In the last 18 hours, we've gone from stirrings of a possible deal to what has been called a "stall." The stall, as Speaker Bass notes, is the "elephant in the room," Proposition 98 and education cuts.
Further complicating this mess, we have more credit rating downgrades. Moody's now has us down to a Baa1 credit rating, and Fitch has us at BBB. Basically, we are hovering just a step or two from Junk bond status, and in terms of the interest rates that we are having to pay right now, the difference between our bonds and junk bonds really isn't that great.
It is pretty clear by now that at least some part of the budget gap will be made up with more borrowing. The wherewithal for a full cuts-only budget just isn't there, on any side really. So instead, we are borrowing from the future, not just in the pure borrowing sense, but also in that we are cutting our investment in education. However, with these credit ratings that we now have, it will be the current borrowing that will be the object of budgetary consternation for the next few years.
Of course, the fact that we have to use these IOUs has made the problem far worse, to the tune of at least $26 million in July alone. But while George Skelton can see that the Governor's overreaching has much to do with our IOU summer, he also brazenly repeats a conventional wisdom repeatedly borne out to be inconsistent with the facts. You know the schpiel, the May 19 election was supposed to mean that the voters wanted cuts, cuts, cuts. Of course, Skelton, and most of the Broderists calling for a "mandatory" shock doctrining of the state, repeatedly fail to acknowledge the facts that most Californians want a balanced package of cuts and taxes.
But why bother noticing what California's voters actually want when you can read tea leaves from 24% of the electorate that understood/cared about what was going on in May that they bothered to vote. I mean John and Ken say that there is rage boiling over about taxes, and we can't dare tax the oil companies, or the rich, or the people will explode. Never mind the fact that it simply isn't true, we MUST cut everything, because that is what the Real Serious People know to be true.
Will we ever default on our bonds? No, our constitution really won't allow for that. But can you blame the credit rating agencies for looking askance at our system? They see it is broken, and in financial circles, that calls for high interest rates. But while Skelton and the conventional wisdom of the Sacramento swamp imply that we just should have cut and be done with it, there are only easy answers in a system that has lost its conscience.
Of course, we really aren't that far away from that, are we?
With the Governor trying to suspend Prop 98 so that he can further reduce California's future competitiveness, education organizations are understably angry. While the California Teachers' Association joined up with the Governor to push the May Special election agenda, it seems that once again things are back to normal.
Here's the full copy from the ad:
"He said he was sorry," the ad says. "He said never again. But since then, $12 billion more in education cuts. And now Schwarzenegger says he'll break the minimum guarantee to our schools again. Summer schools, already canceled. Class sizes, on the rise. Art and music, eliminated. Tell the governor, 'We haven't forgotten. Protect our schools and put our kids first.'" (SacBee 7/9/09)
Education cuts always get the public upset, so Arnold certianly isn't happy to see this. The buy looks to be fairly big, I'll get some more details on that shortly.
UPDATE: The buy is statewide, in every major market.
Yesterday I wrote a post about a SacBee editorial entitled "Shared Sacrifice". Looking back, I think I probably focused a bit too much on the teacher pay, which was really a relatively minor side issue, and not enough on the question of Prop 98. Nonetheless, the name of the editorial certainly goes a fair bit towards inflaming itself.
But, the question of Prop 98 is a good one. Certainly the SacBee got it right when they called it the CA Teacher's Association's sacred cow. And given that CTA is one of the most powerful interest groups in Sacramento, that's not nothing. However, is it a good thing? I think that's a fair question.
Yesterday, the California Assembly and Senate held a rare joint legislative session to hear from California's economic experts on the state of California's economy. Treasurer Bill Lockyer, Controller John Chiang, Department of Finance Director Mike Genest, and Legislative Analyst Mac Taylor gave a remarkably uniform presentation that urged immediate action and politically tough compromise.
"If you act now, the cash situation is manageable, unless it gets worse, and I've already said it will," Genest explained with a slight slip of the tongue that was perhaps even more accurate than intended.
"The faster you act the easier it will be for you to fix your problem," Taylor added.
