As Conservatives play games with the former President's legacy, what would Ronald Reagan do in today's California?
I probably wouldn't have known it was "Reagan Day" but for the helpful tweets of @GeorgeRunner. The former legislator and current member of the Board of Equalization isn't really much of a tweeter, but on occasion he gives us such helpful words as "Happy Reagan Day!" after a few weeks of silence other than an announcement of his "e-newsletter." (By the way, if you call it an "e-newsletter," you are doing it wrong.)
Anyway, I thought I would take a moment to remind Mr. Runner and his #tcot friends about a few facts of the Gipper's tenure here in California. In a blog post, Bruce Bartlett, a Reagan domestic policy adviser, points out some of the false tax mythology:
Reagan's record on raising taxes began almost the moment he entered politics. Elected governor of California in 1966, he inherited a large budget deficit from his predecessor, Pat Brown. Although a conservative, dedicated to shrinking government, Reagan nevertheless found the magnitude of spending cuts that would have been necessary in 1967 to be beyond reach. This led him to endorse a $1 billion per year tax increase, equivalent to a $17 billion tax increase today - an enormous sum equal to a third of state revenues at that time. Journalist Lou Cannon recounts the circumstances:
"No amount of budget reductions, even if they had been politically palatable, could have balanced California's budget in 1967. The cornerstone of Governor Reagan's economic program was not the ballyhooed budget reductions but a sweeping tax package four times larger than the previous record California tax increase obtained by Governor Brown in 1959. Reagan's proposal had the distinction of being the largest tax hike ever proposed by any governor in the history of the United States."1] ([CG&G Feb 2011)
Let's stop with all the beatification and think about what really happened 45 years ago, and what is happening now. Like Reagan, Gov. Brown inherited a big deficit from his predecessor. Schwarzenegger's mish-mash of policies left the state without direction and with a huge deficit to show for it. Brown the Younger in his third time has a similarly daunting challenge as he did in 1978 after Prop 13 and as Reagan did in 1978. And like Reagan, he understands the impracticality of a cuts-only budget solution. And the tax increases that Brown is proposing today is less than half of the Reagan 1967 tax increases.
Runner and his fellow Republicans need to really take a deep look about their presidential saint and how he was able to objectively look at a situation and be more than ideologically dogmatic. Perhaps then we could really govern the state, and the GOP could return to relevance.
While Brown works to cobble together a centrist coalition, the corpse of Howard Jarvis speaks.
by Brian Leubitz
Jerry Brown is putting together quite the interesting coalition for his tax revenue measure. He's got some labor support, of course, but he's been claiming support from some large companies that usually go by "Big" and followed by the name of some industry. He's got some Big Oil, some Big Healthcare, yada, yada.
Hearing this, the corpse of Howard Jarvis was none too pleased. So, they've gone ahead and begged their Big Business friends to resist Jerry Brown's "cajoling."
"We know that Governor Brown, just through the power of his office alone, can cajole and perhaps even threaten vulnerable businesses," the groups said in an open letter. "It is therefore not lost on us that, under certain circumstances, modest support to help the governor place his measure on the ballot might be viewed a lesser of two evils or, more likely, as an insurance payment. However, on behalf of citizen taxpayers and the small business community, we appeal to your sense of doing what is right for all of California." (SacBee)
This really is quite remarkable. Though HJTA didn't exactly get along with Gov. Schwarzenegger, they never really went this far with him. By this far, I mean insinuating that Brown is threatening companies in order to solicit funding for his revenue measure. Not that Arnold ever did that, because, special interests had no power on him. He could resist them with his massive musculature. Until he couldn't.
But this is more a sign of desperation than anything else. If Brown is able to pull significant resources and support from some of the traditional funders of anti-tax campaign, it will be an exceedingly difficult fall campaign for HJTA and its allies. Because you know you are doing well when you try to quote Benjamin Franklin about hanging together or hanging separately. (I say try because it is quite possible that Franklin didn't actually come up with the phrase.) The quote is even more out of touch considering the desperate state of many of Californians most needy who have been devastated by the continuous cuts to services.
The Governor's line was pretty much as expected. He is planning on making some rather grievous cuts, but feels that we need some revenues to balance out the system. He promoted his measure and spoke of the temporary nature of the increases. I would think that temporary is a word that you will be hearing many times as we head to November.
2) HSR
Governor Brown has always been a supporter of HSR, and the recent troubles have done nothing to dissuade him that now is the right time to start building. The state will be putting up $2B for the first segment, which the Governor calls a good deal no matter what else is built. However, he went through the old quote book to come up with some good fodder for why we need HSR:
Critics of the high-speed rail project abound as they often do when something of this magnitude is proposed. During the 1930's, The Central Valley Water Project was called a "fantastic dream" that "will not work." The Master Plan for the Interstate Highway System in 1939 was derided as "new Deal jitterbug economics." In 1966, then Mayor Johnson of Berkeley called BART a "billion dollar potential fiasco." Similarly, the Panama Canal was for years thought to be impractical and Benjamin Disraeli himself said of the Suez Canal: "totally impossible to be carried out." The critics were wrong then and they're wrong now.
