Peruse the contributor list to the Yes on 26 campaign, and you'll see a who's who of corporate "baddies". Tobacco, oil, you get the gist. If there was a company that I've written about with "Big" preceding the name, I'm pretty sure that they contributed to the campaign. And to the other side, they got few, if any, grassroots contributions. It was a campaign of, by, and for the big corporations. Unfortunately, the No on 26 campaign just didn't have the resources to get that message out. I'm not sure that would have been enough to change the final outcome, but it definitely would have pushed some votes.
So, now that we are stuck with it, what does it mean for the state. Well, to put it bluntly it really, really stinks. That being said, it looks like fees currently in place will probably remain unscathed. But not all:
Initial word is that many fees won't be affected. But veteran municipal lawyer Michael G. Colantuono said the proposition is likely to bring significant change in a handful of cases.
Colantuono, part of a League of California Cities task force analyzing Proposition 26, said the measure could affect fees charged by public power utilities, park districts and business improvement districts, to name a few.(SacBee)
But, want to use a fee to help out some poor folks? Well, screw you. It starts getting very murky in this realm, with the potential for a lot of litigation to come on these questions. What counts as a benefit? How much of the benefit has to go to the payors? And so on...
Oh, and as an added bonus for PG&E and CalEdison, it just gave them a boost over muni providers. Because muni electric providers fees are government fees, they can't charge a fee to provide service for the poor, like private providers can. Yatzee for them I suppose.
Look for a lot more to come out about what this breaks, and what it doesn't over the next few years.
First, let's state this clearly: Prop 26 goes where even Prop 13 dare not tread. The measure moves any regulatory fee which doesn't exclusively benefit those being charged the fee out of the realm of majority votes at the state and local level to the 2/3 super-majority, right up there with the rest of our broken system. And as Jean Ross points out in CalBuzz today, it protects polluters:
The court found that such fees were regulatory fees - not taxes - and could be imposed by a majority vote. Sinclair built on the logic of a prior appellate court ruling that ruled that, "A reasonable way to achieve Proposition 13's goal of tax relief is to shift the costs of controlling stationary sources of pollution from the tax-paying public to the pollution-causing industries themselves."
Conversely, if the state can't impose the fees on "pollution-causing industries" to recoup the cost of environmental monitoring and remediation, those costs will be shifted to taxpayers as a whole. Or, in an era where budget crises have become the status quo, programs that enforce environmental, food safety and other laws will be scaled back, if not eliminated. Which may be the true goal of the backers of Proposition 26. (CalBuzz)
While Prop 23 is getting all of the attention, Prop 26 is just as, if not more pernicious. If it passes, it makes the implementation of any new environmental legislation difficult if not impossible. Local environmental innovation will be stifled, and the polluters, through their Republican cronies, will be able to block any fee. Sounds great, doesn't it.
But like Billy Mays used to say (RIP, Billy), "But wait, there's more." Prop 26 would also kill the so-called "tax swap". As it stands now, if the state takes in no additional revenues, and just adjust taxes to make the system more equitable, there is no supermajority requirment. As Jean Ross points out, we could close some corporate tax loopholes to reduce the personal income tax on the middle class without a 2/3 vote in the legislature. That would be ok if and only if, under Prop 13, we net no additional revenue. It's not really an overwhelmingly powerful budget balancing tool, but it does allow some additional flexibility.
However, Prop 26 requires a 2/3 vote for any measure that increases tax for any taxpayer in the state. So, if it reduces taxes for 3 million people, but raises taxes on one dude? Yup, 2/3 vote. It's an unwieldy system to say the least.
It is just one more step on the road to totally break our state, and while Prop 23's defeat is critical, it is hard to argue that Prop 26 is any less important. The reach would be enormous and long standing, and could throw our system into further chaos.
It's part two of our "Netroots Nation Goes To Vegas Piano Bar Extravaganza", and in keeping with tradition that means we are again taking a story request.
This time we won't be talking about energy security or "climate security"; instead, we'll discuss retirement security, keeping your money for yourself instead of paying it out in "mystery fees", and how one of the "usual suspects" is at it again.
California Senator Dean Florez introduced The California College and University Fee Stabilization Act of 2010 (SB 969) today.
As a parent with a child in Grad School, this proposed legislation to limit yearly tuition costs to 5% will be a huge money saver for parents and students. Better than a big tax cut, perhaps! No matter what your political affiliation is YOU need to make sure this legislation by California State Senator Dean Florez becomes CA law!
