California voters said no, but Democratic lawmakers are pushing to do it anyhow.
The issue involves billions of dollars and a ballot measure so important to schools that the California Teachers Association spent more than $7 million in a failed attempt to pass Proposition 1B.
One month after the initiative died, Democrats are proposing to pay schools the same $7.9 billion that was the heart of the measure and to begin payments the same year, 2011-2012.
The funding commitment is part of a massive budget-balancing plan crafted by a joint legislative conference committee and scheduled to be voted upon this week by the Senate and Assembly.
Sen. Mimi Walters, R-Laguna Niguel, said the proposal to commit $7.9 billion to schools directly contradicts the people's will.
"The voters have spoken and we need to listen," Walters said. "Unfortunately, the majority party in Sacramento isn't listening."
Would that the Republicans always listen precisely to what the voters want - say, when they put 63% majorities into both houses of the Leigslature, for example. The Republican Governor has asked for a $4.5 billion reserve at a time of economic crisis, when voters "rejected" a rainy-day fund in Prop. 1A. You can argue the economics of a reserve fund that large on the basis that the economy still has some rough patches, but you can just as easily argue that the Governor is somehow upending the voter's will.
The SacBee does offer the contextual reality of the Democrats' effort here. Before the May 19 special election, the California Federation of Teachers and associated groups sued the state for that $7.9 billion, which they feel is owed to them. The dispute comes over how mandatory Prop. 98 funding gets calculated, and the CFT feels they have a solid argument that they actually deserved more money under the law than the state provided. You can say that you don't like mandates in funding generally, but the courts will eventually decide this dispute regardless of what the legislature does. And Democrats can see the possibility - some would say probability - of CFT being able to win that lawsuit and receive payment immediately, rather than two years out (although "immediately" would probably not happen for a year or so, until the case worked its way through the courts).
Prop. 1B was essentially an attempted out-of-court settlement. That having failed, the participants are going to court. Incidentally, every subsequent budget cut adds to the money owed to schools under Prop. 98, which has ballooned to around $11 billion. So the options are: either set up a future payment schedule, hope the courts rule in a way that would break with precedent, or dismantle Prop. 98 (which wouldn't get the state off the hook for funds owed). So when Mimi Walters argues that "the people have spoken," she's saying that they've spoken on cutting school funding to dead-last in the nation, all the while not answering the still-thorny problem of a current lawsuit.
Late last week I received a statement from an anonymous state employee working at the Employment Development Department, which included some pretty stunning allegations about how Arnold Schwarzenegger and the Legislature are dealing with state workers. For example, the Governor would reduce all state employee salaries by 5%, including ones not paid out of the General Fund but through other dedicated resources, including federal dollars. Our budget deficit is a General Fund crisis, not a crisis of those other resources, and so there is absolutely no necessity to reduce those salaries. In addition, the Governor has proposed furloughing such workers, an illegal action since state law excludes Special Fund workers from these types of job reductions. The State Compensation Insurance Fund just successfully sued the Governor over this matter.
Perhaps worst of all, the Governor and the Legislature have in recent years used special fund money to balance the budget. This is EXACTLY what Props. 1D and 1E would have done, moving dedicated funds into the General Fund. And yet the Governor and a compliant legislature goes ahead and does it anyway when the funds at risk are more murky and have lower-profile champions. This parallels the Governor, despite failing with Prop. 1A, budgeting a $4.5 billion dollar reserve for the upcoming fiscal year, despite the "rainy day" we're currently facing, essentially moving forward in violation of the will of the voters with a spending cap.
Democratic lawmakers are floating a plan to use that projected reserve, but resist augmenting that with new revenues, leading to $19 billion in additional cuts and borrowing from local governments, really a terrible plan considering the alternative options on fees. The unions are getting impatient with the lack of leadership, and advocacy groups seem more interested not in working with them but just going the heck around them. This note at the bottom of the LAT piece from Lenny Goldberg is the buried lede:
The next step for unions could be going directly to voters. One labor-backed group, the California Tax Reform Assn., has prepared a possible ballot measure to repeal the three corporate tax cuts Democrats agreed to in the last year to get GOP support for the budget.