Over the next two years, current estimates project that California faces a $28 billion budget hole, and all sides are willing to acknowledge that's likely an underestimate. Moreover, the Legislative Analyst's Office anticipates huge operating deficits above $20 billion per year through 2014. Lobbying in Washington, D.C. will hopefully reduce our federal tax dollar imbalance, but the complete solution requires bold action in Sacramento as well.
You may or may not remember Howard Rich, but I have had many opportunities to grow to despise the man. He seemingly funds every bad government deform proposition on our ballot. He funded the term limits measure back in the 90s, and still heads US Term Limits. Oh, and despite the fact that he doesn't even live in California, he provided almost all of the funds to get Prop 90 on the ballot. That measure, you may recall, would have required that the state pay for any little regulation of property in the state.
Well, Howie Rich has a new fun activity: harassing Democratic donors by accusing them of the murky charge of "voter fraud." Matt Stoller acquired a copy of the letter, which you will find over the flip.
The part that is most interesting to me is that this comes from the guy who won't reveal the donors to US Term Limits, despite the fact that the body gave $1.5 million to fight Prop 93, citing privacy or other such nonsense. I suppose it is ok for him to threaten donors, but not the other way around.
Of course, Rich can't actually do anything legally to these donors, but he is probably doing a fair job of scaring a few donors away.
With all the talk about cutting into Prop 98, the minimum education spending requirement, we get this latest news on our schools:
California schools, required by the federal No Child Left Behind Act to lift more students over a higher academic hurdle this year, instead stumbled and slipped back, as nearly 1,400 fewer schools met test-score targets.(SF Chronicle 9/4/08)
Now, much of the blame should be laid at the feet of the terrible No Child Left Behind Act. Its focus on testing, testing, testing is antithetical to actual learning. That being said, our failures can also be linked to our low level of spending on education. We are 46th in the nation. 46th!
Prop 98 is a minimum, not the proper level of spending. We should be funding education at a far higher per pupil level than the slightly greater than $7K/year we currently spend. Yet, we want to borrow from Prop 98 funds again? Prop 98 should be irrelevant because we spend so much more than that floor.
The Orange County Register is pretty despondent about Californians rejecting Prop 98, a deceptive little scheme using eminent domain as a stalking horse for the installation of a totally new system of property rights. A system where ownership is absolute and sacrosanct, the needs of the community be damned. In the end, Californians rejected this ruse by about 61% of the vote. So, the Register thinks you are an idiot, as they pretty much tell you with this headline:
"Editorial: Voters give away some of their rights"
Now, the Register isn't your garden variety, James Dobsian, Right-wing paper. It's "libertarian" in a Grover Norquist kind of way; they'd pretty much love to see the Orange County staff consist entirely of 3 cops and a security fence to keep the poor people away from the rich ones. They rarely editorialize in favor of propositions, as to the Register, all government action is bad. Every so often they get behind one, typically one that would gimp government some how. Prop 98 was right up their alley.
And boy did you make a bad decision. The Gum-a-ment is going to take all of your stuff! Boogy, Boogy, Boogy.
Expect cities to become particularly aggressive in using these police powers in ways detailed in the U.S. Supreme Court's 2005 Kelo decision. Don't say we didn't warn you.
The problem with this analysis? Kelo has been in effect since 2005, and the number of eminent domain proceedings hasn't skyrocketed. We haven't been just steamrolled with gentrification across the landscape and people wailing and gnashing their teeth. The truth is that eminent domain is very rarely invoked. Statistics are a bit murky because typically these issues are resolved through settlements, but the number of eminent domain incidents is so low as to be statistically insignificant.
The Register will whine about now that they know they've won on 99, cities will run amok. But they have no evidence or reason to suggest that, when boiled down, all you find is naked supposition.
Now, stoopit voters, would you please quit voting so we can get back to the business of plundering the state?
Speaker Pelosi on the recent revelations by Scott McClellan:
''This war is a big lie. It was a lie to begin with..and it continues to be a lie..at some point, maybe the lies just got to be too heavy for him to carry.'' (SF Chron Blog)
Congratulations to Fiona Ma and the Assembly for passing Ma's AB 2716, paid sick leave. Business interests howled that it would break them after SF passed mandatory sick leave by initiative. It didn't, and SF is better for it. California will be better for it if the Governor signs the bill.
