I have several questions about this sudden restatement of the budget deficit for the next year. First of all, this is not an independent assessment by the Legislative Analyst, but from the Department of Finance. No report was released accompanying the budget revise, just some raw numbers in a letter to the legislature. Apparently a dual revision, one based on whether the ballot measures pass and one based on whether they fail, will be illegally delivered on Thursday, despite the fact that the February budget deal calls for it to be released on May 28. The Governor is getting around this by calling the release a "summary," allowing them to AGAIN show no numbers, just a "trust me" belief that the deficit is now $15 billion, $21 billion if Props. 1C, 1D, and 1E go down.
Taking a closer look at the $15.4 billion deficit projection, aides to Schwarzenegger say that a full $7.4 billion of that is in the fiscal year that ends just 50 days from now; the remaining $8 billion is in the 2009-2010 fiscal year.
That $8 billion in the '09-'10 year matches up with March's projection by Legislative Analyst Mac Taylor. And given that Controller John Chiang announced last Friday a $2.1 billion shortfall in anticipated revenues for the current year... that leaves about $5 billion in what budget watchers might call "new" deficit in this announcement.
That doesn't make a lick of sense. I believe Chiang's numbers that we're $2 billion short in tax collection in the current year through April 30. I do not at all believe a Governor who has lied repeatedly about budget projections throughout his entire career, claiming $5 billion in new deficit in the last 50 days of the budget year. Especially because there are no independent numbers to check.
Like Legislative Analyst Mac Taylor, I would not be SURPRISED that we're not $15 billion out of balance. Some expenditure increases contributed to this deficit, and clearly the worsening economic picture has strained the revenue side. But I'm funny this way - I actually want to see the data. The Governor has spent the entire special election trying to scare people into compliance; would anyone but this Hail Mary pass with one week to go past him?
While we have officially opposed Prop 1C for a while now, we focused more on the bad public policy of borrowing for ongoing expenses. But anti-gambling advocates point out something else about where this money comes from:
The Rev. James Butler, executive director of the California Coalition Against Gambling Expansion, said expanding gambling, even in the form of a lottery, will invite social and economic ills.
Asking people to bet more of their money could lead to increased bankruptcies, homelessness, crime and unemployment, he said.
"It's built on the premise that Californians do not spend enough money on the lottery," Butler said. "It is a mistake." (SF Chronicle 5/7/2009)
Part of the problem with this argument lies with the fact that we already have Indian gaming across the state, where people can go and get a much more immediate gambling fix. If people want to ruin their lives, there are plenty of ways to do it. That being said, it is somewhat distressing for California to stake its future on what is essentially a tax on hope, or if you are more cynical, a tax on the failure to understand the concept of expected value.
While Prop 1C looks more important with every day to the "package" that the Legislature approved in February, as it by far provides the most immediate cash, by no means it is a sure bet. If our lottery revenues do not increase, we'll have to dig deeper into the general fund for education dollars going forward. And if they do increase, well, we've just increased the hope tax on players who are disproportionately poor.
UPDATE: The Riverside P-E has an article about who the lottery players are in the county. Lottery officials point out that there is no hard data to indicate that lottery players are disproportionately poor, and the P-E's investigation in the Inland Empire seems to tacitly agree with that statement. Still, the CA Lottery hasn't allowed data to be released. But in Texas, the state ordered a demographic study. It showed that lottery spending was generally skewed poor and undereducated:
Players making under $12,000 a year spent three times as much as those pulling in over $100,000 and nearly double those making between $75,000 and $100,000. ($19 a month for the under $12,000 respondents, vs. $6 a month for those over $100,000; and $10 for those earning between $75,000 and $100,000.
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Here's the education breakdown:
Less than high school diploma: 16 median dollars spent per month
High school degree 15 median dollars spent per month
Some college 16.5 median dollars spent per month
College dgree 8.50 median dollars spent per month
Graduate degree 6 median dollars spent per month (Houston Chronicle 12/12/2008)
UPDATE 2: I missed data from the CA Budget Project's Report on 1C and a report out of UCLA that shows that California lottery players are both disproportionately poor and non-white.
Browsing the papers today, I'm noticing quite a bit of confusion between the parallel crises California faces with respect to the budget. Jean Ross explains the difference pretty nicely between a cash flow crisis and a budget crisis in this post. The Legislative Analyst identified a cash crisis that arises out of the difference between when payments are due and when revenues enter the state's coffers. Because of that disparity, California and most other states must go out into the bond market and sell "revenue anticipation notes" to cover short-term cash needs, to be repaid when the revenue comes in. The budget crisis exacerbates the cash flow crisis, but the two are not the same thing. And the Legislative Analyst himself appeared to conflate them by claiming in his report that California faces $17 billion dollars in borrowing needs, but failure of Prop. 1C, 1D and 1E would require $23 billion in borrowing. Well, so would passage. Prop. 1C enables the government to BORROW against lottery revenue. This may not be short-term notes, but borrowing is borrowing, and due to the state's horrific credit rating, the interest rates will remain high no matter what kind of borrowing it is.
That borrowing will cost the state money and widen the deficit somewhat, but a decent amount of that is known beforehand, and baked into the cake of any budget deal. As Ross notes, the Legislative Analyst did not update his projection that the state faces an $8 billion dollar shortfall through July 2010, based on lower revenues than the projection in the February budget. However, John Chiang today estimated that current revenues through April are $2.1 billion out of balance with budget projections. According to the Legislative Analyst, this shortfall can be added to the $8 billion, because most of that referred to the next fiscal year. Doing the math...