"It's ready to go," said Lenny Goldberg, the group's executive director.
Reading the statement from the state employee, which I've posted on the flip, gives you some of the reasons why workers feel they have no allies in Sacramento anymore.
California took a multimillion-dollar step backward Friday in cutting its budget.
Assembly and Senate members in a budget conference committee balked at derailing the Cal Grant program of college aid or stripping Hastings College of the Law of nearly all its state funding.
By rejecting the two proposals by Gov. Arnold Schwarzenegger, however, the committee created a new $235 million headache in its bid to fix a gaping fiscal hole.
The panel is rushing to balance the state's recession-wracked budget by curing a projected $24.3 billion shortfall.
Republicans actually claimed they were against eliminating Cal Grants but wanted to find additional offsets in the budget. But in the end, they voted to get rid of every aid grant for 77,000 low- and middle-income California students who want to attend an institution of higher learning. You would think that the Democrats could do something with that.
With respect to Hastings College, the budget committee averted what could have been a costly disaster.
Schwarzenegger's Hastings proposal would have eliminated about $10.3 million in state funding for the University of California law school, leaving it with only $7,000 in general fund support and $153,000 from lottery revenue.
Sen. Mark Leno, D-San Francisco, argued Friday that the cut was much deeper than those targeting other UC programs and would raise Hastings' annual tuition from $28,600 to about $36,600.
Leno said the cut could launch a costly court fight over terms of the law school's creation, which called for Judge S.C. Hastings to donate $100,000 to support the campus - and for the state to pay his heirs that sum, plus interest, if the state ever abandoned its financial support.
Leno said the governor is attempting to "privatize" the law school, and if the Hastings heirs sued, the state could wind up owing more from 130 years of accumulated interest than it could save from its budget-cutting proposal.
Seriously, did anyone in the Governor's office even think about the possibility of paying 130 YEARS' WORTH of accumulated interest on a $100,000 contribution in order to save $10 million, and how those numbers do not compute?
I think you can see where this goes. The conference committee is not nearly in the mood to accept the most extreme of the Governor's proposals - I don't think they'll tell those AIDS activists in the streets that they can no longer get their drugs, for example. And then we'll have a fairly large remaining gap after the committee's work is done. The first pot of money the budget committee will attack will be the absurdly large $4.5 billion reserve in the Governor's plan, essentially ignoring the will of the people not to institute a spending cap and socking away billions of dollars in the middle of a near-depression. After that, we're going to see a big fight. We need to continue to leverage grassroots pressure, wedge Republicans who are starting to waver on a cuts-only approach, and let Democrats know that they must hold the line on things like eliminating welfare and children's health care, and incorporate a majority-vote fee increase to make up the difference. We're already seeing cracks in the rush to shock doctrine California. Let's break it open.
The real tragedy of the proposed cuts in the state budget comes when you recognize that some of them would cancel out federal stimulus dollars. A perfect example would be the elimination of the welfare-to-work program Cal Works. In Los Angeles County, the stimulus funds a program through Cal Works that provides jobs. Without Cal Works, the program gets eliminated, and $200 million in federal dollars cease to flow to the state. Funny how the welfare goes but the corporate welfare remains, ay? And that's really just one example.
"Advocates for the elderly in California say recent budget cuts are dramatically affecting the ability of social service programs to keep up with demand" at a time when "the state's elderly population - and the incidents of elder abuse - are exploding," NPR reports. One example is Contra Costa County, where the Aging and Adult Services Program laid off two-thirds of the staff who "investigate abuse complaints of elderly and dependent adults." The county is now "turning over virtually all of its self-neglect cases to some other agency - often, the police." The Contra Costa situation is "so severe that the county grand jury recently concluded that Adult Protective Services no longer has the resources to carry out its legal mandate to investigate physical and financial abuse complaints." This comes at a time when complaints of elder abuse are on the rise. According to "national studies," only "1 in 5 elder abuse cases is reported" (Siler, 6/3).