Note: I do some web work against 98. Not a whole lot of people are coming out in support of Prop 98, while nearly every newspaper, elected official, and interest group opposes it. You have labor, business, good government, environmental, tenants, and the list goes on and on. On the other side, you have, well, apartment owners and Howard Jarvis' corpse that they keep dragging out.
Today, environmental leaders got together in SF to decry the measure for the potential harm it could do to environmental safeguards. And today, Protection and Advocacy, Inc, a lobbying group for disabled Californians came out against Prop 98 and in favor of Prop 99. Poor Jon Coupal must be crying that even with millions of dollars of landlord money, they still can't catch a break by fooling voters and keeping progressive voters from turning out.
A couple more from Dave:
I found someone who supports Prop.98: Jeff Denham! In fact, he'd rather put abolishing rent control on its own ballot. Another reason to vote yes on the recall.
More bills are facing their fate this week, the last to move bills out of one house. And Republicans blocked the bill put together by a federal receiver and supported by the governor, to build additional medical facilities at our overcrowded prisons. The prisons should be less crowded, and there are plenty of steps to be taken, but this is a human rights issue. Prisoners are dying from lack of adequate care, and without implemented some basic standards there is no way the state will avoid a federal takeover of the entire system. That must be just what those big-government conservatives want.
Anthony Wright has the scoop on some other health care bills, outside the prisons, that did manage to pass through one chamber of the legislature. These are some good, sensible proposals, including a mandate that 85% of premium money go toward patient care (SB1440), independent reviews before insurer rescissions (AB1945), expanding the requirement on insurers covering mental health services (AB1887) and maternity services (AB1962), and SB1522, which standardizes insurance and simplifies the process, in effect eliminating "junk" insurance.
What's going on in California politics? Here's some things that I found:
To the right, you see a video from WhyTuesday.org about an HBO promo event for the HBO movie Recount coming out this Sunday. They brought some of the Florida butterfly ballot machines and let people experience FL voting. Hilarity ensues!
Prop 98 keeps picking up opponents. (I do work for No on 98.) Today, the Redding Record Searchlight opposed it and the Desert Sun went No, alongwithseveralothers, yesterday. The Nos are leading the Yes editorials something like 45-3. In SD-03, Joe Nation has announced his opposition, while Leno and Migden have long been outspoken critics. Also, yesterday the campaign released it's "Fortune 500" List of Landlords who have donated to Yes on 98. Thomas Coates alone gave $500,000 in the hopes of getting a windfall from the end of rent control.
Speaking of the lottery, Peter Schrag has a great column on the lottery's past and future. I was at a debate for my high school government class between then Gov. Ann Richards and GW Bush (then just a grade A doofus sans any real power), when Ann Richards brought the house down with a remark about the lottery. I can't do it justice with the pixelated word, but it was something like "I just think gambling is a cheesy way to make money." It was and is. As Shrag points out, it's not been anything close to a panacea for our schools, and it creates other messes. When it comes to funding, you can try all sorts of gimmicks, but there is no replacing the one guaranteed revenue source: taxes.
Proposition 98 claims to be about eminent domain and protecting the little people. But here at Calitics, we have reason to question the motives of Jon Coupal and the Howard Jarvis Taxpayers' Association. And once again, they are trying to hoodwink California voters.
Proposition 98 eliminates rent control and other renter protections, making living in California's cities out of reach for a greater percentage of our population. Prop 98 would also make protecting California's environment even harder than it is presently. The effects on governance, the environment, and tenants are simply disastrous. NO on 98.
Prop 99 is not ideal, but it is tolerable. It simply blocks the use of eminent domain to transfer owner-occupied homes to private developers. Nothing fancy, but it does have a nice provision that overrules Prop 98 if it gets one more vote. It also has the potential to do the state a great favor by removing the issue of eminent domain from the ballot. YES on 99.
