As the bills come rushing out, there are a few that are of particular note. One of these is Nancy Skinner's AB 2666, which would require the state to maintain a public record of "tax expenditures." In other words, companies who took big tax credits
The Assembly gave final legislative approval today to heavily lobbied legislation that would post corporations' use of tax loopholes on the Internet.
Business groups oppose the bill, Assembly Bill 2666 by Assemblywoman Nancy Skinner, D-Berkeley, so it's uncertain that Gov. Arnold Schwarzenegger would sign the measure. (SacBee)
Now, this is, in reality, a very modest measure. It only applies to publicly traded companies, so much of this information would have been public at some point anyway. This just allows the people of the State of California to conveniently access more information about where their tax dollars are going.
Of course the Chamber and their Republican lapdogs see it another way. They only like openness and transparency when it comes to groups they don't like. But for the voters of California to know that large chunks of their budget is going out on tax credits to single companies? Why, that would be sheer madness. We can't be having an informed populace like that! Sure, services, we have to demand every last bit of accountability, sunshine, and burdensome compliance. But tax breaks? Sunshine is for the lesser folk, don't you know?
In the end, much of this comes down to the fact of whether you think these companies should get to take and take from the government, in services, in roads, in skilled labor, etc, without at least acknowledging that they owe a debt and a fair share of that. But, for some, government is only there for a one way flow. Drown it, and you might just discover that you wish for it back.
Finally, there's a budget proposal worth fighting for, and it couldn't have come at a more critical time.
On Tuesday, Assembly Democrats, led by new Speaker of the Assembly John Pérez, proposed an innovative budget plan, that closes the nearly $18 billion budget gap while focusing on jobs, as an alternative to Gov. Schwarzenegger's job killing, all-cuts budget.
This proposal takes the economic high road by saving hundreds of thousands of jobs for teachers, police, firefighters and other workers, and creating jobs in the private sector that will spur economic growth and new revenues for the state without raising taxes on working families.
Speaker Pérez:
California has to produce a budget that promotes job creation and makes economic sense. We shouldn't make budget decisions that cut jobs and short-change our overall recovery and long-term growth. The California Jobs Budget will protect and create 465,000 jobs in the private sector and local communities, while also protecting funding for schools, public safety, and a basic safety net.
The proposal would ease California through the worst budget deficit of a generation. It protects working families from devastating cuts in service like home care and child care, and saves jobs for teachers, police, firefighters and others who provide vital services at the state and local levels. It proposes only half of the Governor's fee increase for UC and CSU students, and rejects his proposed $4.3 billion cut in education.
This package would mitigate deep budget cuts by choosing working families over Big Oil and large multinational corporations. A new oil severance fee will help fund a private sector job creation program. And delaying unnecessary corporate tax breaks will save $2 billion that can be invested in job creation, child care, health care, and job services for the working poor.
The California Jobs Budget closes the state's $17.9 billion General Fund shortfall and ends the year with a $1 billion final reserve. The centerpiece of the California Jobs Budget is a $10.1 billion Jobs and Economic Stability Fund that will protect against the loss of 430,000 private sector, local community and school jobs in the Governor's May Budget Revision, and which will also generate tens of thousands of new jobs. The California Jobs Budget provides $1.5 billion for targeted Jobs Initiatives, repays debts to local governments and schools to avoid massive local government layoffs, and maintains critical employment services and training programs that get people back to work and keep them on payrolls and off government aid.
Predictably, Republicans and the Governor are already attacking the proposal in an effort to try to score some cheap political points as they enter negotiations.
The California Jobs Budget protects the private sector job growth we've begun to see and it prevents massive layoffs of teachers and cops. Assembly Republican Leader Martin Garrick is saying he'd rather kill 430,000 jobs in a time of record unemployment than have California join other states in charging oil companies a fee for the oil they take, a fee that experts agree won't impact consumers. The irresponsible rejection of jobs and federal funds Mr. Garrick's position represents is not what Californians want - and it's not what California's economic recovery needs.
