldmacher queries the Governor's spokesman on where the hell Arnold came up with the $50 billion dollar figure, and look at the response:
"He was speaking hypothetically," said spokesman Aaron McLear. "His point was if we don't reform our budget system then we'll be right back where we were with that huge budget deficit."
I'm sure he'll continue to "speak hypothetically" in the most hyperbolic way possible. Some would call this manner of speaking, um, "lying."
There's a very pernicious habit in California of turning away from budget issues once a crisis is averted, in a show of relief that we will at least get a small reprieve from having to deal with the contentious battles for a period of time. This false sense of security is bad enough in regular years, when the budget is cobbled together through borrowing against the future and no long-term solutions are implemented. In this dynamic economic crisis, when rosy outlooks can darken in a matter of days, it's downright foolhardy.
Greg Lucas at California's Capitol has been one of the louder voices in insisting that the budget crisis is not at all over. According to Controller John Chiang, revenue in February was $900 million dollars below estimates. Now, if you extrapolate that out, we'll be in a $10-$12 billion dollar budget hole by the end of the year just if things remain at the same level. This is of course unlikely, as the February national job numbers showed. So much of the tax increases passed in the February 19 budget solution are tied to employment - an increase in the income tax, and sales tax increases that of course rely on residents having purchasing power. In addition, these lean economic times will push more people into needing state services, like unemployment and Medi-Cal. Then there are the counter-cyclical increases and cuts that are working against what the economic recovery is attempting at the federal level.
In addition, many of the spending and taxation decisions made in the recent budget cancel out some of the benefits to California of the American Recovery and Reinvestment Act.
The federal package provides an estimated $13.1 billion in refundable income tax credits for middle to low-income Californians at the same time the state budget includes $12.2 billion in tax increases, only some of which are deductible. And only half of taxpayers deduct.
The federal bill includes a one-time $250 payment to the state's aged, blind and disabled poor at the same time the state is reducing the maximum grant for an individual by $37 a month, $444 annually.
"California is roughly an eighth of the nation. The impact of this is sufficiently large that it could affect the prospects of recovery for the nation as a whole," said Jean Ross, director of the California Budget Project, who has been examining how the state's budget interacts with the federal stimulus package.
The biggest short-term issue is cash. Lucas did an interview with John Chiang where he admitted that we will still need to borrow against the anticipation of future revenue as early as April, to the probable tune of $1.5 billion. Because the budget deal was completed too late to include changes to the income tax code, those revenues will not come in until the following tax year. The sales tax will go up April 1, but that will not be enough to cover expenses.
CC: Is February a big month for obligations?
JC: No. April is the real difficult month. If we don't get that RAN, we're $636 million in the red. But then the bigger issue is July. When we walk into the next fiscal year we will need a massive cash infusion.
CC: How come?
JC: We always borrow at the beginning of the year, 25 out of the last 26 anyway and then in April we make up the difference. But this year we walk in with weakness into the next fiscal year. There are less tools in the tool kit. We'll need a massive RAN or RAW (Revenue Anticipation Warrant).
Remember these last budgets borrow $16.5 billion from (state) special funds to backfill the general fund. So if we have any emergency in the state requiring aid from one of those special fund departments, the state is in trouble. Over 1,100 special funds in the state and we borrowed from over 650 of them. Part of this last budget solution gives us the ability to borrow another $2 billion more. The governor's budget has us borrowing $11 billion from special funds over the next 18 months.
So we're going to have to do some outside borrowing for the next fiscal year. Period.
And of course, there's very little anticipation of the worsening economic picture in the budget, meaning that we'll be in unquestionably worse shape by summer. And the cash crisis, forcing short-term borrowing, really impacts selected projects that go out into the bond market, for example infrastructure like the high speed rail project, which will basically have to shut down if there isn't a quick infusion of cash. Keep in mind that California has the worst bond rating in the country and the credit markets are still not that friendly to the state.
