Here's today's question, which talks about the revenue side of the state budget, cross-posted from OC Progressive What are the three biggest revenue cuts of the last ten years, and how much do they cost now?
Have we eliminated 1.2 billion, 2.9 billion, or 7.3 billion dollars in revenue streams?
As the UCLA Anderson Forecast projects a "nasty recession" with "ugly" unemployment figures that won't turn around until 2010 at the soonest, California Republicans have decided to join their fellow partisans in the US Senate and place pathological hatred of unions and environmental laws ahead of our fiscal and economic survival.
Sources said Villines raised the possibility of GOP support for a higher car fee in budget negotiations last month, saying he thought that he could bring rank-and-file Republicans along if Democrats agreed to steep cuts in government programs and a permanent cap on state spending.
The sources who were in the room said his suggestion came after Democrats offered spending cuts they would reluctantly agree to implement.
Villines denies it of course - he's got to keep up the anti-tax front - but this is typical and unsurprising. Republicans have a habit of promising to finally do what common sense has long dictated - provide a bridge loan to automakers, ensure that California doesn't go bankrupt - but only if Democrats agree to destroy a union, or a government program, or an environmental treasure. And if Democrats refuse to go along with such recklessness, Republicans walk away and let everything collapse.
I suppose I should see Villines' willingness to embrace a VLF increase as a victory, but what this really does is bring into clear view the fact that the Yacht Party has no intention whatsoever in trying to solve this crisis. They genuinely don't care what happens to schools, health care clinics, or the economy as a whole. They're out to break liberalism, whatever the cost.
We're not dealing with rational actors here. The focus of political work in California is no longer about trying to work out a budget deal. It's about defusing a full-blown hostage crisis where every one of us - our economic security - are being used as pawns in Villines' game.
Combined with Dave Cogdill's crybaby move at today's budget talks this suggests a clear strategy for moving forward - show Californians just how reckless and dangerous the Republican Party has become. And if any of these jokers want to have a shot at higher office in 2010 they're going to have to defend their decision to let this state collapse in their desire to settle old scores.
California will pull through this crisis, but the light at the end of the tunnel never seemed so far away.
The legislature voted yesterday on the Democratic budget plan and, predictably, Republicans refused to vote for it, unwilling to support a tax increase. Closing a $17 billion hole in the budget with cuts alone would pretty much destroy government, which is of course their goal. In turn that would send California from a recession into an outright Depression, as the safety net would crumble and job losses would skyrocket.
The media's coverage of the budget debate is equally predictable. The Sacramento Bee framed yesterday's vote as a "last ditch effort" and the article opened with phrases like "debated, complained and pointed fingers of blame Tuesday." Arnold compared the legislature to a kindergarten, which I am hoping is not a set-up for some 1990 movie flashback.
The result of such coverage is to further depress public interest in and engagement with the budget process. Reporters make it sound like the Legislature is dysfunctional or doesn't care, conveniently sliding past the fact that the budget delays are solely the product of Republican obstructionism.
That means we need to look beyond what the media says to the actual plan the Democrats put forth:
$8.1 billion in new revenues, from a tripling of the VLF and from freezing the current income tax tables
$8.1 billion in cuts, including $4 billion to schools and $100 million to community colleges
$800 million in fund transfers and other gimmicks
It's not a great plan, and the Democrats' united opposition to education cuts from the spring seems to have melted away. That's not a good sign, as the budget fight that began in 2007 seems to move inexorably toward the Republicans.
At the same time, this plan needs to be seen as a first step toward a budget solution. Legislative support for a restored VLF is a big step in the right direction, reversing 10 years of supporting that flawed tax giveaway. Action on the income tax is also a good move, although I would like to see Democrats return to their summer budget plan that called for a restoration of the 1990s tax brackets for higher income Californians.
That dovetails with the winning tax platform Obama used in his campaign. Note the word campaign. Sacramento Democrats need to start campaigning on the budget. Too often they have been focused on deal-making inside the Capitol and failed to aggressively sell their plans and their framing to Californians.
Next week dozens of new members will be sworn into the legislature. Their new energy can help take this plan, improve it, and build the public support necessary to implement it by breaking Republican resistance.
Let's hope that the new members bring a fresh attitude to the budget - one that recognizes this thing will NOT be solved inside the Capitol with a vote or a backroom deal.