The details:
SACRAMENTO - Senate Majority Leader Dean Florez, D-Shafter, who spoke out strongly against the recent 32% fee spike at UC campuses, this week introduced legislation to help stabilize student fees for future generations of California students.
With rates that can remain relatively stable for some time and then skyrocket, it is nearly impossible for parents and students to plan their saving and investments with any sense of confidence the end result will be enough to afford whatever the going rate is by the time they enroll. Even then, the next year may soar out of reach, abruptly ending a dream.
On Monday, Florez introduced Senate Bill 969 - The California College and University Fee Stabilization Act of 2010 -- to remove much of that uncertainty from planning for a college education.
In the con-con vs initiative reform debate. California Forward is the heart of the initiative side of the argument. So, their proposals, which are likely to be followed up with some corporate cash, carry some importance.
Now, many of these proposals are things you have heard before. And the target of today's news is a measure that would adjust some of the supermajority requirements. Sounds good, right? Well, maybe not, as CalBuzz's birdogging of the measures uncovered a teensy-weensy issue: the original measure required basically all fees to get a 2/3 vote. In other words, they wanted to subsume the Sinclair Paints decision. Sure, progressives would get a majority vote budget in exchange, but that's kinda like getting a lump of coal in your stocking. Sure, you can use it to heat the room for a while, but it's really lame and you end up depositing a bunch of chemicals in the air.
Now that they got some negative attention from the left, CA Forward is trying to do what they try to do best. Get some more squishy love from the squishy middle. They've changed the proposal's language. You be the judge as to how much difference this change makes:
Option 1) Their proposal still cuts into the Legislature's ability to use raise fees by majority vote - which will still infuriate progressives - but only when fee revenues would "replace funding for specific programs, services or activities previously funded by a tax that is repealed or reduced in the same or the prior fiscal year."
Option 2) The proposal said a two-thirds vote was needed for "any bill that imposes a fee that replaces revenue that in the same or the prior fiscal year was generated by a tax.
Option 2 is the old language, with option 1 being the replacement language. Now, this clearly makes a big difference. A majority could still pass a new fee to bring revenue into a specific program that was receiving general fund revenue. However, the tax couldn't have been otherwise reduced.
So, why is this a problem you ask? Why would we want to reduce the taxes? Ah, that brings us into the "Majority vote revenue package" that was placed up for discussion last year, and that Arnold said no way to. Essentially, that plan repealed one part of the gas tax to replace it with a majority vote gas fee as well as a tax to go directly to the general fund. That would be a revenue neutral tax increase, but end up bringing additional revenue to the table.
Under California Forward's current plan, that is still killed. So, pretty much any substantive revenues will have to go through the supermajority. Whether you think the majority vote budget is worth that trade-off is a value decision. Given the painful budgets we'll be seeing over the next few years, I'm a bit skeptical.
Know how we've kind of moved on from the myriad budget crises? Well, it's not moved on, and it's out for blood...
Gov. Arnold Schwarzenegger estimated Monday that California's budget will fall out of balance by $5 billion to $7 billion this fiscal year, on top of a $7.4 billion gap already projected for 2010-11.
If true, state leaders would confront at least a $12.4 billion to $14.4 billion problem when Schwarzenegger releases his budget in January. California currently has an $84.6 billion general fund budget. (SacBee 11/10/09)
Seeing as nothing has changed on the Republican side on taxes, and bonds are not all that likely either, this will likely mean more cuts. So, who will it be this time? Total elimination of IHSS? Cutting money for firefighting services?
Round and round the legislators minds go, where they will stop nobody knows. But certainly everybody will be trying to lay low as the axe comes calling.
Dave mentioned a bit of what Sen. Steinberg said last night, but I thought this was worth while video.
In the end, we learn a few things. First, that Arnold was negotiating in bad faith. He refused to budge, and then piled on additional grand policy changes.
But, Steinberg starts out with 2/3. It's worth transcribing...even if I miss a few things.
The 2/3 requirement that we have in this state. I know it's a tired old saw. But when you really think about, that is the cause of so much of the dysfunction in the legislature. you have a minority party that obviously worked in tandem with the governor that cost the state 6-7 billion dollars tonight for no good reason. To somehow improve your negotiating position. It is without question the most irresponsible act that I have seen in my 15 years of public service...I hope that the significance will truly capture enough attention that the people will decide it is time to change the system that allows the minority to essentially rule the day. That's not just the Senate Republicans, it was the Governor too, who was apparently out to prove a point. And he proved a point.