Another pressing matter is the determination of how much money from the federal stimulus will be available to the state to fill budget holes. There is a "trigger" in the state budget that would actually reduce some cuts - most of them the worst of the worst, particularly in health care for the needy - as well as reverse increases to the income tax, if at least $10 billion dollars in federal money hits the state budget. It's not just that money comes in, it's that it has to go toward general fund relief in order to contribute to the trigger. And Mike Genest, the Governor's finance director, has a preliminary estimate up showing that the state will come up short. This is insanity. As the California Budget Project noted on a conference call today, there will be many billions above the trigger number available to the state, the legislature need only craft the receipt of that money in such a way to hit the trigger. Otherwise, they are raising taxes and cutting services, and needlessly so. One such bill would change Medi-Cal eligibility requirements to free up as much as $11.23 billion over 27 months. That should happen ASAP. Democrats are trying to write this as a special session bill and ensure that it requires only a majority vote.
The main point here is that we remain in crisis mode with the state budget, and will continue for years upon years until we stop putting off the fundamental, structural solutions the way we constantly do. For example, the prison system remained virtually untouched during the budget crisis, despite being both crippling to the bottom line and unconstitutional in its overcrowding and inability to provide health care. We desperately need structural changes with how the state budgets, and those will only be accomplished by demolishing the conservative veto over the process and repealing the 2/3 rule.
UPDATE: Here's a link to the CBP study of the American Recovery and Reinvestment Act, identifying as much as $50 billion dollars available to the state in funding. Surely the legislature can figure out how to capture 20% of that and set off the budget trigger.
Today's LA Times contains a "news analysis" by Evan Halper that seeks to explain why taxpayers seem to be getting less for their tax dollars. But the most obvious point goes almost totally ignored - that tax cuts have reduced the ability of government to provide for basic services. Since that isn't part of this article, the effect is to mislead readers into thinking government is misusing tax dollars, and thus winds up reinforcing right-wing frames.
Reporting from Sacramento -- Middle-class Californians have long griped about paying more taxes than they might pay elsewhere, but for decades this state could boast that it gave them quite a bit in return. Now that contract is in doubt.
A modern freeway system, easy access to superior universities and progressive health programs used to be part of the compact. Even local schools plagued with financial problems continued to offer small classes, innovative after-school programs and advanced arts and music curricula.
These opening paragraphs set the tone for a flawed article. That "social compact" has not really functioned as Halper suggests since 1978. Our freeway system was largely in place by that time. Additional freeways were mostly paid for by higher taxes - even Orange County has voted to tax itself twice since 1990 to build and expand freeways. The "innovative after-school programs" were created by ballot-box budgeting. Advanced arts and music curricula have been absent from most districts in the state since the 1980s.
In short, Halper starts from a flawed premise.
But at a time when taxes are about to rise substantially, the services that have long set this state apart are deteriorating. The latest budget cuts hit public programs prized by California's middle class particularly hard -- in some cases at the expense of preserving a tattered safety net for the poor -- following years of what analysts characterize as under-investment....
"Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California," said Joel Kotkin, a presidential fellow in urban futures at Chapman University in Orange. "Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California's government and the middle class is constantly being renegotiated to the disadvantage of the middle class."
And here you see the right-wing framing - in some cases made explicit, that programs benefiting the middle-class have been cut to "preserve a tattered safety net for the poor." Kotkin, a high-profile conservative think tank figure who has blamed "greens" for the state's current crisis is never going to explain how tax cuts have caused California to fall behind in maintaining its once-great systems of education and health care.
The closest Halper gets to acknowledging the true nature of the problem is here:
The reasons are varied. The cost of services continues to outpace inflation. Programs are being squeezed out by things the government was not providing in the halcyon 1950s and early 1960s, including Medi-Cal and some welfare programs. And the state has been reluctant to embrace new ways of funding services while holding back state money to plug other holes in the budget.
In fact Medi-Cal's earliest origins lie in the 1959 legislative session, as do some welfare programs. Halper gingerly discusses a state "reluctant to embrace new ways of funding services" but this is the closest his article will ever get to the truth, which is that the conservative veto has prevented California from raising taxes to keep the services flowing to the middle class. Even Ronald Reagan did this in 1967 but you would never know it from Halper's article.
Nor does Halper explain, anywhere, the billions in tax cuts that have been made since 1978 - a structural revenue shortfall that costs California at least $12 billion a year. Halper does a good job of showing how our basic services are underfunded but totally fails to explain the reasons why. As a result he closes his article with comments from conservatives like Mitt Romney and Joel Kotkin that not only go unanswered by any progressive voices, but go unanswered by reality:
Former presidential candidate Mitt Romney spoke to the frustrations of many California parents during a speech at last weekend's state GOP convention in Sacramento. Pointing out all the taxes Californians are now paying, he asked, according to the Sacramento Bee: "With all that money, how are your schools?"