By unleashing their attack machine without even considering the merits of this proposal and its potential benefits to our economy and middle class, Republicans have once again shown they aren't interested in meaningful solutions to the budget crisis that will actually get our economy back on track. Instead, the Governor and his Republican allies continue their scorched earth campaign that would eviscerate the state as we know it. We simply can't let them win. Not this time.
As progressives and advocates for working families, this is the proposal we've been waiting for. And this is precisely the kind of proposal the people of California want. Recent polls show that Californians are seeking a fair budget solution that won't destroy what we value most: education, public safety, our safety net and other important programs. The Assembly Democrats have stepped up to offer a budget that delivers.
This proposal is a bold and creative step forward that, frankly, we haven't seen in prior budget fights. But it can't pass on its own. We need to fight for it. It's time for everyone who cares about our state's future to rally around this proposal so that we can achieve where the Governor has repeatedly failed: delivering a budget that protects jobs, education the safety net and finally puts California on the road to economic recovery.
Angie Wei is legislative director at the California Labor Federation, which represents 2.1 million workers in 1,200 unions across the state.
In a Broder-esque column over the weekend, George Skelton took a little of this, a little of that, and a little Capitol craziness, and jammed them all together. If you get beyond his Capitol story time of arm wrestling, you see that there are some very real concerns that are being glossed over. In a discussion of Medical co-pays, this is very concerning
Maybe the $50 and $100 co-pays are a bit excessive for people living in poverty, officially defined at $10,800 a year for individuals and $14,600 for couples. But some co-pays are warranted. (LAT)
Except, as Anthony Wright later points out. It isn't just the $5, for which Skelton dramatically underestimates the value of the money to those on MediCal, but the incentives. If we start requiring these co-pays, it deters people from seeing the doctor early, and encourages them to wait until they can no longer ignore the problem. This is a perverse incentive.
But Skelton gets to the point of choices. More specifically, that we are making extreme choices simply by sticking with the status quo. If we allow the corporate tax break from 2009 to set in, we are looking at $1.8 billion disappearing. And that makes the MediCal payments look like chump change:
Schwarzenegger had the right idea in January but since then has abandoned it. If things got bleak enough, he said then, the state should postpone roughly $1.8 billion in corporate tax breaks scheduled to begin in July.
Things are certifiably bleak. ... {T}hey certainly shouldn't take effect this July. Some things just make sense, regardless of which party you're tied to.
We must understand that bumbling along is, in fact, making a choice. Let's offer Californians a real choice, provide the state the services that we expect and require, and let the chips fall where they may.
Remember all the hopes of increasing tax revenues? Fuggedaboutit:
State tax collections plummeted unexpectedly in April, wiping out months of steady gains that legislators hoped would ease their budget troubles and restore California's economy faster than experts predicted.
Such hope is now fading fast.
Revenue for April, the biggest revenue month because it is when most Californians pay their taxes, lagged projections by nearly 30% - roughly $3 billion, according to state officials. The drop was steep enough to erase improvements recorded in each of the four previous months. (LA Times)
State lawmakers, particularly Senate leader Darrell Steinberg (D-Sacramento), have been bullish about California's recent spate of good news regarding tax collections. For several months, the state has collected more in taxes than expected, with the current haul about $2 billion more than forecast.
But just because the state has collected $2 billion more in taxes doesn't mean the state's estimated $20- billion deficit has shrunk to $18 billion (LA Times)
Of course, because of Prop 98, some of that cash will go to schools. An altogether positive development. Mac Taylor, the new legislative analyst who is turning out to be decidedly less nun and more hawk, puts it in a different light:
We just want to make sure people are going into this with their eyes open," Taylor said. "You can't attribute all of that new revenue to directly addressing the budget problem."