At one point, you can really see the emotion in his voice. Check out the video, it's worth a few minutes.
In order to save you, my dear Calitics readers, the trouble of receiving the Senate Republican Caucus Emails, I choose to receive them. Generally, they are just recaps of the day's news. But from time to time they bring out a "Briefing Report." And ooooh, just like Arnold, they are pissed about anything that doesn't have a 2/3 vote on it.
The Constitution stipulates that all political power is inherent in the people and they have the right to alter or reform government for the good of the public. If trying to force taxes on the people doesn't warrant reform, what will? Did someone just say "California Tea Party"?
Essentially through the entirety of the email, they use a frame of "California's framers". The whole concept of framers in the context of California is more than a bit ridiculous. The whole constitution has been marked up more than a high school essay. At this point there is no unifying principle to the document, and there aren't any people you can point to as having a clear understanding of the meaning of the document.
For example, they point to Article 4, section 12d. That was amended by Prop 13, and further amended since that time. Yet, that doesn't stop them from arguing that somehow California's framers are rolling over in their graves:
When our state founding fathers drafted the California Constitution, they envisioned a document that would achieve balance between the people's freedom and rights, and government's role in protecting those rights. After the Preamble and Article I's declaration of the people's rights, Article II opens by stipulating that:
"All political power is inherent in the people. Government is instituted for their protection, security, and benefit, and they have the right to alter or reform it when the public good may require."
To that end, the Constitution deliberately limits government's ability to spend the people's money and increase the people's taxes.
Just to be clear, many of the framers of Sec 12d are not only still alive, but they are still active in state politics. This isn't some grand constitutional principle, this is current day politics. Current day politics that is broken and nearly devoid of principle.
The Senate Republican Caucus, much like the tea party extremists who displayed images of Hitler/Obama mashups, give a vague odor of rebellion with words like "did anybody say tea party?" They continue to reject the will of a fairly sizeable majority of the state. A majority of the state that desires a functioning state government. And then they have the temerity to decry the building of a working coalition to move something, anything through the state?
The best part of all this? They go after state constitutional proposals sitting in the Senate, that they know for damn sure will never go anywhere. Just to place them on the ballot, the Legislature needs to get 2/3 agreement. It is sheer madness to not allow the majority place an amendment on the ballot, when you can just do it for a million bucks outside the local safeway or wal-mart. And what are these crrrraaaazzzzy proposals? Oh, well, a restoration of majority rule (SCA 5, Hancock and SCA 9, Ducheny), a parcel tax system approved in an education district requiring a "mere" 55 approval (SCA 6 - Simitian), and local taxation at 55% supermajority (SCA 12-Kehoe). Man, those are really crazy, watch out, you just might find that the people can decide for themselves, rather than depending on an isolated minority to agree to something.
The initiative system is broken down, our constitution has no guiding principles because it is like a crowd sourced project gone awry. We need to Repair California.
AB 286, authored by Assembly member Salas, is a fairly simple renewal of a program that already exists. Under current law, counties are allowed to decide whether they want to impose a $1 for personal/$2 for commercial vehicles in order to fund an anti-car theft program.
This isn't some grand new program, it is simply a reauthorization of an existing program, but no, that dollar is very meaningful!
In a sign of bigger budget clashes to come, legislation to extend the life of a local $1 per year car registration fee to combat auto theft ran into fierce opposition from Republicans Wednesday. ... The 45-25 vote sends the measure to the Senate.
* * *
But Republicans called the fee an "end run" around laws that require voter support for new taxes. They said public safety programs should get first call on budgets and not have to rely on additional fees. ...
Assemblyman Kevin Jeffries, R-Lake Elsinore, said if the state had its priorities in order "we wouldn't be arguing about .. a dollar." (SD U-T 6/4/09)
My first point would be that this clearly not a NEW fee. It is an old fee. How exactly is renewing an already existing fee imposing "a new tax." The sheer logic gap is mind boggling.
The Republicans are now so single minded that they are arguing over a single dollar fee for a public safety program Republicans would ordinarily support. It is a program with strong accountability measures that has shown to be successful, but the Republicans are dragging it into a broader fight about the budget system.