The simple answer is: Not what they used to be. And now the state is cutting billions more out of them, including money set aside to keep classes small and to fund arts and music electives.
"The social compact is: I pay taxes and good things happen," Kotkin said. "But I pay a lot of taxes and can't send my kid to our local public schools because they are terrible."
Conservatives broke that social compact by telling Californians "you can pay less taxes and good things will happen." It's wrong for conservatives to turn around and say "oh gee the system's screwed up" when they are responsible for the mess.
And it's inexcusable for the LA Times to reinforce such right-wing sentiments with such an article that refuses to point out what actually went wrong, and who is responsible for it.
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.
When the cuts to the federal economic recovery bill in the Senate were made public, my back-of-the-envelope calculation was that $5-$8 billion dollars in aid to California would be lost. The San Jose Mercury News did the math and came up with similar numbers.
The $838 billion Senate bill would create about 400,000 jobs in the state by funding infrastructure projects, from schools to roads to broadband. But that's 51,000 to 63,000 fewer jobs for the state than the $820 billion House bill, according to the Center for American Progress. The Senate plan puts a heavier emphasis than the House bill on stimulating the economy through tax cuts, in addition to direct government spending.
Funds for reimbursing state Medicaid costs are about the same in each bill, but the funding formula in the House bill favors states with higher unemployment. California would receive $11 billion in the House bill and $9.6 billion in the Senate measure. The House bill also has funds to help those who are recently unemployed receive health coverage. "On health, the House bill is significantly better for California," said Anthony Wright, executive director of Health Access California, a consumer advocacy group.
The Senate cut in half the House's $79 billion fund to help states pay for education and other services. If the Senate version prevails, California would receive about $4 billion instead of the $7.9 billion in the House bill. In addition, the Senate eliminated $14 billion in funds the House allocated to modernize schools, which drew sharp criticism from Rep. George Miller, a Concord Democrat who chairs the Education and Labor Committee. He said the Senate version would cost 315,000 construction and other jobs nationwide.
"With more Americans losing their jobs by the day, we must make every effort to bring that figure up," Miller said.
The latest from the negotiating table is that only $5 billion of the $40 billion cut from the Fiscal Stabilization Fund will be restored in conference. So that's about $3 billion less, overall, for California from that fund, as well as the cuts to Medicare funding of about $2 billion. The school repair funding will be restored to about $6 billion from $16 billion, which means that California probably loses $1 billion there.
So overall, we're probably $5-$6 billion short from where we were with the House bill. Which will make it that much more difficult to cut a budget deal. In addition, if the formula for getting federal funds is in the form of block grants with a state match, California won't be able to access any of them until the cash crunch is solved.
Rachel Maddow is more than just an excellent TV host and progressive hero. She's also a policy geek who hails from Castro Valley and who, because of her father's long experience working for East Bay MUD, knows a LOT about California water policy.
In December she was invited to give the keynote address at the annual conference of the Association of California Water Agencies in Long Beach. It was a fantastic speech, showing her range of knowledge on federal infrastructure politics and California's water needs.
Maddow's words are all the more important as California enters the third year of the most severe drought the state has faced since the American conquest. She speaks of three "water eras" and that the third, which we are now entering, will be defined by the search for "water security." It's a perceptive, big picture talk that sets out the fundamentals that ought to guide us as California struggles to deal with the water crisis.
The speech is also a useful counterpoint to Dan Walters' latest column, which blames the water crisis on the state being "ungovernable." That misses the key point - California's ungovernability stems from the decision in 1978 to lock 20th century policy in place by giving conservatives a veto, conservatives who have defined their politics by promising to preserve the 20th century model of California life, with all of its waste of resources and unequal outcomes.
Maddow reminds us that to deal with the crisis, we need an attitudinal shift - and that shift must come as part of a breaking of the conservative veto over California politics. Only when we decide that the policies of the 20th century must be abandoned will Californians mobilize to take power away from those who so recklessly defend those policies.
The key to California's successful business environment are education and infrastructure. It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries developed in California instead of in "low tax" states like Mississippi and Alabama. These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure.