It seems that's the only way you get Arnold Schwarzenegger to do a damn thing these days. You want to change education? Add some tax credits. You want to cut spending? Add some more tax loopholes, and we'll talk.
And, now, the Legislature has decided to just talk. So, they're throwing in a homebuyer's tax credit (putting realtors over our children) and a sales tax exemption for environmental technology companies (putting another business sector ahead of our children). Yay!
Responding to a demand by Gov. Arnold Schwarzenegger, state lawmakers Monday sent him bills establishing another homebuyer tax credit and a sales tax exemption for environmental technology firms, satisfying him enough to win his signature on a transportation funding bill.
Schwarzenegger last week threatened to veto a Democratic gas-tax maneuver that would save the state $1.1 billion as it tries to close a nearly $20 billion deficit. The proposal was similar to a gas-tax swap Schwarzenegger first proposed in January, but the Democratic version provided ongoing funding for transit programs.
The Republican governor, in a letter, vowed to veto the gas-tax proposal in part because he said lawmakers had not sent him the job creation bills he wanted. (SacBee)
This, my friends, is called hostage taking in the vein of Lucy and Charlie Brown. Arnold proposes a law, gets Dems to buy-in, and then pulls the old veto card out of his hat. Football yanked! Ha-Ha.
Get used to this Democrats. If Meg Whitman successfully implements her "Buy It Now" program for the governor's gig, this is what every negotiation will look like. If you don't do what she says, she's going to veto everything. Or so she says. But if she's going to go that route, she'd do well to learn from the master. After all, look where all this hard work has brought him. It takes real work to get to be the worst governor ever.
With dueling letters flying back and forth (here's Sen. Steinberg's), it is clear that there is a lot of work left to be done on the budget. In fact, Steinberg is saying that they are at a "mini-impasse" now:
Senate President Pro Tem Darrell Steinberg, D-Sacramento, suggested Tuesday that Gov. Arnold Schwarzenegger bears blame for budget inaction after the governor rejected the most significant parts of a budget package Democrats have sent him in recent weeks.
The Republican governor on Monday told legislative leaders that he would veto a gas-tax swap that would have cut about $1 billion from the state's $19.9 billion deficit through June 2011, saying that he wanted a bill that would have cut gas taxes by 5 cents per gallon.
*** *** *** ***
The Democratic Senate leader declared the situation a "mini impasse," though he was confident that lawmakers and the governor would be able to resolve their budget disagreements. In particular, Steinberg said, lawmakers would seek to send Schwarzenegger another bill that helps "short sale" home sellers, perhaps without the corporate penalty provisions if need be. (SacBee)
I recommend you read the full Steinberg letter for additional context, but long story short, they're trying to do a swap of gas taxes for fees. Trouble is, that when other states tried doing a similar move, they ended up losing revenue and the oil companies ended up taking the additional money.
There are a few points of agreement that should be able to get some budget "solutions," but there is still a long way to go to chisel down that $20B deficit.
John Fensterwald has a great story in the Educated Guess about what the parents in Cupertino are facing for their children. The district is K-8 only, and as the area is pretty wealthy, and fairly progressive, they've been able to pass a couple of parcel taxes for the district. In fact, last year they passed one for $4 million. But, that's not going to be enough:
But now this K-8 Silicon Valley district, home of Apple Computer and some of the highest performing schools in the state, is facing a $9 million deficit for next year. And that's putting in jeopardy many of the programs parents consider essential: small classes, summer school, the GATE program for gifted children, librarians.
*** *** ***
To that end, the Cupertino Educational Endowment Foundation is asking parents to help put an initiative on the November ballot that would lower the threshold for passing a parcel tax from two-thirds to 55 percent to make it easier to pass the next parcel tax. And organizers are asking every family to donate $375 toward a goal of $3 million to keep small classes in grades one to three while saving 105 teachers who've been told they'll otherwise lose their jobs.