Now, I won't argue that we shouldn't be funding the government this way, but when it comes down to it, there are no other options. Prop 13 and the supermajority rules have brought us to this point. There is no more room to cut, and now we are left playing shell games. And even after the Republicans have succeeded in making governing California impossible, they won't even play by their own rules.
Buried in Arnold's budget ideas spreadsheet as "Idea #10," Arnold shows that for a "post-partisan" like him, no idea is really sacrosanct. He clearly wasn't wedded to the no new revenue idea before May 19, but he claims to be a born-again revenue hater. What is "Idea # 10"? Well, it's a fee on home insurance policies:
Fund CAL FIRE/CAL EMA with Emergency Response Initiative Fee. Average cost per insurance policy holder would be $48 per year. BY would backfill a portion of CAL FIRE's base budget. In out years, backfill E Fund costs and disaster assistance costs.
All in all, this is a fairly reasonable idea. CalFIRE desperately needs more resources as we head toward a future with increasing fire danger. Even with these additional revenues, Arnold is still proposing to let CalFire's equipment get another year's worth of rust as they are gutting equipment replacement for this budget year.
This is a great idea, yet completely ideologically discordant and intellectually dishonest. Only a few weeks ago, he said everything was on the table...except new revenues. Heck, even the Democratic legislative leaders have said there will not be any revenues. And I'm sure if you asked the Governor right now, he'd say no new revenue measures. So, what's different here? Why is it ok to put a $48 fee here?
At any rate, the Legislative Analyst LAO thinks that this fee will actually be considered a tax anyway, and thus be subject to the limitations of Proposition 98 requiring some of the money to go to K-14 education. Leg Analyst Mac Taylor suggests a more targeted fee for property owners that live in areas with high fire risk.
But the real question that this raises is not whether this is a good idea, which it probably is. The real question is if we can add revenue for CalFIRE, why can't we add revenue for transit by adding a gas fee? Why can't we add revenue for CalWORKS (and the 3 times of federal dollars pulled down) by adding a sales tax on services?
When Finance Director Mike Genest suggests that only poor people get services from the state, perhaps he should consider CalFire, the one service that he and his boss think should get additional revenue. Certainly CalFire supports all Californians, but all those pricey homes built in fire-prone canyons require much of the assistance from CalFire. Why this fee? Why just for this purpose, as worthy as it might be?
I'll be on KRXA 540 AM in Monterey at 8 AM Thursday morning to discuss this and other California-related topics
As you might remember from last fall, California conservatives tend to prefer low taxes to adequate fire protection. As Northern California is ablaze - with two huge fires burning out of control in the Big Sur mountains to the south of me - attention is again focused on providing adequate fire services. And as Democrats and Arnold Schwarzenegger debate the best way to fund it, conservative Republicans continue to fight the very concept. From the San Jose Mercury News:
Hoping to buy more fire engines and helicopters, Gov. Arnold Schwarzenegger is proposing a statewide surcharge on property insurance of $6 to $12 a year. Another lawmaker, state Sen. Christine Kehoe, D-San Diego, wants to charge a $50 yearly fee on the 900,000 homeowners living in rural areas to fund fire prevention....
The new engines were recommended by a state task force after massive wildfires in Southern California in 2003 killed 24 people and burned 3,600 homes.
The governor's proposal would add a surcharge on property insurance for all commercial and residential structures statewide. In ZIP codes designated as "high-hazard zones" for earthquakes, fires or floods, the fee would be 1.4 percent, about $12.60 a household per year. In "low-hazard zones," the surcharge would be 0.75 percent, or $6.75 a year.
The main debate between Kehoe's and Arnold's proposals is who should pay for the costs of fighting fires in the urban-wilderness interface. I like that Arnold's plan would have higher rates for those in higher risk areas, but would still require all property owners to pay something. The fact is that even the brush fires are not exclusively a threat to folks who chose to live in fire-prone areas. Much of California is a fire-prone area, even the urban areas.
The AP has gotten a hold of the governor's May Revise speech and therefore the major budget proposals that are to be unveiled tomorrow. The key elements are described below and over the flip I provide some analysis of each proposal.
Arnold will float bonds using the state lottery as security. $15 billion over 3 years will be raised but $10 billion goes into "rainy day fund"
If that fails, 1% sales tax hike to last no more than 3 years
Prop 98 suspension abandoned; instead COLA will not be paid
State parks closures abandoned; instead fees to rise $1 to $2
$6 billion still left to cut or balance out somehow."