There has been a dramatic wealth-building return on our investment in education and infrastructure. Investors could count on California as a good place to start and grow a business, and it has paid off.
• The Senate Republicans have a slew of publications that they flood my inbox with every so often. Mostly they are a series of missives based upon their ridiculous ideology. But on occasion they put a somewhat fact-based publication on balance billing. They still sneak some of their views in there, but in a subtle way. But it is a fairly good concise discussion of the court decisions on the issue of billing patients for the difference between cost and insurance payments to hospitals.
• More horserace gubernatorial coverage, this time from SacBee. And Newsweek. Meanwhile, Rasmussen is running head-to-head matchups two years out showing Meg Whitman very competitive. I'm going to wait until, I don't know, people even recognize what party she belongs to, before putting any stock in a poll. She isn't even riding off her own name recognition, she's riding off of eBay's.
• Some takes on the PPIC Infrastructure Report: Wildermuth of the Chronicle and Dan Walters of the Bee. As Robert mentioned today, we must create new revenue streams. I don't know where they all come from, but we must look beyond simple gas taxes and user fees. If we fail on infrastructure, our long-term business climate becomes increasingly bleak.
• Richie Ross, consultant to such notables as Carole Migden and Heather Fargo, has a pretty good take on Prop 8, comparing it to Prop 187. While a lot of people thought Prop 187 was just good politics at the time, the GOP "Southern Strategy" isn't really paying long term dividends. Or, actually it is, but just for Democrats. Marriage equality will one day be the law of the land, and those who stood in the way will be nothing greater than a modern George Wallace.
The economic recovery that is currently being bandied about in Congress, particularly in the House, would deliver $4.5 billion dollars for infrastructure projects to California. That's 10% of overall infrastructure spending, which is in line with our population, but the overall pot for infrastructure is too small nationwide, and that kind of relief is not enough to make a dent in the budget nightmare. The fact that money for tax cuts designed to snare Republican votes is crowding out infrastructure spending and job creation contributes to this, but the other problem is the deteriorating nature of our infrastructure, which could cost half a trillion dollars to fix properly. All that money doesn't have to come from the Feds, but with the bond markets unwilling to deliver for California until a budget solution is made, $4.5 billion over two years is a drop in the bucket, and the problem will grow worse. This shows why floating bonds is a horrible way to fund government.
The report cites California's dependence on bond financing as a chief reason the state can't meet its infrastructure financing needs. California has increasingly used borrowing through state general obligation bonds to finance infrastructure projects. But the need for infrastructure investment far exceeds the capacity of these bonds, according to the report, Paying for Infrastructure: California's Choices. Years of declining investment have left the state with crumbling classrooms, congested roads, and an aging levee network that puts many homes and businesses in harm's way. Problems in the government bond market are making it more difficult to sell the bonds already authorized, and in the long term, large projected budget shortfalls will limit the state's ability to rely on these bonds to meet California's future needs.
We can of course see this right now, and the effects are widespread. With the bond markets frozen, environmental projects all over the state have to be shut down, having a very real impact on the environment and public health. Forget the more innovative projects we'd all like to see strengthened with fiscal investment - like the growth of the solar industry and even wave harvesting, the type of green jobs that can save our economy - we're not even going to be able to clean the ocean this year.
If swimmers in Santa Monica Bay bump into trash or bacteria this summer, one culprit will be California's budget impasse.
Hundreds of millions of dollars worth of voter-approved projects have been halted because of the state's financial problems. That includes $12 million that the Santa Monica Bay Restoration Commission was counting on to prevent dirty storm water and filthy runoff from draining into the bay.
"People expect to be able to enjoy the beach and not come home sick," said state Sen. Fran Pavley (D-Agoura Hills), chairwoman of the state Senate Water and Natural Resources Committee.
The money freeze has immobilized construction of new biking trails along the Santa Ana River in San Bernardino and Orange counties. It has stopped plans to tear down the Matilija Dam in Ventura County and restore the sediment-filled Matilija reservoir. It has impeded efforts to boost the populations of salmon and steelhead trout off the coast of Los Angeles and Ventura counties.