Meanwhile, the Public Policy Institute of California just released a poll showing Propositions 1C, 1D and 1E trailing. Those measures would provide $5.8 billion in budget cash in 2009-10. Of particular concern for budget officials is that Proposition 1C is failing badly (32 percent for, 58 percent against), since it would provide $5 billion in cash.
If the ballot measures fail, the state would be looking at a $16 billion deficit (the LAO's $8 billion plus Chiang's $2.1 billion plus the ballot's $5.8 billion). But the LAO number came in March, after which economic indicators grew worse, which means the overall deficit figure could be higher than $16 billion.
Meanwhile, in the above-linked LA Times piece, the Schwarzenegger Administration floats a proposal to significantly address the prison overcrowding crisis:
As the ballot measures lag in the polls, the administration of Gov. Arnold Schwarzenegger has begun revealing the cuts it is weighing as an alternative.
On Thursday, the administration advised law enforcement officials that it was preparing plans to commute the sentences of 38,000 state prison inmates, including all illegal immigrants. It also is considering closing some prisons and sending inmates to county jails, according to a copy of the proposal obtained by The Times.
Under the plan, 19,000 illegal immigrants -- 11% of state prisoners -- would be turned over to the U.S. Immigration and Customs Enforcement Agency after having their sentences commuted. An additional 19,000 "relatively low-risk offenders" would have their sentences commuted as well.
The Governor tried this late last year and nothing really happened with it. Some of these ideas are OK and some are horrible - overburdening county jails won't exactly help either fiscally or from a public safety standpoint. But if the crisis can actually start a dialogue about our insane prison policies, I'm all for it.
I am working for the No on 1A Campaign, however, I am not working for any other No campaign. My opinions should not be construed to be those of the campaign, especially when it comes to the remaining measures.
Back in the presidential campaign, Arnold Schwarzenegger said that Barack Obama "needed to work out" and that he needed to work on "putting some meat on his ideas." While Arnold has done his best to publicly buddy up to President Obama since the election, he just can't cover up the turd he is currently in the process of laying on the carpet. When Squirrel does that, I scold her. When Arnold does it, Californians scold him too. In poll after poll, state leaders are repeatedly chastised. But while the Leg gets, and to some extent deserves, a share of that, it is more a statement of the dramatic failure of Governor Schwarzenegger.
In a poll showing that the budget props are flailing, many are trying to peg this on fear of taxes. And Howard Jarvis' corpse will do its best to make sure that is how politicians see it. But that is simply not it. After all, it's not that long since we passed the millionaire's tax in Prop 63 to improve mental health services. And the Field Poll found a whole slew of taxes that big majorities of Californians supported.
No, this is an absolute failure, and a grand statement of the 6 years of epic Fail after epic Fail emerging from the Horseshoe. Arnold never really found his footing in the Governor gig. He tried playing it like an action movie by calling people he didn't like "girlie men." He tried some mea culpas and cozying up to some of the legislative leaders. He tried pleading with the Republicans, but in vote after vote couldn't get them to follow his program. (Well, I should note that he did get Abel Maldanado to parrot his talking points and basically say what he could not.) But in the end, Californians are solidly rejecting his agenda.
He has used the economic crisis in the most cynical way to get Californians to accept a spending cap that they solidly rejected when it was known as Prop 76 in the last special election. While the President calls to our hopes, Arnold preys on our fears.
Robert pointed out the disparity between Californians' opinions of their state and federal leaders. There are two reasons for this: first, part of this is term limits. Voters don't really get to know their legislators. But more importantly has been Arnold's abject failure to produce any results. In this vein, CalBuzz called our leaders "UTTERLY TONE DEAF."
Despite the ravings of the Jarvis folk, this election is not about taxes, but about the failure of leadership. Arnold came to power promising to blow up the boxes, but like Wile E. Coyote, he's ended up with powder all over his face.
Californians want a responsive government with a clear plan to ensure that their government will be there for them going forward. We want a message that gives us hope, not fear. We want real reform of the budget process to make the system truly workable. We want a voice in a newly democratic process.
And that is the takeaway that Arnold and the Legislators should take from this mess.
Jackfolsum alludes to it, but I wanted to highlight it as well. Arnold got tripped up a little bit today in front of the Jesusita Fire, caught in between telling Californians what they wanted to hear, or telling them they're all going to die. It's pretty amusing:
One of Schwarzenegger's strengths has been to respond to emergencies and assure local residents he will provide all support necessary. But that message clashes with his statements earlier this week that fire services would be jeopardized if voters reject the ballot measures on May 19.
Because he declared a state of emergency for the Santa Barbara fire, he said he was able to get the federal government to pay for 75 percent of the costs.
"This is very helpful for us because as you know, we have a financial crisis in California," Schwarzenegger said. "But I wanted to make sure you all know, even though we have this crisis, we will not be short of money when it comes to fighting these fires."
Oops! But Arnold's "strong leader/warrior/protector" shtick clashes with his "vote for my spending cap or you will BURN BURN BURN!!!" shtick. So he backpedaled.
"First of all, let me just make it clear, because there's always the question that comes up, what happens to the fire departments and to the budget if those initiatives don't pass," Schwarzenegger said. "The first thing you should know is, I will always fight and get every dollar I can for public safety, that is the important thing you should know."