Even in a place like Cupertino, where the district has always been able to find a way, there just aren't the answers that there used to be. Sacramento has cut them out at the knees, and they're trying to recover the best they can. Will Cupertino still have decent schools come next year? Probably, but if even the so-called "rich districts" are struggling to make ends meet, what does that say for the districts that are dependent upon the state?
If Meg Whitman wants to talk about too much state spending, how about she actually takes a look at our schools? You know, because hers went to private school, she's not so familiar. And with each cut, with each lost resource, times become harder.
I have a friend who teaches at a public school in San Leandro. It's a working class area these days, and the economy has hit the community pretty hard. Students are coming to school completely without supplies, and the districts simply don't have the money to pay for everything. But, the teachers aren't going to let the kids sit there with no pencil, and they end up footing the bill. While the Right wants to talk about how teachers are so spoiled, the fact is that they aren't exactly making Kingly ransoms. And honestly, I can't think of a profession that deserves every cent they earn more than teachers. But, even with that being said, teachers are being forced into spending hundreds of dollars each semester to provide simple school supplies for their classrooms.
Robert mentioned the looming teacher layoffs, but there will be some layoffs that will be coming down the pike right away.
In low-key votes, lawmakers slashed nearly $1 billion from the state's prison system, chiefly from inmates' medical care, and approved a $540 million reduction in state workers' paychecks. The state Senate had approved those measures last week, and on Monday the Assembly passed them on party-line votes. (SJ Merc)
In this series of votes, the Assembly didn't look at the Amazon.com tax nor the plan to change the way the gas tax works.
What it did do, slashing prison health care funding, is perhaps without controversy in the Legislature, but the federal courts might look at this slightly differently. Further cuts to the salaries of state workers, who have already seen cuts due to the furloughs, will increase the strain of many workers who are just struggling to keep their heads above water.
Given that Sen. Steinberg has already said that he wouldn't seek broad tax increases, it appears that cuts are going to be the name of the game. And Arnold doesn't even want to look at simple majority tax/fee exchanges. While the stimulus from DC appears to be doing some good, the biggest of the 50 Little Hoovers is right here in Sacramento.
Arnold Schwarzenegger did a swing on the DC fun ride this weekend. And, of course, he did his standard trip of the Sunday talk shows. This week it was ABC's this week to look on endearingly as Arnold spills a load of bull all over the ground.
Apparently when Arnold enters the Eastern time zone, he becomes all magically magnanimous towards Democrats. Apparently, if you talk trash about your own party, it's big news in DC. There were a whole slew of stories about Arnold trashing the GOP. There's Arnold on the stimulus:
"I find it interesting that you have a lot of the Republicans running around and pushing back on stimulus money and saying this doesn't create any new jobs, and then they go out and do photo-ops and they're posing with the big check and they say, 'Isn't this great! Look the kind of money I provide here for the state! And this is great money to create jobs, and this has created 10,000 new jobs, and this has created 20,000 new jobs,'" Schwarzenegger said on ABC's "This Week." "It doesn't match up." (The Hill)
And Arnold on Health Care and the President:
And he sided with Obama, saying it would be wrong to start all over in preparing health-care legislation for Congress to consider.
"I think any Republican that says you should start from scratch, I think that's bogus talk, and that's partisan talk," the governor told reporters.
*** *** *** ***
"It was truly encouraging to see him being so interested in talking about job creation being his number-one priority," Schwarzenegger said.(CapAlert)
Now, there's two ways to read this. Either it's just Arnold doing what Arnold does best, play showman, or it's Arnold beginning to angle for some sort of position in the Administration.
Look, Arnold has always been something of a wild card, in terms of what he says, but when it comes to where the rubber hits the road in Sacramento, he's the CalChamber's go-to guy. He sides with corporations over people, and fights for corporate tax cuts while MediCal is slashed. Hardly the great bipartisan hope that some would like to depict.