Needless to say, this threatens the ability for Contra Costa county to qualify for stimulus funds to backfill those cuts, thanks to "maintenance of effort" rules. The Feds giveth, the state taketh away and taketh away what the Feds giveth. And that undermines the goals of the stimulus and damages economic recovery, given that we are the nation's largest state.
Some would say that the state's "runaway spending" brought this on, but Sen. Mark Leno argues persuasively against this, detailing the nature of the spending over the past decade and where that money has actually gone - tax cuts (the vehicle license fee), prisons, debt service, and the rapid cost growth in health care and fire protection. This is familiar to most of us but ought to be shared with those friends who don't know the facts. Same with this.
What truly brought this on is a dysfunctional process that requires serious structural reform.
The statement of organization for Californians for Children's Health says the group - for which a Web site is under construction - exists to support "expansion of children's health coverage," and its sponsoring organizations include the Children's Defense Fund Action Council; the Children's Partnership, a project of the Tides Center; Children Now; and PICO California. Its CFO is PICO California director Jim Keddy; its secretary is Kelly Hardy, Children Now's associate director for health.
Hardy earlier today told me Californians for Children's Health aims to develop a ballot measure for November 2010, and although today's rapidly changing budget environment makes it hard to say exactly what that measure's specifics will be, "we're contemplating new revenue sources that would come in, not General Fund sources, that would support children's coverage programs."
Steinberg has a history of going outside General Fund revenues to pay for social services projects - see the millionaire's tax in Prop. 63, which funds mental health programs.
You need to play within the hand dealt, and voters have shown a willingness to use tax increases to fund specific programs. Losing the Healthy Families Program would mean 900,000 kids without health care in California, and we would be the only state in the country not accessing federal SCHIP funds. So obviously, you try to get that revenue absolutely any way you can.
At the same time, is this any way to run a government? Create a system where no revenues can be raised inside the legislature, forcing stakeholders and politicians to go to voters to look for a dedicated stream here and another dedicated stream there? This is unsustainable to the nth degree. We will not transform California one dedicated funding stream at a time. It just won't work, and we'll spend hundreds of millions of dollars on consultants in the process. Steinberg shouldn't foreclose the option, of course, but his money would be better spent on reform efforts so that he no longer needs to go to the voters for everything, and we can have a representative democracy such that has worked in America for over 220 years.
Moreover, I fear that Steinberg is setting this fallback plan up assuming that Healthy Families will be either eliminated or gutted in the next couple weeks. Perhaps the donation to a potential ballot committee is a threat to the Governor; but perhaps it's a signal that the cuts can come down. Let's be clear - in the meantime, while we wait for the results of that election, children will die from a lack of health care coverage. We have other options - Jean Ross describes some of them beautifully here - and the Democratic legislature should be drawing lines in the sand, not giving up on drastic cuts and making contingencies.
Arnold Schwarzenegger's address to the legislature was notable only for its fatuousness. He demands the destruction of the social safety net in California and pleads that we have "no choice," while hiding the decisions he made which brought us to this point. He claims that his budget is not "just about cuts," then offers the same reforms that the voters have time and again rejected, or half-measures like firing groundskeepers (to privatize school responsibilities to low-wage contractors, incidentally). Evidently, the May 19 special election, which has been massively over-interpreted and interpreted wrongly by the Governor, was supposedly a call to arms against tax increases, but a spending cap and rainy day fund, which were on the ballot and voted down by 66% of the electorate, are still viable ideas. He drew a line in the sand by calling for the dissolution of the Integrated Waste Management Board, an organization that IS NOT FUNDED WITH ONE PENNY FROM THE GENERAL FUND but instead with fees on garbage collectors. He talked about spending less per inmate on the prison population but his budget seeks only to get rid of precisely the services, rehabilitation, drug treatment and vocational training, that would lower recidivism rates, unstuff the prisons, and allow us to spend less on their management. He admitted that money from the sale of surplus property cannot go toward the General Fund, in a fleeting moment of truth, but claims it would lower our debt payments, which is true, but precisely what Arnold has been increases with borrow and spend policies for the last six years.