3) Education
Brown has been something of critic recently of the overabundant testing scheme in place under NCLB. Today was no different:
In California we have detailed state standards and lots of tests. Unfortunately, the resulting data is not provided until after the school year is over. Even today, the ranking of schools based on tests taken in April and May of 2011 is not available. I believe it is time to reduce the number of tests and get the results to teachers, principals and superintendents in weeks, not months. With timely data, principals and superintendents can better mentor and guide teachers as well as make sound evaluations of their performance. I also believe we need a qualitative system of assessments, such as a site visitation program where each classroom is visited, observed and evaluated. I will work with the State Board of Education to develop this proposal.
We'll see what becomes of this, but reducing testing won't make the Arne Duncan and the Dept of Education happy. However, it is the right choice for California. We spend too much time teaching to tests in what is becoming an ever-shorter school year.
You'll be able to watch a replay of the speech soon, I'll post a link to that when I get it.
First, let me apologize for not "going dark" today, but since the state of the state is today, I hope the "Stop Censorship" logo on the front page will clearly state my opposition to SOPA/PIPA. Hey, if it works for Google, right?
Anyway, in a few minutes, the Governor will be giving his state of the state speech. The Republicans have already "responded" to the Speech on the intertubes, but apparently they put those behind a password until the speech to complete the illusion or something. Not to defend them on this, but to most Capitol watchers, the meat of the speech is not much of a mystery.
The governor will outline how the economy of the state is improving, which it is, but at a rate that has not kept up with the state's demand for services from an already slashed budget. In order to combat that, he is going to ask the people of California to approve his revenue measure that will temporarily increase the sales tax by half a cent and levy a higher tax on upper income earners.
His budget already takes this measure into account, basically providing two alternatives. One that attempts to preserve K12 funding while still continuing the slash and burn of our social safety net. The other budget, which assumes no additional revenue, cuts billions of dollars from K12 and would likely mean big teacher layoffs and a still shorter school year.
Dan Schnur and other Republicans are calling this a ransom note from the Governor. But as Brown said, that's where the money is. If we don't have money, we can't pay for education. The facts are there, we need additional revenue.
Decision of Nicholas Berggruen's good government committee means one less possible revenue measure
This morning, CalBuzz released polling data showing the revenue measure of the Think Long committee to be trailing two other measures. CalBuzz posited that they would probably just go along with Brown's when push comes to shove. And, well, I guess the push came quickly, as this afternoon they just announced that they won't be pursuing their measure for the time being.
Therefore, we have decided to proceed as follows:
1) Continue communicating the necessity and benefits of the Tax and Revenue Reform Plan and engage a diverse range of stakeholders, with the goal of releasing draft ballot-measure language for comprehensive public and fiscal review during 2012, for the purpose of filing the strongest-possible measure for the November 2014 ballot.
2) In the meantime, a high-turnout election is a terrible thing to waste. California voters deserve the opportunity in 2012 to begin the long process of reforming state government. Therefore, in the coming days, we will be announcing our intention to partner with other organizations by generously supporting one or more reform measures that have already been filed for the 2012 elections, consistent with our Blueprint.
My guess would be that Berggruen will write a check to Brown's campaign and then participate in the gentle nudging of the other measures to the side.
New Poll shows Millionaire tax fares best, while Brown is forced to re-file initiative
by Brian Leubitz
Not an entirely good news day for Jerry Brown's attempt to get some revenue in the system. First, he is forced to refile his measure because of drafting errors:
Gov. Jerry Brown is taking a mulligan, tripped up by a typographical error and forced to re-file his ballot initiative to raise taxes.
The Democratic governor on Friday filed paperwork with the state for "The Schools and Local Public Safety Protection Act of 2012- ver. 2." The measure is identical to one Brown filed in December, the governor said in a filing with the attorney general's office, "except that we have corrected a typographical error that resulted in two numbers being transposed."(SacBee)
While this is a bit of annoyance for his efforts to get the measure onto the signature gathering process, his team has allowed plenty of time. I can't imagine there will be any major issues caused by the re-filing.
The other big news comes from a leaked poll from the center-right Think Long Committee (funded by rich dude Nicholas Berggruen). The results of a seemingly well-considered scientific poll, just published by CalBuzz, show that the CFT/Courage Campaign "Millionaire's Tax" leads the pack at a 70/30 split. Brown's package is ahead by 62-37, and Molly Munger's taxes for education just above water at 51-45. Think Long's own proposal to extend the sales tax to service was ahead 57-30.
I would have to agree with the Buzzers sentiment that Think Long would probably defer to Brown eventually, especially armed with these numbers. As I mentioned before about Molly Munger, she is a bit of a wild card. Whether she intends to move forward on her income tax increase for education will play an important role in the fall campaign for these measures.