During this whole multi-year budget season, the Republicans have consistently been fighting to put the reduction of taxes as the top issue on the table. And Steve Poizner's "10-10-10" Plan calls for a 10 percent cut in taxes as well as a 10 percent cut in spending. Of course, we've cut far more than 10 percent in each of the last few budget years, so his plan doesn't carry much meaning, but the sentiment is still there.
But, like so many issues facing California, the Republicans are out of touch with the people they are supposed to be representing. In a poll by the Datamar firm (PDF), taxes as an issue didn't even rate. It just got lumped in with "all other issues." Meanwhile, "budget cuts" rated as the second leading issue among all groups except Republican respondents. (They're still hung up on the immigration issue, despite the fact that we are still in the middle of a slow, if not nil, immigration flow on our southern border.)
Of course, the economy is still front and center, as "jobs" and "economy" could conceivably be pushed together in terms of responses. But, as voters are looking around the state, they see the effect budget cuts are having. Transit and roads programs are being slashed, you get charged for 911 calls, and the social safety net is falling apart. Workers across the state are falling into semi-permanent states of unemployment that just become harder and harder to break out of.
So, why then are we still arguing? Why not fix the budget? Well, the Republicans have played their hand well. It's always easier to be a party of no, and as well as they've played that game in DC, they do it better in Sacramento. Because despite the minority's rejection of even the budgets proposed by their own governor, they are attributed a relatively small share of the blame.
SInce 1978, the Republicans have almost always been in the minority in the Legislature, but have wielded that minority as a club to make some serious and far reaching cuts to the system. In addition to commanding the governor's position most of that time, they have been able to bully Democrats into adopting budgets that would never be approved under any majority vote system. It has skewed the actual state of the government and
Yet by allowing just the stray vote or two to cross the lines, they keep their names out of the filth of the actual budget and can blame the Democrats for the perverse effects of a system gone astray. Thus, you get this graph to the left, where the Dems, despite there willingness to give and give to the Governor and the Legislative Republicans being seen as the source of problems. Despite all facts to the contrary, no matter how many ways you can show historically what the supermajority has done to the state, it doesn't matter. You end up with this garbage.
Of course, given our string of pr debacles, nobody should be surprised to see that nearly 70% of Republicans blame the Democrats, while only about 30% of Democrats blame the Republicans in the Legislature. We have simply failed to tell our story. And at this point, it's not even clear if Californians are really wiling to do what is necessary to create a working and sustainable government.
That being said, it is imperative that we not only continue to fight for the majority of Californians who are more concerned with cuts than taxes, but we frame it as such. Every day, Democrats need to take the fight away from a frame as a fight with the Republicans and transform it into a populist crusade for the rights and values of the majority of Californians.
I'll be on KOGO radio with San Diego U-T editor and blogger Chris Reed at 6:35 this evening. You can listen online or catch it on the radio in San Diego at 600 on your AM dial.
The internet, 15 years into its serious commercial life is still something of a wild west. In theory, sales tax (or its counterpart the use tax) is supposed to be paid on all purchases. In practice, it's only paid where the stores collect it. While the state has begun making a push for Californians to pay use tax on products that they buy from online stores, few people actually do so. I'll admit that keeping track of my online purchases is a pain in the butt. I just end up guessing and paying on that guess. But, I'm just guessing here, but I bet I'm in a pretty small minority here.
New York has gone the additional step of requiring Amazon and other online companies collect and pay that tax. Amazon, and fellow online retailers, aren't so enthused. From Amazon's website:
Effective June 1, 2008, Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the State of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax beginning on that date.
Please note that if you place an order prior to June 1, 2008, your Order Total may not include an estimate of New York sales taxes, but those taxes may still be charged if your order is readied for shipment on or after that date.
But what does Amazon have against this practice? Is it too challenging for them to do the work of collecting taxes? Not really, at this point, payment processing systems can be programmed fairly easy to collect and submit sales taxes.