The newspaper editorial boards have been coming out overwhelmingly opposed to the Landlords' Scheme to end rent control and environmental protections. Just today, four newspapers have come out in opposition to Prop 98:
Of course, some had speculated about the independence of the LA Times' Editorial board becuase Times owner Sam Zell is a major donor to Prop 98 and stands to make a tidy sum if 98 passes. However, they came out strongly against 98:
With the ill-considered Proposition 98, property rights advocates once again have undermined themselves and poorly served homeowners, businesspeople and real estate investors by overreaching. It would have been so easy to give Californians what they need: assurance that no city, county, other local government or the state can condemn property, evict the owner and turn the land over to a developer who donated to elected officials and then convinced them that he could make the plot prettier and more productive. ... The Times urges a no vote on Proposition 98 and a yes vote on Proposition 99. LA Times
This is what leaders and organizations throughout California have been saying for months: Prop 98 is a deceptive scheme in favor of landlords. That's why groups like the AARP, the League of Conservation Voters, and the California Democratic Party all urge a NO vote on Prop 98 and a Yes vote on Prop 99.
If you want to learn more, please visit our website at NoProp98.org.
By this time, I hope you've heard about Prop 98. But that's not the case everywhere, so much attention has been paid to getting the word out about the really negative effects that Prop 98 would have upon California. A great group of people came together in SF to talk about the Landlords' Scheme to eliminate rent control, tenant protections, and affordable housing regulations.
Several folks came with cardboard boxes to make the point that many people living in rent controlled units would be forced to the streets. Many units would be converted to luxury condo conversion projects and housing supply in San Francisco would dwindle further. Affordable housing is already tough enough to come by (just look at Craigslist if you don't believe me), the last thing we need is Prop 98 eliminating much of the affordable supply.
You can watch the entirety of the rally on YouTube over the flip, but some of the comments lept out at me. Some people expect that these propositions won't really affect their lives, but Prop 98 is very different. From June 4, 2008, landlords will have carte blanche to do what they please to tenants. "Just Cause" eviction will be a thing of the past, and renters will have to prepare for an onslaught. As Ted Gullicksen of San Francisco Tenants Union said, "San Francisco would become a city not just for the wealthy, but for the very, very, very wealthy. ... San Francisco would lose its character and its diversity."
It is not all that surprising that landlords' would try this, really. After all, they are businesses trying to maximize their shareholder and/or owner's pocket books. Heck, this is a great investment for people like Sam Zell, who stands to make $15 Million from a Prop 98 win. The problem is that they are using deceptive means to overturn the will of the people. The people in several cities across California have determined that they favor rent control. And practically every locality has chosen to require a "just cause" for eviction (as well as some state regulations).
But the landlords weren't able to get rent control overturned at the local level, at least totally. So instead of trying to convince localities to end it or to get state legislators to overrule the localities, the landlords' go with deception. They hide under the cover of eminent domain to end tenant protections. That's why this is so important to defeat June 3. We just can't let Prop 98 sneak by us, it would be the third leg of the stool. Prop 13, the 2/3 rule, and this. But that stool is one that doesn't support all Californians, only the super-wealthy.
Follow me over the flip for the videos and more. You can also get more photos at my flickr set.
There will be a big No on Prop 98 press conference at noon tomorrow at San Francisco City Hall. (Beyond Chron event listing) The SF Tenants Union recommends you wear a carboard box to help San Franciscans visualize their future with Prop 98.
It looks like the Common Cause redistricting initiative has succeeded in signature gathering, or at least they are going to say they are. There's a press conference scheduled at 11 today with a "major announcement regarding signature gathering." As this is a constitutional amendment, they need about 1.1 million signatures to be reasonably sure that they'll make it on the ballot.
Apparently Gray Davis will be there to play nice with Arnold and attempt to get some credibility back. Too bad it's a fundamentally flawed system giving Republicans say over apportionment that they never earned at the ballot box. Sure, it won't make a huge difference in reinvigorating the fading CA GOP, but I'm just not sure why this redistricting board doesn't look like the voters of California, but instead some idealized 3-way tie between Dems, Reps & DTS.
We're almost out of cash (SacBee). Normally we have a few billion socked away in some account or another. however, Judy Lin reports that we may be completely out of cash by mid-summer. We need a budget on-time this year. So, Republicans if you would just get on board with the will of the majority, that would be great. Thanks.
Dan Walters notices the tiff between John Garamendi and Steve Poizner. Garamendi sent out a letter(PDF) last week stating that he would not stand by quietly while Poizner hacks through the consumer protections that he built as Insurance Commissioner without at least the courtesey of some public comment. Poizner responds that since the press got it first, it must be a gimmick. Of course, because Garamendi has so many levers of power as Lite Guv that he can use tools besides the media. Poizner knows how the game is played, he just doesn't like it when it is turned against him.