Overall thoughts: Here we go again. Arnold Schwarzenegger came to office in the recall of Gray Davis in 2003 promising to solve our state's budget problems once and for all. Instead he immediately blew a $6 billion hole in the budget with the Vehicle License Fee cut and then borrowed to close the rest of the gap - costing the state around $3 billion in annual debt service.
Now that Arnold's solution has predictably failed, he is predictably offering more of the same. Borrowing against the lottery is a problematic concept for many reasons, the main one being it avoids the core issues of our budget. It's yet another one-time fix that does nothing to solve the structural revenue shortfall that has plagued our state for 30 years.
It is significant that Arnold seems to be backing away from his most significant cuts - especially the K-12 cuts. Obviously the details released tomorrow will be key, and we should fully expect higher ed to take another crippling blow. But this does indicate that the activism many of us have launched against the primary schools cuts has had an impact.
And of course, there's still $6 billion left over - $6 billion that the Yacht Party will insist come in the form of destructive cuts that damage the economy, $6 billion that Democrats will - we hope - insist come in the form of wise, long-term revenue solutions.
Finally, Arnold seems to be gambling that the economy will make a quick recovery and that the current woes are just a dip and not the opening stages of a deeper recession. That, I think, is a major and probably reckless gamble to make.
"I believe the drastic cuts proposed by the Governor would be devastating to the people I represent," Hancock told the 100-person crowd. "The budget will define our values as a community."
The budget as a statement of values was a theme repeated throughout the program. "We can have this conversation about numbers," Swanson added. "But that kind of misses the point. This is really about values."
Jean Ross, Executive Director of the California Budget Project, laid out what values are being put to the test in Governor Arnold Schwarzenegger's budget:
Confronting education -- a $4.825 billion cut to K-12 schooling. That's a reduction of $786 per student;
Confronting health care -- a $1.126 billion cut to Medi-Cal spending;
Confronting crucial social services for children and families -- a $463 million cut to CalWORKs programs. The largest share of these savings would come from removing aid for 150,000 children in low-income households; and
Confronting crucial social services for the elderly and disabled -- a $324 million cut to cost-of-living adjustments for cash assistance programs for low-income seniors and persons with disabilities in the SSI/SSP program.
To make matters worse, some of these cuts would take away federal matching funds. "What sense does that make?" Assemblymember Swanson pondered.
For more, including a discussion of the early release of prisoners, see over the flip...
A proposal to increase funding for community colleges has qualified for the February ballot. Here is the title and summary:
Establishes in state constitution a system of independent public community college districts and Board of Governors. Generally, requires minimum levels of state funding for school districts and community college districts to be calculated separately, using different criteria and separately appropriated. Allocates 10.46 percent of current Proposition 98 school funding maintenance factor to community colleges. Sets community college fees at $15/unit per semester; limits future fee increases. Provides formula for allocation by Legislature to community college districts that would not otherwise receive general fund revenues through community college apportionment. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Potential increases in state spending on K-14 education of about $135 million in 2007-08, $275 million in 2008-09, and $470 million in 2009-2010, with unknown impact annually thereafter. Annual loss of fee revenues to community colleges of about $71 million in 2007-08, with unknown impacts annually thereafter. (06-0030.)
In Today's LA Times, George Skelton goes after Arnold Schwarzenegger the tax/fee issue. SO, before we start, definition wise, here's what I think the distinction to be. A fee is charged specific users of specific services that the state provides. Taxes are just general charges that are not tied to specific services. Tax increases, under Prop 13, are required to have asupermajority. Fees can pass with a simple majority (and, of course, a gubernatorial signature).
So, remember how Arnold made lots of "no new taxes" pledges? Well, it turns out that if you call it a fee, they are exempted too. Yay!!
One of the pleasures of writing a Sacramento column is that politicians read it and occasionally change their minds. I'm thinking that must be what happened to Gov. Arnold Schwarzenegger on taxes.
First, he apparently has bought into my oft-written contention that taxes, as Oliver Wendell Holmes put it, "are what we pay for a civilized society." In order to enhance the quality of life in an increasingly congested state, taxes sometimes have to be raised.
Schwarzenegger, who previously preached the no-tax gospel, seems to have converted. Why else would he have proposed to sock doctors and hospitals with a new tax to help pay for universal healthcare in California? The docs would pay the state 2% of their receipts and the hospitals 4%, raising an estimated $3.5 billion.(LAT 1/15/07)