"No. 2, it is very clear that when the initiatives fail there will be $6 billion less that will be available, so therefore there will have to be additional cuts made, if it is in law enforcement, fire, education," he added. "...But I will fight for every dollar, and will always make sure we have enough manpower and enough engines and helicopters ready to fight those fires."
Interesting use of "when the initiatives fail," not "if" there. Arnold reads the polls, I guess.
He really has no idea what he's doing. He wants to scare and please at the same time, so it comes out like mush.
Come to think of it, Arnold sounds a lot like the Californians seduced by the Two Santa Claus Theory, who want to cut services in general but protect services in particular. So maybe he's just giving the people what they want.
"No. 2, it is very clear that when the initiatives fail there will be $6 billion less that will be available, so therefore there will have to be additional cuts made, if it is in law enforcement, fire, education," he added. "...But I will fight for every dollar, and will always make sure we have enough manpower and enough engines and helicopters ready to fight those fires."
The Budget Reform Now folks, on the heels of one ad narrowing their focus to Props. 1A & 1B, have released yet another, basically with the same script only substituting a teacher for the firefighter, warning of $16 billion in cuts if 1A & 1B fail to pass. 1A & 1B do NOTHING in the current budget year or the next. Nothing at all. Arnold Schwarzenegger and his cadres are exploiting a crisis with fearmongering tactics to gain a spending cap they can use to ratchet down state services forever.
This is very simple. If 1A's spending cap would immediately limit state services $16 billion dollars below the baseline funding needed to provide services at the current level, then $16 billion in services aren't at risk with the failure of 1A. They're at risk with passage. And that risk would be permanent, and would increase every year, well and above the two year extension of tax increases.
Arnold obviously doesn't give a damn about the current budget gap. Heck, he probably enjoys it; he can use his new furlough tools and threaten to set the state on fire and a host of other right-wing options. The golden goose for him and his rich supporters is the spending cap. And those Democrats who enable him in this effort ought to understand what they're supporting - a permanent reduction in services for the state's most vulnerable citizens. "What's your solution," is the phrase thrown around at us. The problem is we know theirs.
UPDATE: The latest brilliant idea from the Governor: raid local governments if the Props fail, a direct contradiction of his deal with cities to stop raiding their budgets five years ago. Under yet another Prop. 1A from 2004, the state can borrow 8% of property tax revenues (about $2 billion), which would have to be repaid with interest in three years. The credit cards are open for business again! While this measure represents 10-15% of the total projected budget gap, it would decimate services at the city and county level, services that - voila! - the state would need to step in to provide. Also the Governor cannot pull this off unilaterally: it would require a 2/3 vote of the legislature.
(A quick notice of an opportunity to have a conversation with Jean Ross of the California Budget Project at 11 AM today. We will be focusing on Prop 1A and its impact on the general budget mess. The call will be recorded and aired as the next Calitics Podcast as well. It's something of an experiment with the podcast. If you are interested in hopping on the call, shoot me an email (brian A T calitics dotcom) and I'll get you the call-in info. - promoted by Brian Leubitz)
I am working for the No on 1A Campaign, however, I am not working for any other No campaign. My opinions should not be construed to be those of the campaign, especially when it comes to the remaining measures.
Sen. Sheila Kuehl knows a thing or two about the legislative process. The long-time legislator and persistent advocate of single-payer health care has published an essay on the California Progress Report opposing Props 1A, 1D, & 1E. The first essay covers only the first half of the props, with the remaining coming soon. She minces no words on Prop 1A, and the guarantee of money for schools in Prop 1B is not enough to change her mind:
I don't like the idea of a spending cap [in Prop 1A], even calculated on the regression model. I would prefer the ability of the Legislature to spend one-time money on one-time expenditures and calculate ongoing expenditures separately, without an automatic cap, and a growing rainy day fund. With such a cap, there will never be enough monies for the schools, even with a small portion of the monies over the spending cap going into an education fund. In my experience, all programs get short-changed when a robo-cap like this is enacted.
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I don't think the education funding is a sufficient reason to enact the permanent spending cap proposed by Prop 1A in the state Constitution. Other teachers' organizations oppose Prop 1A and have indicated, since they believe the state already owes the 9.3 billion, they will simply sue the state for it. Which would, of course, create even more of a hole in the budget. There needs to be a sure hand with authority to pass an adequate budget without gimmicks, which is why I support an end to the 2/3 requirement.
She's a little more mixed on Prop 1C:
This is the one proposition I'm tempted to support. Of the six billion current dollars estimated to come from all the propositions combined (not counting increased tax revenue three and four years out), more than five billion is estimated to come from the sale of the lottery receipts. Although I do not support increased encouragement for gambling, this income could be the least damaging.
It's also interesting that the casino-operating tribes made sure that the measure avoids any new games that could threaten their operations.
I am working for the No on 1A Campaign, however, I am not working for any other No campaign. My opinions should not be construed to be those of the campaign, especially when it comes to the remaining measures.
Building off of Dave's post earlier today, and Robert's from yesterday, it is clear that the Yes on 1A campaign is doing its best to marginalize any opposition as "hyper-left." From our friend, Yes on Prop 1A consultant Steven Maviglio:
"The public screams, 'Do your job! Govern!' Steinberg calmly replies, 'We are governing; we have made difficult choices.'"