The CFT/Courage Campaign measure has some broad grassroots support, and has received some positive media attention. However, whether the progressive coalition can come up with enough money to get it on the ballot is an open question.
In case you were asleep for the past few years, we have a revenue problem with our budget. Namely, we don't have enough cash coming in to pay for our state's priorities. Gov. Brown is hoping to clear the field for his own measure, but it seems he has a lot of work to do on that front judging from the news of the day.
First, Molly Munger dropped half a million dollars on her own measure that aims to raise $10 billion for schools. Her measure raises the entire tax structure in a progressive fashion. You can read more here, but this is the type of measure that progressives would ordinarily support. However, given the need for budget flexibility, there will be substantial pressure on this measure to get out of the way.
However, Molly Munger is no lightweight. She's a veteran civil rights litigator who also happens to be the daughter of Warren Buffet's longtime business partner, Charles Munger. Her brother, Charles Munger, Jr, spent a bunch of money ($12mil) on Prop 20 to get Congressional redistricting into the commission. Molly Munger has not indicated how deep her pockets on this one will go, but if she's willing to put up $500K, will she drop the other million or two to get it on the ballot? As Peter Schrag has said, shepherding this thing through the whole process will be quite the challenge for Ms. Munger.
The other big news today was the joint LAO/Dept. of Finance estimation of the Governor's proposed revenue measure. Suffice it to say there are a few problems:
The Democratic governor is counting on a voter-approved tax increase on sales and the wealthy to generate $6.9 billion for the 2012-13 budget. But the nonpartisan Legislative Analyst's Office says Brown's plan would raise only $4.8 billion in the first budget cycle.
The Analyst's Office and Department of Finance included their separate projections in a joint letter to Attorney General Kamala Harris that is required for ballot preparation. (SacBee)
In other words, more uncertainty for a Capitol building that is rife with it now. Of course, trying to project the economy right now is somewhere between ridiculously hard and impossible right now, but the $2.1 billion gap is larger than the Gov. would have liked to see right now. We'll have to see what kind of contingency plans the governor makes for this extra whole that he now will have to make up.
Might we see "Return of the Triggers"? If the Governor thinks that the $6.9 estimate is worth gambling on, the situation ends up being remarkably similar to where we found ourselves last year, waiting on cash to come in. One would hope that the triggers don't become a regular feature of our budget cycle, but it might be, once again, the easiest way out of a box.
Or, you know, some other random number will pop out of the sky in a few days and the whole scenario will change. Heisenberg pretty much rules Sacramento these days.
Top 2 Creates Interesting Scenarios Within Republican Assembly Caucus
by Brian Leubitz
The headline itself sounds like insanity. But with only a month until candidate filing opens it is looking increasingly like Republicans may realize they have to choose between keeping a few RINO pets or face extinction.
We all know the situation in the Senate, where Republicans are pinning their hopes of keeping Democrats below 2/3rds on a handful of seats along the Central Coast. They are so worried they have launched an expensive referendum challenge in hopes of getting more favorable lines from the Supreme Court. Members of their Caucus must think they are in trouble as they resemble rats on the proverbial ship with both Senators Blakeslee and Strickland announcing they will not be running for re-election.
The Assembly is more interesting. Most analysts believe that Democrats cannot reach two-thirds in that house in 2012. But looking at the Republican frontrunners they may not have to. In AD 77 there is Brian Maienschein, a former San Diego City Council member who is well liked by local labor and who the Flashreport had labeled as too moderate to be considered a real Republican.
In AD 61 they have Bill Batey. Besides being a Moreno Valley City Councilmember, this guy is pro-choice, fine with gay marriage and won't sign the no-tax pledge. And yes, he says he is a Republican.
In AD 8 they have Peter Tateishi who is a by-the-book Republican. But leadership is so worried about his ability to win the seat they have been quietly encouraging local developer Jon Bagetelos to run. Why quietly? Because among his moderate credentials, Bagetelos is a major backer of Sacramento's Democratic mayor Kevin Johnson. Bagatelos lost an Assembly race once before to a conservative Republican and this time is trying to quietly set himself up before the tea party people figure out who he really is.
Then you can throw sitting Assemblymember Jeff Gorrell in the mix. The only reason he hasn't been branded a RINO yet is that he hasn't had the chance to vote due to an extended military deployment to Afghanistan. But once he is back and if he has some other moderate voices to give him cover, expect Gorell to go up on votes for taxes, labor, choice and marriage equality.
So unlike the Senate where Republicans are putting up a vigorous fight, if something doesn't change by the time candidate filing closes Assembly Republicans may simply hand Democrats the two-thirds votes we need to advance our agenda no matter what happens in November. Where is Republican leader Connie Conway? Are the conservative members of her Caucus giving her a pass because they would like to remain at least sort-of-relevant? Or are they asleep at the wheel as she pulls the wool over their eyes? Given Assembly Republicans penchant for dumping their leaders, I guess we will know soon enough.