Republicans find it very tough to pass legislation, so this is what they turn to: banning pets from the laps of drivers. So much to say about Bill Maze's (R-Visalia) legislation which just passed the Assembly, but I'll just leave it up to your imagination.
Sen. Perata and Chief Justice Ron George want to fix our courthouses. The legislation calls for about $5 Billion in bonds to modernize California's court facilities. Anybody who has been to a court building recently will understand why this is a good idea.
Three Elephant Seals were ruthlessly, and illegally killed near San Simeon over the weekend. There's not much in the way of clues or motive. The seals are protected by federal law and don't eat any endangered fish in the area.
The SF Bay Guardian released their endorsements for local races and state propositions. These tend to be some of the most influential endorsements in the City, and to a lesser extent, in the region. As always, they do a laudable job presenting a thorough analysis of each race and the relative merits of each position. Hats off to Tim Redmond and the crew at the SFBG. Here's a summary of their positions, and I'll discuss some of them over the flip.
Prop 98: No, No, No
Prop 99: Yes, Yes, Yes
SD-03: Mark Leno
SD-09: Loni Hancock
AD-13: Tom Ammiano
AD-14: Kriss Worthington
CA-08 (Pelosi): No Endorsement
Governor Schwarzenegger has once again abandoned his radical friends on the right, and boy are they pissed. But, here's his remarks on Proposition 98, the constitutional amendment to end rent control, land use restrictions, and governmental regulation of the environment. Arnold opposes it mostly because it blocks him from building dams.
Schwarzenegger said he was opposing Proposition 98 in part because it might block the building of water projects crucial to farmers and residential users.
"Eminent domain is an issue worth addressing," Schwarzenegger said in a prepared statement. "However Proposition 98 would undermine California's ability to improve our infrastructure, including our water delivery and storage." (SacBee 4/25/08)
Apparently the potential harm to tenants was a little lower down on his list. But with this Governor, you take what you can get. He's opposed to Prop 98, and that's a good thing.
The LA Daily News takes a look at some of the people that could be harmed by Prop 98's odious landlord power grab. This isn't just some hypothetical, but real people living here in California. People will be forced to leave the cities and head out to the exurbs or out of state. For example:
He's a disabled Vietnam veteran. She's a retired teacher who spends most of her pension on health insurance.
Arnie and Marilyn Bernstein are among an estimated 1million Angelenos with a rent-controlled apartment.
But if voters kill rent control in a June ballot measure, the Bernsteins say, their monthly payment would jump from $876 to $1,300 - a 48 percent increase.
"We couldn't afford another apartment," said Marilyn Bernstein, 62, of Canoga Park, who has lived in the one-bedroom unit for 21 years. "We'd be living under a bridge - like `Tent City, here we come.' The possibility of lifting rent control would be devastating."
Emphasis my own. The fact is that while this is permanent vacancy decontrol, the rent control ends when the tenant moves out, Prop 98 makes it a heck of a lot easier to do evictions. Tenants are generally in a lot worse place if Prop 98 passes. So, Jon Coupal, head of the local Destroy Gummamint Set (HJTA), has to defend this turdblossom. Let's see what he comes up with. Ah, yes, he lies.
"It doesn't make it easier to evict anybody," Coupal said. "All the protections under existing law remain in effect. Only when that unit is vacated can anybody raise rents. We actually take the existing protections against evictions and make them part of the California Constitution."
Naysayers insist, however, that the landlord-backed measure would essentially end rent control in California.
Oh, those naysayers, always coming in with their facts and messing up your spin. You can read the proposition on the Yes 98 site. Look at Section 3, the part that would be grafted onto the California constitution. Do you see tenant protectsions there? Not so much. In fact the only time the word "tenant" is mentioned comes in the Sec. 5, where it eliminates rent control.
In reality, Prop 98 slashes into the heart of tenant protections. It is a dangerous ruse to use the issue of eminent domain to dramatically increase property rights in a way that was never envisioned in the past.
Given that George Skelton has written the opposing view in today's L.A. Times, I thought readers would enjoy my opinion about California's early primary.