Of course, Arnold urged swift passage of all his Shock Doctrine proposals, because that's how it works. The goal is to give nobody time to think, only to acquiesce in the face of crisis. Some, like Assemblywoman Nancy Skinner, will not put her brain on autopilot, mindful of the Depression that would ensue from an all-cuts budget and the drastic consequences for our economy.
"The Governor's opening statement that the voters in rejecting the special election measures said, "don't ask us to solve complex budget issues, that's your job," is right," she said. "He was wrong however in his assertion that Californians want an all cuts solution ...We have choices. For instance, restoring the top income tax rate on high wealth incomes of $250,000 and above in place under Republican Governors Pete Wilson and Ronald Reagan would allow us to avoid $4 billion of these cuts. Enacting an oil severance fee on oil drilled in California, revenue collected by every state and country in the world that produces significant amounts of oil, could avoid another $1 billion in cuts.
"The Governor talked of us acting courageously. Acting courageously is looking at all alternatives and making smart, rational choices that lessen the cuts with some sensible new revenues," she said.
Noreen Evans, similarly, has stepped up, at least rhetorically, to offer a counter-weight to the Governor's Shock Doctrine tactics:
SACRAMENTO - Santa Rosa Assemblywoman Noreen Evans is emerging as one of Gov. Arnold Schwarzenegger's fiercest critics, a noteworthy development given her prominent role in the high-stakes back-and-forth over the state budget crisis [...]
"I don't know what the point of that exercise was, really," the Democrat said immediately after the speech as she stood outside the Assembly chambers.
Schwarzenegger told Assembly and Senate lawmakers that he has "faith in our ability to once again come together for the good of the state."
But Evans said the governor was not helpful "at all" in bridging the divide between Republican and Democrat lawmakers. Rather, she labeled Schwarzenegger's approach to budget matters as one of "shock and awe."
"It's working because it's shocking, and it's awesome, and it's terrible," she said.
While there are some voices in the Legislature creating pushback, my experience is that the Democrats fall in line with their leadership (same with the Yacht Party, actually; it's practically a Parliamentary system). And given the clear signs from Bass and Steinberg to bend over backwards to enable Arnold's proposals and get it done quickly, I think the only way to halt this forward march would be to mass support inside the Capitol around specific proposals. For instance, the California Budget Project today released a report about the $2.5 billion corporate tax cuts included in recent budgets in September 2008 and February 2009, cuts we certainly cannot afford in this economic climate. If everyone must share in the pain, as the Governor said, that must mean something. And so these $2.5 billion in corporate giveaways ought to be repealed. Period. Full stop. Here are some of the gems from these tax breaks:
Nine corporations, dubbed the "lucky nine" in the CBP's analysis, will receive tax cuts averaging $33.1 million each in 2013-14 due to the adoption of the elective single sales factor apportionment, according to estimates by the Franchise Tax Board.
Eighty percent of the benefits of elective single sales factor apportionment will go to the 0.1 percent of California corporations with gross incomes over $1 billion.
Six corporations will receive tax cuts averaging $23.5 million each in 2013-14 from the adoption of credit sharing.
Eighty-seven percent of the benefits of credit sharing will go to the 0.03 percent of California corporations with gross incomes over $1 billion.