Which apparently the hyper-left, along with the hyper-right, doesn't seem to get. Neither side wants to compromise. With (sic) is what Steinberg and Bass have done, and is what leadership is all about, particularly when there's a 2/3 budget requirement handcuffing their ability to push progressive values. (CMR)
Look, I understand what it means to compromise. I'm all for reasonable compromise where it makes sense. But compromise for compromise sake, well let's say it's hardly guaranteed to ensure a winner. (Two words: Missouri Compromise.) But if we are going to complain about the constraints that 2/3 has shackled upon us, as Steve does, how are we going to add yet another constraint on top of the ones we have now? We are trading additional long-term dysfunction for the right to kick the can a few years down the road.
Furthermore, the "rainy day fund" won't even be there to help us in our next bust cycle. Prop 1A's requirement that money taken from the slush rainy day fund go only to one-time expenditures. What made the San Francisco rainy day fund so successful was the flexibility to protect vital services, as in the case of the city granting SFUSD $11 million to save 130 teaching jobs. But Prop 1A offers none of that protection for Californians and the services that we want to remain viable.
Despite everything else that has been or will be said, the fact is that Prop 1A still does not impact the budget for the next two fiscal years. Nothing, nada, zip, zero. While the Yes campaign is trying to make this all one big package, perhaps they should take Robert's advice and focus on Prop 1C. That's where the real money is, without quite the same level of dysfunction. While the Republicans wanted to slash through Prop 63 mental health funds (1E) and Prop 10 first five funds (1D), the real prize for them is the "spending cap" (Mike Villines words, not mine) contained in Prop 1A. That's why they tied the additional out year taxes to the passage of 1A.
Compromise isn't itself a governing principle, and the support of generally progressive legislative leaders doesn't ipso facto make it "progressive." As former Sup. of Pub. Instr. Delaine Easton pointed out, Prop 1A will leave us in a hole that we will not be able to dig out of. That's hardly a compromise that progressives are clamoring for.
UPDATE: One more thing that I missed in Steve's post, that we see in the latest Yes on Prop 1A ad, and that we see in Arnold's rhetoric, the doomsday scenario. At least they've taken off Arnold's phony $50 Billion number, but the message is still the same. Vote for this or your children will be out on the streets, which will be falling apart and full of busted water mains because we can't fix them, and they will be harassed by arsonists who can run free because we have no police or firefighters. Boogah-Boogah!
Dave pointed out the sheer ridiculousness of this fear mongering, but as it appears to be a central aspect of the campaign, it's worth mentioning again. And as I mentioned above, Prop 1A, the gooey center of dysfunction in this tootsie pop, contributes not one dime in the next two years.
Play doomsday all you want, but what does it have to do with Prop 1A? If they were so concerned about doomsday why didn't their latest ad even mention the measures that actually bring in cash this year? Prop 1A has nothing to do with whether your teacher of firefighter has a job next week, or next month or next year. But the doomsday theme is an attempt to tie the lot of the propositions together, despite the fact that Prop 1A would do nothing to avert layoffs in the short-term, and over the long-term threatens to throw a wrench in how we provide services in California for decades.
Of course, it's sheer cynicism, as Prop 1A has absolutely nothing to do with Props 1C, 1D, and 1E. Like the Governor calling George Skelton and asking him to dumb down the propositions for the people of California, this doomsday line demands that Californians cast an unquestioning eye upon these measures and take the Governor at his word. But given his track record, why should the people of California trust him or his fuzzy math?
I spoke at yet another Democratic Club meeting on the May 19 propositions yesterday, against yet another member of the California Legislature, Julia Brownley (who I really like and respect). One thing I sought to make clear to everyone is that we are going back to the drawing board on May 20 no matter what happens on May 19. The Legislative Analyst already finds the February budget deal to be $8 billion dollars out of balance, and April tx receipts came up $1.8 billion dollars short of the budget projection. Some of us recognize that this means alternative solutions must be gathered right now, because Democratic legislators will be stuck in the chamber with the Yacht Party on May 20 regardless.
I was heartened to hear Assmeblywoman Brownley note that a majority vote fee increase will probably be part of the solution. When the Legislature passed this in December, they raised more money than would be sacrificed if Props. 1C, 1D and 1E failed. An argument could be made that the majority vote fee increase combined with the passage of those props would obviate the need for almost any cuts. I think that's faulty reasoning, since 1D and 1E ARE cuts, to vital services that will cost the state more money in the long run. As for 1C I find it completely unworkable and just a borrowing gimmick.
I do have to say that it would be much easier to swallow this posturing from the ballot measure supporters that they would have no choice but massive cuts on May 20 if everything failed, if they didn't enable massive permanent corporate tax cuts in the last budget deal...
Corporate tax attorneys are chuckling over the absurd deal in the last agreement that lets multistate and multinational taxpayers decide, each year, how much income they want to report to California. Because this was negotiated in private, with no hearings and no independent expertise brought to bear, the result is a giveaway and a national embarrassment, in a state that had prided itself on a fair, successful corporation tax.
Here's how it works. Each state typically figures out what percentage of a large company's business is done in the state, and then taxes that percentage of income. Historically, if 10% of a multistate company's payroll, property and sales are located in the state, then 10% of its nationwide or worldwide income is subject to tax. In the budget deal, California changed the formula to allow companies to choose to make that percentage based only on sales in California.