Two new reports shed light on income inequality and who is paying for California's government
by Brian Leubitz
It is probably just happenstance that these two reports came out on top of each other, but it weaves a narrative that has been out there for years. The middle class is hurting, and the corporations, who need and require a strong middle class of consumers, is doing little to help. In fact, they are actively working to strangle their own customers.
First, let's start with our shrinking middle class. The Public Policy Institute of California is out with a new report focusing on California's increasing income inequality. The statistics on the middle class from the report fairly summarize what has happened to our economy over the past thirty years. In 1980, 60 percent of California families were middle income. By 2010, 47.9 percent of Californians lived in families considered middle income, after adjusting for the state's cost of living. These are families with incomes between $44,000 and $155,000.
Now, that's a pretty broad swath of income levels, and it could be argued that a family earning $44,000 isn't really middle class, but bright lines are always difficult in situations like these. But the underlying truth remains the same, California's (and the nation's) middle class is disappearing.
California has always been somewhat exceptional, however. And such is the case for income inequality. As a state, we tend to have a richer top income bracket and poorer bottom income bracket. During the so-called Great Recession, income levels of the bottom 10% of earners fell more than 21 percent between 2007 and 2010. While the top 10% didn't increase their fortunes, they only fell 5%. The gap between California's upper- and lower-income families-which has been larger than in the rest of the nation for decades-grew twice as wide as it was in 1980. High-income families earn nearly $12 for every $1 earned by the lowest income families.
While this is going on, corporations are maintaining pay ratios of CEO to average workers of somewhere in the neighborhood of 200 to 1. Unfortunately, not all of their customers, you know, the average worker, are doing so well. Many of these customers are slipping further behind and finding that the California social safety net wasn't really that robust after all. But, losing their customer base still isn't enough to get the Chamber of Commerce on board with tax increases or helping to fix our state's economic situation. After, all, it's a pretty sweet deal they get now; many major California corporations pay little to no taxes:
California's major corporations have rung up hundreds of billions of dollars in profits in recent years, but have paid only a few percentage points of those profits in income taxes here and in other states, according to a new nationwide study by several liberal organizations.
The compilation of corporate profits and state taxes ... covered 265 of the Fortune 500 corporations that reported profits for three straight years, 2008-2010, including 33 based in California. Nationwide, the 265 firms had a combined $1.33 trillion in profits during the three-year period but on average, paid just 3 percent of those earnings in state corporate income taxes.
The 33 California corporations' tax bills ranged from minus-1.5 percent (McKesson Corp.) to 8 percent (Apple). The California corporation with the largest profits during the period, Wells Fargo Bank at $49.7 billion, paid $344 million or 0.7 percent in state taxes. Second-place Intel Corp., with $23.3 billion in profits paid no state income taxes, the study found.(SacBee)
Now, all this isn't to say that these companies did not pay taxes, after all, their shareholders paid capital gains taxes on any realized profits, and their employees paid taxes, and so on. Nor did they do anything illegal. They followed the letter of the law, which was largely written by their corporate lobbyists, but it is the law of the land nonetheless. It isn't really a California issue either, it is an issue of how we are going to fund state governments and balancing our priorities.
Our tax laws are generally a good way of offering incentives to taxpayers, but there is such thing as over incentivizing as well. As we look at overhauling our tax code, which seems to be coming up at all levels of government, we need to ensure that both the federal and state governments have the resources they need to provide their services.
And as we are seeing with the increasing income inequality, those services are going to be more necessary than ever.
Governor aims to increase highest tax bracket and sales tax for a limited time
by Brian Leubitz
If nothing else, Gov. Brown is ambitious this go-round. While his pension plan is slowly simmering in the Legislature, he knows that we really can't continue to function with cuts-only budgets. With the impending decision by Director of Finance Ana Matosantos on whether to pull the triggers in the last budget deal, we are looking at billions more of holes in the budget to fill. (And at this point, the only question that is out there is how much of the triggers will be pulled.)
Brown has mentioned that he will be bringing something to the ballot in terms of revenue, but it seems that there is serious movement on it now. He's been meeting with labor and his supporters too work on a plan that they can agree to get on the November ballot.
In the latest proposed fix for California's fiscal crisis, Gov. Jerry Brown is expected to announce a multibillion-dollar tax initiative in the coming days, asking voters to raise levies on upper-income earners and increase the state's sales tax by half a cent.
The levies would expire at the end of 2016, said sources with direct knowledge of the plan. The governor's office has been fine-tuning the tax measure for weeks with its labor allies. It hopes to file language with the attorney general's office as early as Friday so it can start gathering the signatures needed to place the measure on the November 2012 ballot.(LA Times)
The plan would buy four-five years of time in order to both reset the budget and hope that the economy recovers. Over the past six months there have been a raft of proposals being discussed from various organizations, and the most sure way to losing on all of them is having more than one tax measure on the ballot. If this does hit the streets fairly soon as anticipated, other potential measures will probably die quietly.