Are there 27 Democrats in the Assembly, or 14 in the Senate, willing to go to the mat to force the repeal of these unnecessary corporate giveaways, providing revenue that can go to the poor, the sick, the infirm, the elderly? Rank and file Democrats never think to show their power in these negotiations. In a time of crisis, they should - and force the Governor toward a more equitable solution. Richard Holober's post, which I referenced earlier, closes with this:
It's time to re-unite a fractured progressive movement - based on hope, not fear. We need leadership that can think beyond the imminent crisis, reach out to build a coalition, and organize for budget justice. Labor and community based activist organizations must supply the leadership.
Let's mobilize behind broadly supported values: require corporations to pay their fair share of taxes; increase the progressivity of our tax system; and eliminate undemocratic super-majority budget and tax rules that give a handful of reactionary politicians a stranglehold over funding our schools, health and public safety services. The campaign may take years. We can win, but first we need to get out of the budget crisis bunker.
Which politicians will enable us to escape that bunker?
Apologies to Russell from Fat Albert, but in this case I mean that literally.
The Los Angeles Unified School District announced Thursday it is canceling the bulk of its summer school programs, the latest in a statewide wave of cutbacks expected to leave hundreds of thousands of students struggling for classes.
The reductions, which will force many parents to scramble for child care, are the most tangible effect of the multibillion-dollar state financial cuts to education. Community colleges also have announced summer program cancellations.
Bridge learning has a direct throughline to academic achievement, and in the long run, the value of getting an at-risk youth a high school diploma far outweighs short-term spending. But of course, summer-school programs extend beyond make-up classes for students behind the curve, but also playground and pool programs which keep kids out of trouble and off the streets. In other words, the very kind of after-school programs that the Governor championed before he took office.
Gov. Arnold Schwarzenegger's plan to dismantle the Cal Grant program would make California the first state in the recession-battered nation to eliminate student financial aid while raising college tuition, experts said this week.
"Other states are cutting back, but not a complete phase-out," said Haley Chitty, communications director for the National Assn. of Student Financial Aid Administrators.
The governor's proposal would end all new Cal Grants, eventually eliminating the state's main financial aid program for college students, and prevent existing awards from increasing. Grants awarded to 118,000 freshmen starting college in the fall would be canceled, as well as hikes in 82,255 continuing awards promised when the University of California and California State University raised fees this month by 10% and 9.3%, respectively.
Cal Grants awards focus on the lower-income population. That's on whom this budget is being balanced.
Arnold will deliver a joint address to the legislature this week. I'd rather that be a joint address to all public school students. Explain this to them.
I just appeared on KPFA with Eric Klein to talk about the Governor's proposed budget cuts, along with several experts and stakeholders, including friend of Calitics Anthony Wright of Health Access California. I agree with him that it's almost hard to fathom the amount and severity of the cuts proposed for health care, especially at a time with the federal government is moving forward with a "do or die" plan to reform the health care market, increase access and lower costs. The proposed Governor Hoover cuts would have the exact opposite effect, and the people gravely impacted by this will not have the luxury of waiting around for the Feds to catch up and fill in the gaps.
Two recent CBP fact sheets help break down the Governor's proposed cuts to Medi-Cal and Healthy Families, in numbers that are easier to grasp. These fact sheets show:
More than 940,000 California children would lose health coverage if the Healthy Families Program is eliminated as the Governor proposes. More than 240,000 children in Los Angeles county alone would be affected. Want to know how many children would be impacted in your county? Check out the fact sheet to see.
In total, more than 1.9 million Californians could lose access to health coverage within three years through proposed reductions to the Medi-Cal Program and elimination of Healthy Families.
As the Governor said himself today, "behind every one of those dollars that we cut there are real faces."
Kudos to the LA Times, by the way, for allowing the great unmentionable to get printed on their pages - the decisions made in Sacramento will truly be the difference between life and death for many Californians.
Schwarzenegger argues that the state's declining economy and plummeting tax revenues have boxed California into a corner, forcing deep and historic cuts in the health and welfare programs that form the state's social safety net. Without those tough measures, he says, California will cartwheel toward insolvency.