The entire architecture of the ballot pact that emerged was heavily shaped by leaders' desire to please - or at least neutralize - the state's most powerful political players.
Now, some of those very interest groups protected in the budget deal are bankrolling the campaign to ratify it.
For the oil industry, the package omits a once-proposed 9.9 percent oil severance tax. Energy companies have given more than a million dollars to pass the plan, led by a $500,000 donation from Chevron.
For the liquor, beer and wine industry, increased alcohol taxes were shelved. Alcohol industry heavyweights, such as E. & J. Gallo Winery ($100,000) and California's Beer and Beverage Distributors ($50,000), have all opened their checkbooks.
For the teachers union, the list of ballot measures includes a separate measure to ensure repayment of deep cuts to schools and protections for top-priority programs. The California Teachers Association has contributed $7 million to the passage of Propositions 1A and 1B.
For casino-operating Indian tribes, the state lottery measure avoids any new games that could threaten their gambling operations. Tribes, who could have been major contributors against the lottery proposition, have kept their checkbooks closed.
In the last budget deal, all the industry-specific taxes, all the service-based taxes that wouldn't be so regressive, faded away, and the same groups protected by that fade (including practically every sports team, as sporting event-industry taxes were once on the table) ponied up for the special election. So pardon me if I don't believe your lament that you'll just be forced to cut state services, when you found room for billions in tax cuts to the largest corporations in America and protected every single industry that could donate money for ads and mailers. Let's just say I don't buy the image of a legislature with their hands tied.
I am working for the No on 1A Campaign, however, I am not working for any other No campaign. My opinions should not be construed to be those of the campaign, especially when it comes to the remaining measures.
One of the reasons that I oppose Prop 1A, and to a lesser extent the other measures, is the sense that it is one more thing that we'll have to fix. It is one more layer of dysfunction on our staked seven layer dip of dysfunction. But as a practical matter, it is critical that Californians understand the structural dysfunction that is at the heart of the mess:
A defeat of six of the seven measures on the May 19 special election ballot - a good possibility, according to recent polls - could mean a return to the Capitol's pattern of futile negotiations between Democrats, who hold large legislative majorities but little sway, and minority Republicans, who hold the last word on budgets.
If nothing else, political observers say, such a scenario could present an opening for Democrats to unmask what they believe to be the heart of the Legislature's dysfunction: the two-thirds vote in both houses to pass a budget, as required by the state constitution since 1937.
* * *
California is one of only three states - alongside Rhode Island and Arkansas - to require a two-thirds vote on budgets. Only five states, including California, have a two-thirds requirement for taxes. (CoCo Times/MediaNews 5/3/09)
You know that, I know that, but at least according to the variety of polls we have seen since the marathon budget session, people forget quite quickly just exactly why we have this level of dysfunction. They forget that the majority of California is getting mugged by an increasingly small minority that is doing its darndest just to maintain control of a third of the legislature. Back in February we had majorities for overturning the budget 2/3 rule, and a close call for the tax rule. Now we're looking at uphill slogs in both.
That doesn't mean that we shouldn't work to get both out of our Constitution. It was quite the subject at the CDP convention
Lowering that threshold to a simple majority is "the next big fight we need to win," Treasurer Bill Lockyer said at the recent state Democratic Party convention, where delegates identified the two-thirds requirement as the most pressing issue among 117 they considered.
* * *
Strategists and party officials say that they expect to put the issue before voters on the November 2010 ballot, perhaps lending it extra profile during the gubernatorial campaign. (CoCo Times/MediaNews 5/3/09)
I think the 117 number comes from the number of resolutions, which was actually 119. (Trust me, I was there for the marathon meeting.) As for the most pressing, I'm guessing that came from the prioritization from the resolutions committee, but that should be taken as the consensus of the convention. It is merely that all 20 voting members of the resolutions committee recognized that it should be prioritized. But the point is still well taken, it truly is the most pressing issue.
We've heard rumors of propositions to change the 2/3 majorities, but the only props on the Secretary of State's website don't appear to be from any institutional player and don't go back to the simpler to explain majority vote, opting rather for the arbitrary 55% figure. I don't know who exactly will lead the charge against 2/3, but it needs to be a cohesive effort from the grassroots all the way to the top.
We simply cannot let this dysfunction continue. And right along with that, we can't add on to the dysfunction with Prop 1A. I understand the need to grab the $16 Billion that will come in two years from tax increases, however, make no mistake that the spending cap formulas contained in Prop 1A will haunt us for years, and will be with us far beyond the two years of the extended regressive taxes.
We need to repeal 2/3, and on May 19, we need to be careful that we don't add one more item to our list of things we have to change.
I've been pretty up front in questioning whether or not the next Governor matters compared to the structural reforms needed to get California back on a sustainable course. Nevertheless, the off-year CDP convention in Sacramento does traditionally kick off the following year's gubernatorial race, and this year was no different. Given what we know right now, I think it's highly probable, actually, that the Democratic primary will feature only two candidates. Jerry Brown and Gavin Newsom were the only two with any visibility whatsoever in Sacramento, and while Antonio Villaraigosa may still feel he can jump in late and capture a healthy share of the Latino vote in any primary, his awkward exit from the festivities does not lead me to believe that he will bother with the race.