Until we see the details on this measure, I'll reserve full judgment. I do not like the inclusion of sales taxes, one of the most regressive taxes, but they do seem to be the most likely to pass. Other than taxing the 1% that is. Expect further details by next week at the latest.
This piece was cross-posted in the Huffington Post. It was also co-authored by Joshua Pechthalt and Anthony Thigpenn.
When we think of California, we imagine the state that allowed the three of us to be who we are, a state that gave us the California Dream. For years now, that dream has been quickly slipping away and now it's in danger of being lost forever.
California is not in crisis; crises are sudden and acute. California is in a chronic, grinding decline and it's providing a window into America's tomorrow. Here we have the richest and poorest, the most diverse population, high technology centers which lead the globe. And yet, here with 38 million people - 20% of the United States - we cannot find a path to leave the bounty that invigorated us for the next generation.
The answer will not come from Sacramento, just as on the national level it cannot come from Washington. It needs to come from all of us. It's simple: government has a central role in providing the basics of civilization and that costs money.
The first step is admitting that we need more money to pay for our present, much less our future. That's why it's time for the 1%, those who benefited the most from our state's past investments, to invest in our state's future. Our state needs perhaps $20 billion a year in new revenue to assure that kids grow up to lead. That will take time, but for now, we see a clear path to $6 billion or so a year that would at the very least restore a large portion of the most recent cuts to education, healthcare, safety and transportation. All it takes is the 1% chipping in and paying more income tax.
Warren Buffett said it best: "If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further. But I think that people at the high end - people like myself - should be paying a lot more in taxes. We have it better than we've ever had it."
It's been a brutal decade for most Californians. Our schools, universities, hospitals, roads, and bridges - which used to be the envy of the nation - are in tatters. The unemployment rate hovers around 12%, and Sacramento continues to talk only about what to cut next, perpetuating the downward spiral.
Students are rightfully disgusted as they take to the streets and create their own Occupy encampments to protest the relentless inflation of tuition at California's legendary colleges and universities. Working families who dream of providing their children with a higher education watch in horror as costs continue to skyrocket.
A couple of weeks from now, we face a massive $2 billion in additional cuts that will be "triggered" based on a summer budget deal passed on a wishful premise that the economy will get better before it gets worse. On the front lines once again will be children, the elderly, and disabled. The axe will fall on everything from public schools (where California already ranks 47th in per pupil spending) to in-home health care.
A Washington Post-Bloomberg News Poll from last month shows that 68% of all Americans support raising taxes on households with incomes of $250,000 per year and higher. Gov. Brown could also take his cue from the patron saint of fiscally conservative Republicans, former California governor Ronald Reagan, who raised taxes as governor and president numerous times, knowing it was for the good of our state and country.
Should every child in California have access to an excellent, rigorous, free education through college and beyond? Should they have healthcare to assure that their minds are sharp and their bodies fit? Should they know that at any point after high school, whether they choose college or another path, they can find a good job? Should they be the sail that lifts our economy to new heights in energy and technology solutions of tomorrow?
Yes.
We believe in our state. We believe in our country. We are patriots of the first order who know that true love of state or country manifests not in slogans, but in deeds that offer a brighter future to the next generation than to ours.
The time has come to say yes to our dreams. The time has come for the 1% to join the fray and help rebuild our state and our country. Let them come forth and pledge with us to invest in tomorrow, starting today.
Joshua Pechthalt is the president of the California Federation of Teachers, representing over 100,000 teachers and education workers. Anthony Thigpenn is president and founder of California Calls, a statewide alliance of 26 community-based organizations who have built a base of 328,000 supporters of a progressive, economic agenda. Rick Jacobs is the founder and chair of the Courage Campaign, a California-based online progressive organizing network of more than 750,000 members around the country.
Robert mentioned the so-called Think Long report that proposes reducing taxes on the highest earners in favor of additional taxes on the middle class. In case that wasn't enough to piss off the Left, there is this little treasure in the report: (via SacBee)
We believe such new funding should not be automatically given to a system that is failing to educate millions of Californians. It instead should be tied to improving performance of K-12 schools, as a result of rigorous evaluation of teachers, as well as curbs on automatic teacher tenure and seniority.
So...in case No Child Left Behind didn't do enough to screw up the schools, we need to tie state school funding in a larger way to a deeply flawed system of test-first, test-last, and test-always that encourages teachers to teach to the test. The rest of that second sentence is merely rehashing Arnold Schwarzenegger proposals that voters soundly rejected at the polls.
What we have here is nothing really all that different from what California Forward and other similar corporate-leaning centrist organizations are pushing. And unsuprisingly it isn't getting great reviews. Here is Dean Vogel, current president of the California Teachers Association:
"The Think Long Committee Report was supposed to be a bipartisan path to rebuilding California's future, not a dangerous detour that would hurt students and the poor. Educators are alarmed by these recommendations to raise taxes on the poor, lower taxes for corporations, dismantle Proposition 98 - the state's minimum school funding law - and avoid repaying $10 billion already owed to public schools and students."