But a 10-person legislative budget panel, which is reviewing the governor's proposals, listened during a long day in a crowded hearing room to scores of people who said their survival depends on programs set to be hit by the budget ax.
They heard from mothers of children with autism, representatives of people on dialysis, poor parents whose children see dentists on the government's dime, former drug abusers set straight by a state rehab program.
And they heard from a woman named Lynnea Garbutt who has lived with AIDS all of her 24 years.
She has survived with the help of a state program that provides the expensive antiviral drugs she takes. Now, with that program facing elimination, she pleaded with lawmakers to save it -- and her life.
"If these cuts take place, you're not just cutting money from the program -- you're cutting my life," she told the panel, her voice shaking and tears falling. "I choose to live. Please don't make me die. My choice is life."
This is how Yacht Partier Chuck DeVore responded - move out of the state. Love it or leave it!
The cuts made to programs like Healthy Families (California's SCHIP) would eliminate federal matching funds and double or triple the scope of the cuts. And it would be one thing, by the way, if the Yacht Party simply held the line and said "we can't afford it." But no, they want to spend billions of dollars, only on their own projects instead of saving human lives.
In this article in the San Diego Union Tribune, the same Republicans (and Republican governor) who would eliminate children's health care and basic services for the neediest Californians, actually want the state to pony up the money for a water bond.
Schwarzenegger, says the article, is still fixated on a whopping $10 billion bond. And Senate Republicans are right there with him:
"Sen. Dave Cogdill of Modesto, the lead Republican on water issues, agreed. "It's obviously a tough time to bring it forward, but we can't wait," the article notes.
We can't wait? According to my calculator, If the entire $10 billion was sold together, the interest payment could be in the neighborhood of $660 million annually. That's $660 million more that would have to come out of schools, health care, and other items on the chopping block.
Similarly, the Yacht Party cried poor about programs that help people, but made room in the February budget for a huge corporate tax cut.
Everyone who has spent 10 seconds on this recognizes that there's no good way to use current revenues to provide the basic level of services Californians deserve. To the extent that I have hope that we will overcome the selfishness of the cruel and the impossibility of navigating a broken system, it comes from people, who are fed up and starving for leadership and change from a government that no longer serves their interests. To turn the figurative starvation literal, Los Angeles teachers are going on a hunger strike to protest budget cuts. We're all hungry, and we'll be a lot hungrier if Governor Hoover has his way.
Robert makes quick work of the new and not improved Gov. Schwarzenegger prescriptions for disaster, trying to fill an entire $21 billion dollar deficit (which is now more like $24 billion according to the Legislative Analyst) with cuts. I cannot completely argue with the decision to cancel the RAW (revenue anticipation warrants), because bad borrow and spend policies, as Noreen Evans explained, part of the problem in Sacramento, not the solution ("Like paying your bills with your credit card when you don't have the money to afford it.")
This is going to get worse, by the way. The offshore drilling plan Arnold proposed lost a key environmental supporter this week, threatening that $1.8 billion solution. And Tim Geithner's apparent suggestion that loan guarantees require an act of Congress, while immaterial to the budget at this point, really hinders the ability to solve the short-term cash crunch. Basically the entire budget would have to get passed before one dime of borrowing could take place, otherwise the borrowing is unlikely to even happen, and even when it does it will be prohibitively expensive.
So, what to do? I think Greg Lucas is on to something. It's time to embarrass Governor Hoover. Put his bill on the floor and watch it get a half-dozen votes.
Bringing the GOP governor's plan to a vote accomplishes several things.
It establishes how many initial votes exist for the plan. Not many, presumably. Will Republicans vote for it or are the cuts too deep even for them? Or should they choose to dismiss the action as a "drill" and not participate, an opportunity is presented for Democrats to score some coup on their political opponents.
A somewhat simplistic example: "All we hear from Republicans is that they want to cut state spending. Well, here's a chance to do so and yet they sit on their hands."