If that is the case, we have a virtual mirror-image of the 2008 national Democratic primary, with a candidate positioning himself as looking to the future against a candidate firmly implanted in the past. That's the general belief, anyway, and there's quite a bit of truth to that. Clearly, Mayor Newsom's convention speech continually framed the choice for voters as "whether we're going to move forward in a new direction or whether we're going to look back." Clearly, each candidate has a profile that fits that general mold. And the general mood of each candidate's signature event, with Brown lolling at the old Governor's Mansion with his 1974 blue Plymouth in the driveway, literally an historical set piece, while Newsom closed off a street and held a block party featuring Wyclef Jean (and got what amounts to an endorsement from Sacramento Mayor Kevin Johnson when he introduced Newsom as "the next Governor of California"), could not have been more different.
And yet Jerry Brown has always been something of a political futurist, someone who was mocked in his time for being unrealistic and silly, on issues which are now firmly in the mainstream of the American political debate. And as CalBuzz points out, Brown's presentation to the convention may be closer to the zeitgeist than Newsom's right now:
While Newsom (a Hillary supporter, BTW) spent the weekend trying to position himself as Obama to Brown's Clinton, General Jerry delivered a Jim Hightower-like jeremiad to the convention, filled with rips and roars at financial insiders and white collar criminals. In tone and substance it seemed closer to tapping the populist zeitgeist of these financially troubled times than did Newsom's effort to fight the last war.
Voters fed up with Governor Arnold's shattered promises to "blow up boxes" and sweep clean the mess in Sacramento may well be in the mood for less "change" and more common sense, which happens to be Brown's political meme du jour.
Ultimately, I don't cotton much to these popularity-based views of major elections, preferring to judge on substance. The primary electorate is older, but that means there's more potential for increasing turnout among youth, so we'll see where that leads. But ultimately, I'm going to judge on the basis of substance, particularly with respect to structural reform. And while Brown gave a fairly nice speech, highlighting his high-profile work as Attorney General suing the likes of Wells Fargo, in essence he left unanswered the charges that he is an apostle for fantasyland in thinking he can just bring Democrats and Republicans in a room together and get them to work everything out. On the other hand, Newsom, in a meet and greet with bloggers, came out once again in favor of a Constitutional convention to put all of these contradictory and hobbling budget and governing ideas on the chopping block and work from scratch to figure out a way to organize the state that makes sense. You can ague with his somewhat rosy picture of his record - as I have - but you cannot argue that he has a forward-looking view of how to finally blow up this insanely dysfunctional structure.
On the near-term issue of the special election, Brown has appeared on stage with Arnold Schwarzenegger to tout the Yes side on all measures, while Newsom has not. In fact, he expressed his opposition to Props. 1C, 1D and 1E, saying "I can't get my arms around balancing the budget with lottery money" and that 1D and 1E would raid successful and cost-effective programs. Now, what I can't get MY arms around is Newsom's support for 1A, particularly because he explained that his first instinct was to oppose, but that he "had to be responsible" and look at the impact on city budgets. However, 1A would provide no budgetary relief for two years, while 1C, 1D and 1E, which he opposes, would. In clarifying this, Newsom spokesman Eric Jaye explained that the impact on city budgets could be made worse by the bond markets seeing the failure of 1A and raising their interest rates, but there's definitely a tension there. Perhaps Newsom thinks that he can fix whatever damage is done by a constitutional convention, but a voter-approved spending cap would be hard to cancel out within a the space of a year or two.
(More on the Newsom blogger meetup in a later post.)
I think there's room to be critical of both candidates, as well as room to be praiseworthy. But rather than framing this election along cultural or generational lines, I think it's necessary to frame it along the policies they would both bring to Sacramento and whether they make sense for progressives to get behind. So it's not past vs. future for me so much as success vs. FAIL.
Efforts by Gov. Arnold Schwarzenegger and legislative leaders to win voter approval of six budget measures on the May 19 ballot grew more difficult Sunday when a sharply split state Democratic Party declined to back three of them.
The mixed verdict by more than 1,200 delegates to a state party convention came after a nasty floor fight over the grim menu of proposed solutions to California's severe budget crisis.
"We've got all kinds of divisions," Art Pulaski, leader of the California Labor Federation, AFL-CIO, said of the fractures among unions that drove the party's internal rift. "It's not unusual for us."
Republicans, too, are split on Propositions 1A through 1F. The state Republican Party has broken with Schwarzenegger, its standard-bearer, and begun fighting the measures.
Taken together, the muddled messages from California's two major parties threaten to fuel the sort of voter confusion that often spells doom for complicated ballot measures.
This is pretty on the money. There's a split within both parties, one that Democratic leaders aren't coming to terms with. Neither side has taken heed of its grassroots, at least in part. With the propositions in trouble, we must take an eye to the message that will come out in the aftermath. The truth is that Democrats have a principled policy difference here, and those legitimate concerns should not be discounted by the leadership in favor of a narrative that voters opposed the ballot because of 2 years' worth of certain tax increases. In fact, the word "taxes" was not used once on the floor of the convention by those opposed to 1A or any other measure. We oppose these measures because we find them deeply harmful to the future functioning of the state. We believe there's a better way in the short term, with the majority-vote fee increase, and the long-term, with the end of the conservative veto and a more sustainable course, based on broader-based taxation to pay for the services all Californians desire. We reject in whole the dumbed-down, simplistic framing that 1A would "reform the budget" and failure would court disaster.