KPIX Channel 5 in San Francisco commissioned a poll from Survey USA about the proposal being floated in Sacramento to triple the Vehicle License Fee as part of a deal to close the budget gap. The results were not surprising given decades of anti-tax rhetoric:
Support: 17%
Oppose: 74%
Not Sure: 9%
The crosstabs show the oppose numbers to be remarkably consistent - 68% of Dems oppose and 75% of liberals oppose.
It's not easy to sell a tax increase without having done consistent work to show Californians why this is necessary. And in the absence of that long-term effort you get polling results like this that will likely put the kibosh on the current efforts in Sacramento to restore the pre-1998 VLF.
My own thinking has always been, and continues to be, that the Democrats need to stick to their summer budget proposal that emphasized higher taxes on the wealthy, a restoration of the 1990s-era tax brackets. That dovetails with what the Obama campaign successfully sold to the public, although obviously California is in no position whatsoever to offer tax cuts to anyone else.
Sacramento legislators need to get out of the closed meeting rooms and start taking their message to the public. The time to do so was decades ago, but if we are to solve this budget mess with anything that resembles progressive solutions, that work must be done now.
John Laird has always believed that Arnold Schwarzenegger's reckless cut of $6 billion from the state budget by cutting the VLF was a bad idea. And representing the 27th Assembly district, with some of the most beautiful parkland in our state (really - ever been to Point Lobos?) he has long sought ways to improve parks funding and access.
The additional funds would be a huge boost to a parks system that has accumulated $1 billion in deferred maintenance and has struggled in recent years with ranger staffing and park security, Laird said.
"This will allow us to begin to return to the level of parks we used to know," Laird said. "It's in a process of dying over time. Unless we find a strong, stable source (of funding), we're just going to fall farther behind in our maintenance and have trouble acquiring more land."...
Because cars would be able to enter parks for free, the state would lose about $40 million in entry fees it collects every year. The net funding increase would actually be $242 million.
Also, the state parks system's entire $150 million annual budget would be available to the state's general fund in the first year of the registration fees. Every year after that, the state's general fund will be allowed access to $50 million less from the state parks budget until the entire amount is designated for the parks.
At that point, state parks would have a $392 million annual budget, not including any variations in the total number of registered vehicles in California....
"We can negotiate things like that if people think it's going to be an issue," Laird said....
A recent poll of Californians showed 74 percent favor the registration increase, Laird said.
While I'm not sure I like the idea of leaving the parks budget available to the general fund - it's time we stopped raiding other funds because the state isn't willing to tackle the structural revenue shortfall - and though I'd prefer a full restoration of the pre-1998 VLF, the overall concept seems sound. California's beaches and parks should be free for day visitors, and as they are part of the state's natural heritage, everyone should pitch in to help keep them afloat.
Besides, at many parks, folks have already found workarounds to avoid paying the day use fee - including here in Monterey County, where folks can simply park along Highway 1 and walk into most parks and beaches rather than pay the fee. This provides a more sustainable parks budget, helps address the backlog, and all with new revenues. It's a progressive solution.
When the Governor and the Legislature last reported in on the subject of the budget, they slashed Medicaid funding and other big expenses to get us down to a $8 Billion deficit. Turns out that was still using the Department of Finance's rosy revenue projection. Arnold is now claiming it's more like $10 Billion:
Gov. Arnold Schwarzenegger said Thursday the state budget deficit will be "probably more than $10 billion" in the next fiscal year as the state takes in lower than expected revenues in a flagging economy.
A $10 billion gap would be at least $1 billion more than previously predicted for the fiscal year that begins July 1.
The Republican governor, addressing a district attorneys' conference in Sacramento, blamed budget formulas that lock in spending increases and a downturn in the economy related to problems in the housing market. (SacBee 4/25/08)
Ah, yes, those damn increases that increase aid to California's most vulnerable at the pace of inflation. With rising global food prices and shortages, now is a great time to cut benefits.
Thing is, you can't separate the economy and the budget problem. Our revenue system is just too cyclically dependent upon the economy. So, yup, this is another bubble burst, so another bad deficit.
One thing that I didn't see in that article, was where Arnold mentioned how much he hated the "car tax." Specifically, how much better off California is for not having the VLF. Because having to deal with budget deficits is waaay better than not having to slash through state services so Republicans can get some "budget reforms." You want budget reforms? How about this one: Let the majority rule!
California has been a very cyclical economy for quite a while now. We experience the highest of the highs and the lowest of the lows. Today, the University of the Pacific's Economic Forecasting Center let us know that, yup, we're in a recession. The PDF of the report is here, but it won't really shock you. It simply acknowledges what most of us have known for a while: our economy is in trouble. (h/t SacBee) The report doesn't really say anything major, it takes their prediction from slow growth to light negative growth.