No, at this point, it is completely about the online stores' efforts to undermine local businesses. They believe that their purchases should not be subject to taxes, while if you go down to the local bookstore, you have to pay up.
Perhaps the idea made sense when the Internet was a struggling venture. Amazon.com is now the world's largest book retailer. More music is sold online than off. The internet does not need any more boost through accounting trickery. These stores should be collecting taxes.
While the loss to the states is relevant here to the budget, of equal, if not greater, concern is the loss to local companies. They have to collect the taxes, and then are left with seemingly higher taxes. It's about time that we level the playing field. Let internet and brick and mortar retailers at least compete on a level playing field. Local businesses already contribute more to the local economy in jobs and recirculating money, why would we tie an arm behind their backs?
Meanwhile, Arnold Schwarzenegger continues to oppose small businesses right here in California, and says he plans to veto the measure if it gets to his desk.
Remember ArnoldBucks? Well, I hope you like them, because they are on their way back.
"Here we go again," said state Controller John Chiang, warning lawmakers that the state will run low on cash this spring unless they make adjustments in the weeks ahead.
California is falling $6 billion short of the revenue it needs to fund basic programs in the current fiscal year and is projected to be short by another $14 billion in the fiscal year that starts July 1.(AP)
Of course, the response thus far has been talk of cuts-only deals and some budgetary gimmicks. Instead of real solutions that will allow the state to provide for the general welfare, we get more threats of increased withholding and other ways for the state to get some interest free loans from the people.
Last year, the ArnoldBucks IOUs ended up costing the state millions of dollars in additional interest, setup and processing, and hurt our credit rating as the world saw our dirty laundry. I can't wait for this year's excitement!
Well, CTA didn't take on Prop 13, but this isn't a bad start:
On Sunday, delegates for the 325,000 member union voted to back initiatives to rescind corporate tax breaks (see initiatives #1412 and #1375), passed a year ago under cover of darkness, that eventually will cut state revenues by an estimated $1.7 billion. Backing up its vote with dollars, the CTA has committed $587,000 to gather 434,000 signatures needed to put it on the ballot. (Educated Guess)
In a time of economic chaos, why would we start with tax breaks for corporations? Good on CTA for pushing on this issue. It should be a crowd-pleaser for the left, and it seems like it should stand a good shot of passing in November. For now anyway, CTA has taken the safe route.
At the same time, they had prepared initiatives to increase the property tax rate on commercial real estate and to allow real estate values of commercial real estate to float. In other words, they were trying to split the tax roles. That measure would be much more expensive to pass, and the Cal Chamber and their cronies would fight that like a dog.
This measure, on the other hand, is a populist measure. It's hard to imagine the advertising campaign that you'd be able to say would surely defeat this one. Possible to defeat, of course. But if we're betting straight up, I'd put my money on Yes.
Keep a look out for the petitions, CTA should have no problem gathering the 700,000 or so signatures they'll need to be safe for this one getting on the ballot.
Given the fact that the Republicans have no interest whatsoever in reforming our broken revenue system in a way that would be palatable to the majority of Californians, it leaves the Legislature looking for other solutions. The majority vote revenue package has been hanging around for a while, and Governor Schwarzenegger vetoed a version of it last year. But, the Democrats are bringing it back.
Assembly Democrats decided to find money to cut textbook costs for college students by closing a corporate tax loophole on multinational corporations.
By casting Assembly Bill 1178 as revenue neutral, raising and cutting equal sums in taxes, Democrats could ignore Republican opposition and pass the measure by a simple majority.
The bill moved to the Senate by the bare-minimum number of votes required, 41-28. (LA Times)
Of course, the Republicans haven't met a tax loophole that isn't sacred, a credit which isn't deified. They have no interest in working with the Democrats and the majority of the country.
While majorities may support the supermajority, majorities also favor a working government. And right now, the Republicans are nothing but an obstacle to good governance.