As for the spin that delegates "supported" the measures on the "May 11 ballot" (Steve, you should probably get the date right if you're working for the Yes side), and a "supermajority quirk in party rules" was used by opponents, I really don't know what to even say to that. First of all, the quirk has been on the books for a long time, and it was actually progressives like Dante Atkins who have been working to reform the endorsement process, so welcome to the party. Next, with fully 1/3 of the delegates electeds and appointeds, most of whom negotiated and supported the deal, and another 1/3 elected by county committees, and another 1/3 grassroots delegates elected at caucuses, a 60% threshold, which again was never argued by these people when it worked for them, represents a fairly broad consensus of all three sectors. Finally, if you went state by state, I would imagine you would find such a threshold in many if not most state Democratic parties, whereas the 2/3 rule for the budget, to which some are making a false equivalence, only finds parallel in Arkansas and Rhode Island. I would be all too happy to completely reform the endorsement process and even question its use by the party outright, that would be a fine debate. But whining about known rules sounds like Hillary Clinton's staff bemoaning the fact of caucuses in the 2008 primary when they knew the facts for years. The grapes, they are sour.
Now that the endorsement battle is over and the election just weeks from being done, let's have a dialogue instead of a lecture, and let's take the concerns seriously of those who reject the false messiah of a spending cap and raiding important voter-approved initiatives and balancing the budget on the backs of gamblers. Let's actually advocate for something rather than being forced to accept something. Let's not worry about "what the Republicans will say" and let's not sniff that "pie in the sky solutions won't work." Let's reform the state and come out with a government that works.
At a press avail following her speech at the California Democratic Party convention, I asked Sen. Boxer about the Resolutions Committee passing support for a Congressional inquiry into the actions of torture judge Jay Bybee and the imposition of all possible penalties including impeachment. She said "I'm very open to that.... there is an ongoing investigation at the Justice Department into his work (at the Office of Professional Responsibility -ed), and we'll see how that goes. But I'm very open to that. And I'll remind everyone that I didn't vote for him when his nomination came up. I was one of 19 to do so."
Needless to say, the support from Sen. Boxer will be a great help in the Resolutions Committee, when they prioritize the top ten resolutions to send to the floor of the convention tomorrow.
The other interesting tidbit from the presser was that Sen. Boxer offered no indication of her endorsement on the ballot measures for the special election on May 19. She says she and Sen. Feinstein haven't studied the measures yet, and that they will get together in Washington and offer a joint statement once they make their decision. "I'll let you know when I go public. But let me say this - the budget process in California is dysfunctional, because of the super-majority needed to pass a budget and tax increases. And until we get to the root causes of changing that, it's very difficult to do anything." This pretty much tracks with what we've been saying for a long time. Until you pass #1, it won't matter if you pass #2-#10.
Other topics covered included torture investigations (Boxer supports the Truth and Reconciliation Commission that Sen. Leahy recommended), the fate of cram-down provisions in the Senate ("Sen. Durbin is doing a heroic job... the banks are still a major lobbying group."), potential opponents in her 2010 re-election (I hope nobody runs against me!"), and the news of a budget reconciliation deal on health care in the Senate (she didn't have much to say on that other than that reconciliation should always be on the table, as it was during the Reagan years, and that the situation is "in flux.") Boxer was at her most eloquent answering a question about the rule of law and the impression that those at the highest levels of power, be it the banksters or the torture regime, were above it. "The law must prevail... the people should feel that something's wrong, if nothing is done on torture. If we don't like a law, we repeal it, we don't ignore it."
I'm still sitting in the Resolutions Committee meeting. I've been here for almost five hours, but most of the drama was compressed into the first hour or so. Dave described the situation of the hearings on the resolution committee for the props, and all that sounds about right.
I'm used to being outgunned, but there was a deafening silence after I spoke against Prop 1A. Nobody else on the resolutions committee spoke out against the proposition. I, alone, was running the opposition against what will be the most profound change to our budgeting system since the notorious Proposition 13 in 1978. It was a heady responsibility to be the lone voice against a sitting Assembly member that I normally agree with, Kevin De Leon. Along with California Faculty Association Presiden Lillian Taiz, I was challenging the Leader of the State Senate, Darrell Steinberg.
And thus I became David to a Goliath I never expected to challenge. I have such enormous respect for Sen. Steinberg, and nearly always agree with his politics. But, Proposition 1A is simply wrong for the state of California. The extra $16 Billion in revenues in the out years is simply not worth the additional dysfunction that the spending cap will impart on the state.
But this David lives to fight another day, as the endorsement must proceed through the floor session on Sunday. I know that the grassroots of the state party will have something else to say about the matter. And together, a lot of Davids can be a pretty formidable challenge for ol' Mr. Goliath.
In the Resolutions Committee meeting here in Sacramento, the committee approved a "Yes" vote for all the measures on the May 19 ballot. The discussion was fairly revealing and typical of what I've seen around the state. The committee members, almost to a man except for Calitics' own Brian Leubitz, argued that the ballot measures reflected the best that the legislature could do, and spun tales about the consequences of failure. Out in the audience, the crowd loudly cheered any time this official narrative was challenged by remarking on the consequences of success, for example the spending cap that would ratchet down state services permanently. My favorite part was when someone, arguing for 1D, said that "if we don't pass this, children will suffer painful cuts." Which of course is the POINT of 1D. "We have to think of the children when we cut programs for children!" was the basic message.