Remember when California moved up its presidential primary from June to February - so that we'd have a "bigger impact"? We ended up sharing February 5th with 21 other states - and so had almost no effect on the nomination. Barack Obama lost to Hillary Clinton because he didn't have enough time to introduce himself to voters in such a large state, but made up for that loss by racking up huge victories elsewhere. Now California has a state primary on June 3rd - where turnout is expected to be very low, so the right-wing Proposition 98 to end rent control could pass. If we had kept the primary at a later date, we would have affected the nomination - and Prop 98 would have gone down in flames. But the Democratic leaders in Sacramento pushed a February primary to extend their term limits - in a gambit that failed.
The Yes on Prop 98 folks have launched what I think might go down as one of the most melodramatic ads ever. It starts with a couple of kids, who we are made to believe who are siblings who have been ruthlessly forced to move by the big, bad "gummamint" through their evil eminent domain. They'll never get to see their friends again! Too bad the ad is entirely misleading.
Unfortunately, they didn't get to talk to the kids of renters who will be forced to move when the landlords who funded this measure kick them and their families out of their apartments. To the children who will be pushed out of California's major cities because rent control is ended and eviction protections are obliterated. Apparently, only kids whose parents own a house matter.
Of course, relatively few homes (typically on the order of a few dozen in the state per year) are actually purchased through the use of eminent domain. Furthermore the vast majority of these incidents involve public uses of the land, roads, fire stations, that kind of thing. But the truth was never really an obstacle the right-wingers cared much about.
But the tide is clearly turning against the Landlords power grab. Even Republicans, like former Governor Pete Wilson, and the odious and ineffective George Radonovich (R-Mariposa), are turning against this stinker of a proposition. But these ads are going up across the state, and turnout will be shockingly low. So, we need to turn out voters from LA and SF. Check out the No on Prop 98 Website for what you can do to help.
Jon Coupal is the head of the Howard Jarvis Taxpayers Association, and by the way, seems to be managing the Yes on 98 campaign. Coupal isn't much a fan of government. In his world, we'd all fend for ourself in a state of constant battle with nature and our neighbors.
In recent weeks, Gov. Schwarzenegger, legislative leaders and the Legislative Analyst's Office have called for eliminating what they term "tax loopholes" to help close California's staggering $16 billion budget deficit.
But one person's loophole is another person's legitimate advancement of public policy. This is especially true with those tax credits or deductions that are both broad-based - benefiting large segments of society - and which result in a significant societal benefit.(OC Register 4/2/08)
He then goes on to talk about the home mortgage deduction, and how that's terrific! If the evil Democrats succeed in eliminating it, surely every house in California will fall into foreclosure.
Uh-huh. There are a few problems with this, specifically that the Legislature isn't trying to end the home mortgage deduction. There's a name for this type of argument, ah, yes, it's called lying. You could call it a red herring, or what ever you want, but, it's just a lie. The tax loopholes the legislature is trying to close are not as big as the mortgage deduction. Like the yacht tax loophole. Apparently, Coupal is against closing that, but what policy purpose does that encourage? Ah yes, it encourages the time-tested state policy of moving business to Nevada. A great one, there, Mr. Coupal.
Jon Coupal is comfortable with lying, though. Like when he says that Prop 98 won't end rent control, it will merely phase it out. (Disclosure: I do some web work for No on 98.) Too bad he fails to mention that Prop 98 also ends tenant protections that block unfair evictions. So, sure tenants keep their rent control, until they get evicted, that is.
Coupal just continues his tired, old rant. "Government is too wasteful, private companies do it better and cheaper." Yada, yada. Too bad they don't actually have any evidence of that. In fact, the real evidence ends up quite to the contrary. Just look at the recent news that the Medicare auditor showed that the private medicare plans never provided any savings whatsoever over the regular Medicare plan. The old, stodgy government run Medicare is in fact better.
But let Coupal rant about how he wants to cut education and cut services. His argument is tired as Prop 13. Let's see this terrific Republican budget with all the so-called waste. What Coupal and his cronies call waste, is what everyday Californians call a lifeline to the future: Good schools, safe and effective transportation, and care for those who need it most. If we state our claim clearly, voters will see past Coupal's snake oil for the progressive truth it is obscuring.