In the con-con vs initiative reform debate. California Forward is the heart of the initiative side of the argument. So, their proposals, which are likely to be followed up with some corporate cash, carry some importance.
Now, many of these proposals are things you have heard before. And the target of today's news is a measure that would adjust some of the supermajority requirements. Sounds good, right? Well, maybe not, as CalBuzz's birdogging of the measures uncovered a teensy-weensy issue: the original measure required basically all fees to get a 2/3 vote. In other words, they wanted to subsume the Sinclair Paints decision. Sure, progressives would get a majority vote budget in exchange, but that's kinda like getting a lump of coal in your stocking. Sure, you can use it to heat the room for a while, but it's really lame and you end up depositing a bunch of chemicals in the air.
Now that they got some negative attention from the left, CA Forward is trying to do what they try to do best. Get some more squishy love from the squishy middle. They've changed the proposal's language. You be the judge as to how much difference this change makes:
Option 1) Their proposal still cuts into the Legislature's ability to use raise fees by majority vote - which will still infuriate progressives - but only when fee revenues would "replace funding for specific programs, services or activities previously funded by a tax that is repealed or reduced in the same or the prior fiscal year."
Option 2) The proposal said a two-thirds vote was needed for "any bill that imposes a fee that replaces revenue that in the same or the prior fiscal year was generated by a tax.
Option 2 is the old language, with option 1 being the replacement language. Now, this clearly makes a big difference. A majority could still pass a new fee to bring revenue into a specific program that was receiving general fund revenue. However, the tax couldn't have been otherwise reduced.
So, why is this a problem you ask? Why would we want to reduce the taxes? Ah, that brings us into the "Majority vote revenue package" that was placed up for discussion last year, and that Arnold said no way to. Essentially, that plan repealed one part of the gas tax to replace it with a majority vote gas fee as well as a tax to go directly to the general fund. That would be a revenue neutral tax increase, but end up bringing additional revenue to the table.
Under California Forward's current plan, that is still killed. So, pretty much any substantive revenues will have to go through the supermajority. Whether you think the majority vote budget is worth that trade-off is a value decision. Given the painful budgets we'll be seeing over the next few years, I'm a bit skeptical.
California needs a knight in shining armor to deliver it from the forces of budget shortfalls, program cuts, and sub-15% legislative approval ratings.
At first, I thought our hope was Gavin Newsom, but his departure from the Governor's race leaves a handful of candidates on both sides that seem inherently opposed to doing the one thing that could save this state: raising revenue.
So, who is going to carry the baton? Where is our saving grace, and when will he/she hurry their butt up and save us from sinking further and further into debt and depression?
One person who could posthumanly save the State of California is Saul Alinsky. Deemed by many as the "father of community organizing", Alinsky helped organize the Back of the Yards area of Chicago introduced to the national stage by Sinclair's "The Jungle".
Alinsky passed away in 1972 (in Carmel-By-The-Sea), but his revolutionary tactics for mobilizing the masses have time and time again generated the true catalyst for change: Friction. Given the current economic situation in this state, Lord knows we need something.
The AP has a story about the fact that Arnold's Prop 49 is breaking a hole in the budget. Arnold, for his part, is pretty adamant that he won't gut it. Because, you know, it's part of his legacy. I guess it's only okay to mess up Darrell Steinberg's legacy by repealing the mental health measure.
The problem here is still one of framing. Solutions now seem to be completely limited to cuts, those who support additional revenue appear to have completely lost:
With California facing another mammoth budget deficit, the state's nonpartisan legislative analyst says voters should reconsider some of the billions of dollars tied up in ballot measures they have approved in recent years.