While we may not be in a catastrophic position at this point, we can only harm ourselves by slashing our investments in the state. But rather than having the government run an organized program, you have cities like Davis independently organizing and fundraising for schools. Leaders in Davis are organizing a "dollar a day" drive just to keep the schools open and the teachers employed. All the while, the Republicans fiddle away in their obstinacy. Over at the Flash Report, Asm. Minority Leader Mike Villines writes that over their dead body will taxes be raised.
One thing is clear: Republicans will not support tax increases on you and your family. Our priority is helping California live within its means by cutting wasteful government spending.
We don't believe it makes sense to create new government programs when we can't afford what we already have.
We are also working to reform our broken budget system so that our state has the tools it needs to avoid severe budget deficits like this one. Republicans will propose common-sense reforms like a rainy day fund that can only be used in fiscal emergencies or adopting a pre-negotiated list of budget reductions that state leaders can implement during economic downturns to save the state from a budget crisis.
First, these solutions are nothing of the sort. Villines wants to create a rainy day fund? While it's pouring outside? Brilliant, I suppose if you're totally immersed in the water, you don't notice the additional rainfall. So, perhaps we need to make good on the the rhetorical threat I implied from his writing: Taxes over the GOP's dead body. We have the opportunity to hammer the GOP at the ballot box in the legislature in November, but there's still the Governor hanging around. Sure, he's willing to nibble around the edges, but unwilling to address the real need to reform our revenue system.
Villines writes that, "The contrast between the Republican and Democrat approach could not be clearer." He is correct. They stand for firing thousands of teachers, Democrats stand for working to ensure the long-term stability of our education system. They stand for a crumbling infrastructure build around 1950s values, we stand for maintaining our assets and working to provide a long term vision. Republicans stand for social Darwinism without a net. Democrats understand that we cannot continue to think that it's still "good times" with our revenue and not expect consequences.
Fiddle on Mr. Villines, but don't expect Californians to pay the price of admission for that performance.
UPDATE: Well, I spoke too soon. Dan Walters apparently got some blowback on the re-enact the VLF theory. From today's Capitol ALert PM email:
Dan Walters backs away from an earlier column suggesting the governor could reinstate the vehicle license fee, because a deal with local governments prevents that. "The net effect of this complex deal was to punch a semi-permanent, $6 billion hole in a budget that was already dangerously out of balance. So while Schwarzenegger was still promising to end 'crazy deficit spending' and balance the budget, he was, effectively, making it virtually impossible to do so," he writes.
Oh well, so much for another one of Dan's brilliant ideas. Maybe he'll retract his global warming denials soon. /update
I can't believe I am writing this. I've not hidden my general distrust of Dan Walters. But, he makes a good point yesterday, and so...what Dan Walters said:
Rescinding the car tax cut would be both the easiest way for Schwarzenegger to close the budget gap because it wouldn't require a legislative vote and, politically, the most difficult, given his vociferous advocacy during his 2003 campaign for governor.
He is, as the old saying goes, hoisted on his own petard - which literally translates into being hurt by his own gaseous emissions.(SacBee 12/9/07)
Of course, most of us understand that if the VLF had not been eliminated back in the day, we wouldn't be dealing with a budget "crisis" today. It's just that simple. But, given his harsh rhetoric, it would be challenging for Arnold to pursue such a course. But a bold course it would be. But let's back up a minute:
Schwarzenegger has indicated in private conversations with budget stakeholders that new revenue would be considered in return for spending cuts. The conventional wisdom is that new taxes are politically impossible because Republican legislators would never supply enough votes to meet the required two-thirds margin.
Whoa, while Walters generally veers in bizarre directions on his analysis, his information is generally solid. So, at least the germ of considering increasing revenue is in his head. That's a start. But, it's also true that Republicans in the Legislature will have nothing to do with increasing revenue.
The interesting thing about the VLF is that there is no vote required. You see, it was never really a tax cut, it's a state backfill to local governments. And if the governor declares that we can no longer afford that backfill, municipalities can resume collection of the VLF. And the state can hold on to their billions of backfill. See, one stroke of the pen killed the VLF, and one stroke can bring it back.
The only question here: Does the action hero have the courage to look past his past bravado and see what's best for the state. I wouldn't hold my breath on this one, though.