Without getting bogged down in NCLB, what really amazes me is that all these people want to look for causation only at teachers and schools. When they see a struggling school, they only see "failing teachers." They never stop to look around the neighborhoods to see the failing communities. The families torn apart by poverty. Parents who rarely see their children because they are working multiple jobs. Sure, Newt Gingrich has a plan to solve that problem, (let's create an army of 9 year old janitors!) but no solutions for addressing the inequality in our society seems to be present in the Think Long Report.
If you want to see better performing schools, teachers are merely an easy scapegoat. Some teachers are truly more gifted than others, and we should encourage teacher quality. However, that is only one small portion of the underlying problems. Causation is never an easy, but politicians and billionaires apparently share an interest in preferring easy answers over good, thoughtful policy.
Think Long has said that a repeal to Prop 98 will not be in their tax measure that they intend to bring to the ballot. However, their posture really goes to more than just Prop 98, it goes to the heart of our system of public education. Their attacks are certainly not the first, nor will they be the last as profit-seekers look to open up public education to corporate style earnings.
“Proposition 13 set up an unfair and dysfunctional two- tiered system of property taxes. It choked off a source of revenue, and the lack of that revenue has brought California to the edge.” –Kevin Starr, historian and California State Librarian Emeritus
Many Californians would agree with Kevin Starr that our state is teetering on the edge of disaster. Unemployment remains the second highest in the nation, 32 percent of all mortgaged homeowners are underwater, public schools have been cut to the bone and public universities are unaffordable for the middle class.
Big business and their Republican allies have repeated the laundry list of why California’s economy is struggling so many times that it is practically written in stone—Taxes, Regulations, Public Employees. These are the unholy trinity that supposedly crashed California’s economy and threatens to smother any business growth in the future.
The facts, however, contradict the well-worn talking points of big business. The Council on State Taxation, a business-friendly group led by CEOs of major corporations, found that California has a moderate tax burden, taking less in taxes from business than many other states, including the sweethearts of the right, Texas and Florida.
Many experts look at regulations as job creators, in addition to the benefits to public health and worker safety. Roger Noll, co-director of the Program on Regulatory Policy at the Stanford Institute for Economic Policy Research breaks down the GOP’s obsession with regulations:
The effect of regulation on jobs has nothing to do with the mess we’re in. The current rhetoric about regulation killing jobs is nothing more than not letting a good crisis go to waste.
He goes on to state that regulations may affect job distribution, but not the total number of jobs, eliminating the possibility that California’s landmark environmental laws crashed the global economy causing the current recession.
As for public employees, it requires leaps of logic to understand how laying off thousands of teachers, nurses, home health aides, crossing guards, librarians and public works crews makes the state a better place to do business. California already has the 4th fewest state employees per capita as any other state—even Texas has more state workers per capita than we do! And more than a third (37 percent) of those public employees are at UC or CSU—I doubt laying off professors, economists and business school personnel will please the business community too much.
That begs the question, then, why is California on the edge? Putting aside the deregulation of Wall Street and their subsequent destruction of the global economy through risky and irresponsible gambling, why is California in such a dismal economic state?
A reporter recently put that question to state historian Kevin Starr. He traced the beginning of California’s decline to 1978, the year Proposition 13 passed. Prop 13 capped property taxes, limited local governments’ ability to raise revenue and imposed a two-thirds majority to raise revenue.
Prop 13 has had profound negative consequences for California on all levels. Local government is starved of revenue and dependent on the state to keep schools open and local employees on the job. In turn, the budget crunch forces deep cuts to UC, CSU and every public program that impacts the lives of Californians. At the same time, elected officials can’t vote to raise revenue without a supermajority, giving the minority of anti-tax Republicans disproportionate veto power.
While Prop 13 was seen as a populist measure, corporations have been the true winners. Across the state, the burden of property taxes has shifted radically from corporations to homeowners. A recent report by the California Tax Reform Association (CTRA) cites numbers for all counties showing how homeowners have taken on a significant burden of funding public services, while corporations have shirked paying their fair share.
The Republicans and the Democrats, at least in the venue I know best, California, have a very different relationship with their respective bases. The Democrats raise money from their activist base, gets volunteers, and then generally ignores them. The Republicans, well, it is a very different story. Sure they get money and volunteers, but the tail wags the dog. The right wing activists of the Republican party controls them.
As a long-time blogger, I suppose I have a bigger megaphone than most. However, I have nowhere near the power (nor earning power) of Jon Fleischman, my right-wing counterpart at the FlashReport. He says something, and all of a sudden, legislators are looking around to make sure that they didn't cross him. Me, well, sometimes I get an "attaboy" when I am of some use, but let's just say that Calitics isn't lucrative, and that nobody is calling me a horseman of anything but the cartoon variety http://1.bp.blogspot.com/_dj0Q...
So, it is interesting, that, in an interview with CalBuzz, Governor Brown called out the Republican base as the proverbial tale wagging the Republican party.