These are not small inconveniences. A new report from Brigham Young University scientists shows that cleaner air, for example, has a direct effect on increasing the lifespan of a population. There is a cost to bad borrowing. If we can't fund infrastructure, the ports and the oceans don't get cleaned. Smog reduction projects may shutter. The air gets dirtier. And you die three years earlier.
California's delegation needs to push for General Fund relief in the recovery package, as well as federal guarantees for our municipal bonds, which would frankly jump-start projects faster than anything. If it's good enough for the banks, it should be good enough for California.
UPDATE: OK, the CBPP has a more comprehensive report, and the numbers are much more in line with current needs. They predict that California will get $11.1 billion in increased Medi-Cal spending, and $7.8 billion from a new State Fiscal Stabilization Fund, in addition to the infrastructure spending. That approaches $20 billion over the next two fiscal years.
Look around you and you probably know somebody who had been affected by the economic slowdown, particularly here in California. Maybe it's someone you know in the construction industry:
State Controller John Chiang refused to make payments Thursday to contractors for work done on more than three-dozen public-works transportation projects. The action, the first of what are likely to be a series of blocked payments, was prompted by the state's unprecedented budget shortage.
The move was required by the Pooled Money Investment Board, which on Dec. 17 ordered a halt to the payments to projects financed with a mix of voter-approved bond funds pending a resolution of the state's fiscal dilemma [...]
The projects are all being handled by Caltrans, which has objected to cutting off the money to the contracts. Some $33 million and 39 public projects are affected.
(It's hilarious that the Governor objected to this after his own Finance Director voted to shutter all infrastructure projects a few weeks ago. Did he not know that this would be the result? Another Santa Claus Republican.)
Or maybe it's that friend of yours who doesn't have any health care or the ability to pay for treatment, or that other lady you know who works at the hospital:
California hospitals are threatened. With only 1.9 hospital beds per 1,000 population,3 the state's residents are being placed at risk by the negative impact caused by inadequate Medi-Cal payments and California's faltering economy. Currently ranked 49th nationally, hospital bed availability is likely to contract further in this environment, diminishing access to health care services even more. As a result of low Medi-Cal payments, the majority of california hospitals have already made cutbacks or anticipate reducing services, including closing subacute units and psychiatric units; eliminating skilled nursing beds and ER beds; reducing cardiology, obstetrics and other clinical services; and laying off staff or reducing pay.
The impact of the economic downturn is evident. Hospitals report a 73 percent increase in consumers having difficulty paying out-of-pocket health care costs, and 33 percent report an increase in ER visits for uninsured
patients. With the growth in unemployment, hospitals are experiencing the effects of more californians without job-based insurance. in fact, hospitals report a 30 percent decrease in volume for elective procedures - one of the few areas that provide hospitals an opportunity for revenue growth. In addition, the capital markets are providing a significant hurdle for many california hospitals. More than 25 percent report the inability to access financing for construction, remodeling, equipment purchases or working capital. This has resulted in 41 percent of hospitals halting construction projects or equipment purchases. This has a significant impact on the state's economy and jobs.
The University of California system may cut the number of in-state first-year students by 2,300, or 6 percent, as the recession squeezes the budget.
The proposal to reduce enrollment for the 2009-2010 school year, as well as a plan to freeze 285 salaries of administrators, will be presented Jan. 14 to the Board of Regents by President Mark Yudof, the Office of the President said today in an e-mailed statement. The system, based in Oakland, has 220,000 students on 10 campuses.
As an aside, health care and education were the only two industries to INCREASE jobs in today's dismal employment report. Here in the Golden State, we are going in the opposite direction.
The failure of leadership over the last decade at all levels of government is now coming due. We are not prepared - nor are we taking seriously enough - the magnitude of this meltdown on the state of California. We are about 3-4 weeks away from the state sending out IOUs. That's functionally bankruptcy, and the trickle down of that will be fast and painful. Everyone in the state will either be affected or know someone close who is.
California's dysfunctional government has finally caught up to itself. The general lack of urgency about this is stunning to me.
Good thing an old-politics hack like John Burton will lead us out of the abyss!
California will close most state offices on the first and third Fridays each month starting in February, padlocking DMV outlets and other services while reducing state worker pay to help survive a massive budget problem, according to a state Department of Personnel Administration memo.
Only offices deemed critical, such as state hospitals and prisons, will remain open under Gov. Arnold Schwarzenegger's twice monthly furlough plan.