Among the suggestions from Legislative Analyst Mac Taylor is an after-school measure that costs $550 million a year and helped launch Gov. Arnold Schwarzenegger's political career. It is one of many programs contributing to the "autopilot spending" that the Republican governor and fiscal watchdogs often complain about because the plans were approved by voters without specific funding sources. (AP 11/20/09
The seriously messed up part of this: nobody can envision the world both Steinberg's Prop 63, the millionaire's tax for mental health, and Schwarzenegger's Prop 49 could a) both live in harmony and b) have stable revenue sources.
Both mental health and after school programs are important, but so is K12 and higher education, so is IHSS, and so is infrastructure. We must always balance one interest against another, but it has gotten to the point that we are starving our primary goals. We are cannibalizing programs that should exist to feed other programs that should exist.
We are only punishing ourselves. We must find new sources of revenue.
In a rather disheartening statement about the status of California's debt, the state was forced to pay a shockingly high 4% (tax-free) for about $1.9 Billion in bonds sold this week:
Borrowing $1.9 billion on Tuesday via bonds that mature in June 2013, the state was forced to pay a 4% annualized tax-free yield to lure investors. As recently as Friday the brokerages underwriting the deal, led by Goldman Sachs, had estimated that the bonds could be sold at a yield of 3%.
The boost in the yield demanded by investors reflects the "saturation" of the market with California debt over the last seven weeks, said George Strickland, a bond fund manager at Thornburg Investment Management in Santa Fe, N.M. Since Sept. 23 the state has sold more than $21 billion in short- and long-term debt for budget-related reasons and to fund infrastructure projects. (LA Times 11/11/09)
Unfortunately, with the state looking at about $14 Billion of budget deficits over this fiscal year and the next, there's no indication that we will be able to take it easy on the borrowing. And this bond itself is to repay $2 Billion that the state took from local governments to cover the gaps they opened up in the budget "solutions."
Furthermore, with the signing of the water package, the state is looking at taking another $11 Billion of general fund bond indebtedness. Treasurer Lockyer points out that with these bonds, our debt service as a percentage of budget looks like a rather ugly figure, possibly rising as high as 10%. If we continue to heap on debt, basic services will continue to suffer.
But the decision on water still must pass a vote, and the decisions that face the voters of California are some very difficult ones. The question of whether the winners in this deal, primarily the wealthy farmowners of the Western Central Valley, are able to keep the anti-debt forces at bay is still an open question. Or as Peter Schrag puts it in the California Progress Report:
Water is a fixed - and probably declining - resource. The only way it can be stretched is by conservation, recycling of waste water and by more efficient use. This deal takes the first baby steps in that direction, but only by promising more goodies to agriculture and by taking most of the money to pay for it not from the beneficiaries but from schools, universities, the old and the sick, and from the taxpayers, present and future. Next November, when they get to vote on the bonds, they'll have the last word on that.
This weekend at the California Democratic Party (CDP) Executive Board Meeting several hundred board members unanimously passed this resolution:
Majority Vote BRG09.08
WHEREAS, the California Constitution requires certain bills making appropriations from the General Fund, for changes in state taxes for the purpose of raising revenue, to be passed in each house of the Legislature by a two-third vote; and
WHEREAS, this requirement amounts to minority rule by one third, plus one and has brought the State of California to a revenue crisis and a situation of paralysis because of a vocal minority of conservative Republicans; and
WHEREAS, the people of California deserve urgently to have a functional, effective and balanced government, able to respond and adjust to economic downturns and upswings for the benefit of the majority of its citizens, rather than be held hostage by the ideologies of the few;
THEREFORE BE IT RESOLVED, that the California Democratic Party supports a change to only require a simple majority (like the U.S. Congress and 80% of states) for revenue bills, thus restoring majority rule and representative democracy to California's government.
This resolution combined with a similar resolution for majority rule for budget put the CDP in the position of favoring majority rule for both budget and revenue related legislation.
It seems that's the only way you get Arnold Schwarzenegger to do a damn thing these days. You want to change education? Add some tax credits. You want to cut spending? Add some more tax loopholes, and we'll talk.