Invoking the infamous symbols of Conquest, War, Famine and Death from the Book of Revelation, the former seminarian identified the anti-tax fearsome foursome to whom the Republicans submit as 1) DC anti-tax crusader Grover Norquist; 2) Jon Coupal of the Howard Jarvis Taxpayers Association; 3) LA radio spewers John Kobylt and Ken Champiou and 4) FlashReport, GOP operative Jon Fleischman's right-wing blog.
"It's emotionally quite wrenching for any of the Republicans to embrace anything opposed by the Four Horsemen of the Tax Apocalypse," Gov. Gandalf told Calbuzz. "If that group, or even maybe any one or two of them, invoke the dreaded 't' word, they do cower."
Of course, this is really nothing new. If you've taken a bit of time to really consider the California right-wing over the past two decades, it doesn't take a PhD in political science to see their slide from pragmatic dealmakers to ideological extremists. Jerry likely knew this before he retook the Horseshoe, but perhaps the breadth and depth of this takeover took him by surprise.
To be honest, in many ways, the right-wing has more power over the Democratic Party than the left-wing base. Under the 2/3 rule, revenue legislation must be tailored to hold all of the conservative Democrats. Nobody can take a walk, even if we did have the 2/3 Democratic chambers that we have been lusting after for so long.
Fleischman has a post today excoriating former Senate minority leader Dave Cogdill for agreeing to temporary sales tax increases. He states, and perhaps daydreams, of what California would have looked like if we had a 2011 budget in 2009. And the thing is for Fleischman, perhaps the world may have looked slightly better.
But that is only if you are doing well. After all, California (and the US in general) is a great place for those who are doing well financially. But ask those Californians who are alive today because they got a helping hand from state services, and you would see a very different picture of that 2009 vs 2011 budget debate.
Of course, the fact that the Rich need the state is hardly reported. But California without the economic engines that are the UCs, CSUs and the community colleges is a markedly different (and worse off) state. A California without the public infrastructure is a worse off state. We all need the public goods that only the state can provide efficiently. Denying that might be convenient for the Right, but it is devastating for California.
(I'll be on KPFK at 8:40 Tuesday morning to talk about HJTA and the GOP. - promoted by Brian Leubitz)
Anti-Tax organization makes CA GOP a wholly-owned subsidiary
by Brian Leubitz
It won't be saying anything new about my opinions on Prop 13 today. No, my loathing for an initiative that set the state, and the nation really, on a drug binge of selfishness and greed has not changed. The sad state of the current generation of American voters, who have become the first Americans to cast off concerns for their children or the next generation at all, in search of a few extra bucks in their BofA statements hasn't changed.
No, this is more about the state of the legacy of Howard Jarvis. He has succeeded in a way that would probably even shock him. With the 2/3 majority, his organization, the Howard Jarvis Taxpayers Association can now wield an unprecedented level of authority. In fact, recent events lead George Skelton to point the finger for the death of Gov. Brown's jobs tax reform on HJTA and their new leader, Jon Coupal:
Brown and his advisors kept hearing from Republican senators that they sort of liked the governor's proposal - thought it basically good policy - but wouldn't sign on unless Coupal did.
"If Jarvis gives us a pass, we'll be there," is how one Brown intimate described the Republican feedback. "Coupal was the entryway."
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Under Brown's proposal, the assemblyman (Fletcher) added, "The people who stood to benefit were the working poor and small businesses, and they don't have a powerful lobby. We were taking on some very powerful interests."
In the end, the most powerful interest was the tobacco lobby. Cigarette companies prosper greatly from the current loophole. Their lobbyists swarmed all over legislators during the session's final two days.
"It's unbelievable," Brown said in a Friday night statement, "that so many politicians in Sacramento would choose to protect cigarette makers and out-of-state corporations to the detriment of California jobs." (LA Times)
But, alas, the cigarette companies have a lot of sway with both HJTA and with the GOP. Of course the order of those two organizations seems a little meaningless, as Republican legislators are now saying that they have to get approval from one dude with a membership list and a blog.
In the end, this all leads back to the stink of money. Corporations do what they have to do to save money, and that means fighting for tax breaks on the back of the middle class. But there once was a day that we could dream of legislators who could stand up to moneyed interest. However in the day of multi-million dollar legislative races and the constant efforts to move up and over, perhaps that is too much to ask.
In looooong session, Jerry Brown is unable to muster 2 GOP votes
by Brian Leubitz
If you are like me, and follow a lot of Capitol reporters on twitter, you will see a slew of tweets ending around 2AM last night. That would be because that is when the Senate finally closed its day and finished up this Legislative session.
But through all that, Brown's big last-minute goal went down in the Senate:
Gov. Jerry Brown's corporate tax package failed to clear the state Senate in the final hours of the legislative session.
The plan, contained in Senate Bill 116, fell five votes short of passage, by a final tally of 22-15.