Once again, we see the grassroots/establishment divide, where the legislature and their compatriots in learned helplessness wail about tales of woe while urging a Yes vote on measures that would make things demonstrably worse in the state. We've gone through this over and over again, so the fact that the resolutions committee supported the measures doesn't surprise. However, the strength of the opposition in the room tells me that something may occur on the floor on Sunday.
I would guess that the establishment will try to push the entire package through, and since the only real institutional opposition is on 1A, there will be an effort to pull 1A from the consent calendar. I think it's genuinely up for question as to whether or not it was successful, which is interesting in and of itself.
All my life, I've heard politicians in Sacramento and Washington promise to change the way they do business, and to take action to solve our most pressing problems.
When I was born almost thirty years ago, millions of Americans lacked access to health insurance, millions of families couldn't afford to send their kids to college, and the scourge of discrimination kept even more Americans from realizing their dreams.
Thirty years ago, tens of thousands of veterans who answered their country's call in Vietnam were already calling the streets their home, and thousands more would soon follow.
Thirty years ago, the United States was coming out of an unprecedented energy crisis, vowing to change the way we powered our nation.
And thirty years later, despite year after year of politicians promising change, these problems haven't just gone unsolved--just about all of them have gotten worse.
For me, like most Americans who live and work far from the halls of government, these are not issues that live in the political abstract or as talking points used to sell hastily crafted budgets. They're very real, very consequential, and very personal.
The Yes on Prop 1A campaign has a daunting task in trying to get the voters of California to support the Frankensteinian creation that is Prop 1A. After all, support is hovering around 29% now. So, like I did with Squirrel in her Darth Vader costume, the Prop 1A campaign is trying to do with their dog.
Let's start at the top: Arnold Schwarzenegger, in a meeting with the Bay Area Council, yesterday said this:
"We are one of the only state's that don't have a rainy day fund... so Prop 1A [will be a historic reform if it passes.]"
WILL require general funds to be put in a "Rainy Day" fund to build a RESERVE to protect California from future economic downturns. The Budget Stabilization Account will also be used to pay off the California Economic Recovery Bond early;
Wow, how quickly Arnold forgets his own propositions. It's easy, I suppose, when they have been spectacularly unsuccessful.
And then there's the ads. The Budget Reform Now Committee, that would be the Yes on 1A-F campaign in campaign-speak, released an ad for the teevee. I enjoy that on their web page (and in any YouTube embed), the ad is up there with a one star rating. As for the content of the ad, it is, shall we say, only honest in a way that a political consultant could love. You can peep the whole ad, in all its widescreen glory, over the flip.
The ad is just about as confusing as the measure itself, which is saying quite a bit. For example, the actor in the ad says that "Prop 1A will give us budget stability." Beyond the fact that we've heard that one before, oh, about four years ago with Props 57 & 58, there is the troubling matter of the huge structural budget deficit that Prop 1A leaves in its wake.
According to the California Budget Project's report on Prop 1A (PDF), the projected revenue cap will be $16 billion lower than the Governor's "baseline" spending in 2010-2011, followed by $17 and $21 billion in the next two years. Thus, we'll have to either raise taxes or decrease spending. That's hardly the stability we need.
Or how about the somewhat audacious claim that Prop 1A will "help hold the line on higher taxes." While I'm not one to concern myself with that particular issue, the claim is deceptive at best. Ignoring the extended sales tax for the out years, if Prop 1A does anything, it encourages taxes. The most efficient way of resetting the cap is to, drumroll please, raise taxes.
This ad does its best to dress up a dog, but Californians are saying that this dog just won't hunt.
The governor went on a bit of a tirade against dissent, first talking smack about U.S. District Judge Oliver Wanger's 2007 order reducing the operation of pumps in the Delta to protect the endangered Delta Smelt, then about a three-federal-judge panel's moves toward ordering the release of certain inmates to reduce California's chronic and unconstitutional prison overcrowding, and then about Clark Kelso, the receiver empowered by a federal judge to demand $8 billion from the state to correct unconstitutional, decades-long underfunding prison health care.
"It's not productive for the state to have so many chefs in the kitchen," the governor grumped. "Those are the kinds of things that make it very difficult."
But his ire wasn't just directed at the federal courts. Lt. Gov. John Garamendi, he said, opposes him on fiscal policy at every turn, he said: "He's running for Congress now, so that's good."
And he cited state Controller John Chiang's and state Treasurer Bill Lockyer's opposition to his plans to cut state salaries last year. "How does a coach win a basketball game when all of the players are running off in different directions?" Schwarzenegger asked.
Maybe that's why he's so hot for Proposition 1A, which would give the governor new authority to unilaterally reduce some spending for state operations and capital outlay and eliminate some cost-of-living increases, all without legislative approval - shoo, you pesky compromises; begone, consensus! Also, maybe he's forgetting that these federal judges' job is to hold California to its obligations under federal law and the U.S. Constitution, and that the Democratic statewide elected officials he's knocking are with this state's majority party while he's in the minority.
Now you tell me that this Governor is a good-faith operator when he seeks to grab additional executive power without legislative oversight. He's an actor used to getting his way because he has the biggest trailer on the set. And he has little use for those measly checks and balances. It's all so very American. So why not just get rid of them?
Only problem for Mr. Whiny Ass Titty Baby, nobody in the state likes him and they consider him to be a terrible steward of government. That's why they're rejecting his efforts to hamstring the state even further.
I am 
I'm quite proud to be working for the