The Democratic governor had proposed changing a corporate tax formula to require that multi-state companies calculate their tax liability based on the portion of sales in California. The roughly $1 billion expected to be raised annually through the change, mostly from out-of-state companies, would have been directed to specific tax breaks, including a sales tax exemption on manufacturing equipment. (SacBee)
The Governor wasn't even able to hold all the Democrats and one (I'm trying to figure out who) actually voted no. The question now for Brown is how he gets anything done with a Republican minority that understands their one (and only) power to block revenue legislation. But, of course, even if the Senate is 2/3 Democrats next year, we now know that is no guarantee of anything.
Governor looks to secure two Republican votes for tax changes
by Brian Leubitz
Well, step one for Jerry Brown is complete, as he got 2 Republican votes in the Assembly, but the job is far from complete.
The Democratic governor's revised tax plan raises about $1 billion in corporate taxes, mostly from out-of-state companies, and redirects that money toward tax breaks for California businesses and individuals.
He enlisted two Assembly Republicans to support the package, but he still must find votes from at least two reluctant Senate Republicans for his plan. The Legislature is scheduled to close its regular session tonight.
Brown and lawmakers hailed the plan as a jobs creator, though they offered few projections on its economic stimulus impact. Brown was joined at a news conference by GOP Assemblymen Nathan Fletcher and Cameron Smyth, who voted Thursday evening to put the legislation, Assembly Bill 1X 40, over the top in the lower house. The measure passed on a 54-10 vote, with the bare minimum for the needed two-thirds majority. (SacBee)
Sen. Dutton is apparently not ok with taxes being raised on anybody, even if the taxes are just being shifted. Apparently taxes on any one person can only go down in the world of Sen Dutton, and then proceeded to call for a special session to review the measure beyond Friday. Because then, you know, he could stall it forever and make sure nothing happens. That's kind of his deal, don't you know.
The likely targets for this measure will be Sen. Cannella, maybe Sen. Aanestad, and whomever else Jerry can drag along for the ride. 2 votes is doable, but certainly will take much arm twisting.
Governor aims to pass a tax reform measure before close of session
by Brian Leubitz
The Governor has been itching to get some sort of job plan going. Unfortunately, many of his ideas require a 2/3 vote, and Sacramento Republicans, like their counterparts in DC, seem more intent on blocking Democratic initiatives than getting anything done.
But this isn't even a measure that is increasing taxes:
Brown last month proposed eliminating a corporate tax benefit that allows companies to pick the less-expensive of two tax formulas when calculating tax liability. He proposed using the money, about $1 billion, to fund a sales tax exemption for purchases of manufacturing equipment, and he proposed expanding an employer tax credit.
Even before Brown announced the plan, Republicans criticized it and Democrats acknowledged it was not likely to pass. The change would require a two-thirds vote in the Legislature, and Republicans blocked a similar proposal in budget talks with Brown earlier this year.
"Any time you have legislation, it's the work of more than one hand," Brown said at the biotech company Gen-Probe Inc. "There are some Republicans that are already on board, and there's active discussion by those individuals with other legislators of that party. So, I'm reasonably optimistic we're going to get something by the end of the week. It will reshape itself as it goes through the legislative process."(SacBee)
Of course, the Republicans talk about "job creators" like somehow being rich equals creating jobs. Corporations aren't creating jobs, but Brown is trying to do something to spur spending. Anything. The elective tax structure hasn't really shown to be a boon for anything but corporate treasuries, and creates no real incentive to create jobs in California.
Meanwhile, the Republicans moan about job creation, and then won't do anything to create jobs. Color me shocked.
Sen. Steinberg raises idea of granting tax authority to local governments
by Brian Leubitz
With all the realignment talk running around, granting additional taxation authority to local governments hasn't been immune. In fact, Sen. Steinberg has addressed the idea a couple of times. However, the current proposal seems more fully considered to a particular government sector.
Senate Bill 791 would allow local transportation agencies to seek voter approval for a "regional transportation congestion reduction charge" on gasoline or diesel. The bill language, introduced in the form of amendments to existing legislation last week, would also allow a new vehicle registration charge on electric vehicles. Revenues raised by the fees, which would require approval of a majority of voters in the impacted region, would fund transit proposals developed by the local transportation planning agencies to reduce vehicle congestion.
The Sacramento Democrat called the bill an effort to create a "local option" for funding transit projects, saying it is "very consistent with the work that we've done this year on bringing services closer to the people" through realignment of state and local functions. (SacBee)
Now, at first blush this seems to be an indicator of nothing good. The only reason such a proposal is necessary is that our state government is essentially unworkable. And, in fact, that is the motivation behind much of realignment. The supermajority requirements have done a number on Sacramento, and the only remaining solution is to recreate tiny little fiefdoms. It is regrettable, but given the circumstances, not an unreasonable path for Steinberg and the Legislative Democrats.
We are essentially at the point that the state is better off without coordination, and, from a functional standpoint, that is a poor use of resources. But from a where we are standpoint, any taxing authority that can be reasonably achieved seems like a good idea.
As Conservatives play games with the former President's legacy, what would Ronald Reagan do in today's California?