Bringing the proposal to a vote also attracts the media spotlight. Parents might be interested to know about the $6.3 billion in payments to public schools the governor would defer for one year, a figure that doesn't include the $8 billion the state already owes schools.
What the plan does to immigrants, the developmentally disabled, the elderly who receive in-home care also might be of interest to the public which so recently decided to make the fiscal problem worse.
The public might also like to know that $12 billion of the governor's $21 billion worth of actions are one-time and that embracing them makes it harder to solve future budget messes.
Essentially, it's time to build a set of facts and put people on the record. There has to be some long-term thinking here, and some public explanation of the implications of a Hoover-like budget. Like there was no reason for Democrats to play nice with George Bush when he was at 28% in the polls, there similarly is no reason to play nice with Arnold Schwarzenegger. He is basically despised.
Virtually the entire political leadership in Sacramento took without questioning the view that the overwhelming loss of the special election is somehow a mandate for "living within our means" and deep, drastic cuts to the budget. The Washington Post, the Los Angeles Times (in multiple venues) and most other publications provided uncritical coverage of the Governor and even leading Democrats, parroting this theory that "the voters spoke" and the message was that only cuts would be allowable from this point forward.
Beware of any sentence that starts with the words "What the voters told us was..." Far too often in our politics, dishonest lawmakers decide that voters mandate their particular ideologies and preferred policy decisions regardless of the facts. Perhaps the only real message delivered from the voters to lawmakers was that the former doesn't particularly like or trust the latter. But there are other possibilities. A new polling memo by David Binder Research details why Prop. 1A in particular failed, and the results do not match the Governor's ramblings.
Contrary to what the Governor is saying after the defeat of his proposals, Prop 1A did not fail because voters delivered a message to "go all out" in cutting government spending. The all-time record low turnout for a statewide special election clearly demonstrates the lack of depth to that argument. Prop 1A did not
generate a spike in turnout and taxes were not cited as the main reason why voters overwhelmingly rejected Prop 1A. Support for a state budget that relies solely on spending cuts is very limited - even among those voting no on Prop 1a.
Voters in this election were more likely to be Republicans and less likely to be Independents, whereas Democratic voters came out in proportions consistent with past turnout. Of those that voted in this election, 43% were Democrats, 42% were Republicans and 15% were Independents or minor party voters. This past November, the electorate consisted of 46% Democrats, 32% Republicans and 22% Independents or minor party voters.
In November 2010, the electorate will be a group that is more supportive of the revenue options tested in the survey, and more strongly opposed to only using cuts to balance the state budget. While only 36% of voters that turned out for the May 19th election supported using entirely budget cuts to balance the budget, even fewer - only 24% -- of non-voters felt the same way [...]
Voters simply do not trust the leadership in Sacramento, and recognize that the failed special election was just another example of the inability to bring real solutions to voters. When given two choices, four out of five voters - even among those who voted 'Yes' on 1A - agreed that the special election was just another example of the failure of the Governor and Legislature, who should make the hard decisions necessary to really fix the budget. Only 20% agreed the special election was a sincere effort to fix the state's budget mess.
I would argue that the voters feel no trust in the legislature because they see time and again policy solutions that stick the average Californian with the bill that the wealthy and well-connected don't pay. The fact that the only permanent tax issue in the February budget was a $1 billion dollar tax cut for the largest corporations in America is a perfect example.
The polling memo also shows broad support for tax increases in a variety of areas, including wiping out this massive corporate tax cut:
75% support increasing taxes on alcoholic beverages (62% support among 'No' voters)
74% support increasing taxes on tobacco (62% support among 'No' voters)
73% support imposing an oil extraction tax on oil companies just like every other oil producing
state (60% support among 'No' voters)
63% support closing the loophole that allows corporations to avoid reassessment of the value of
new property they purchase (58% support among 'No' voters)
63% support increasing the top bracket of the state income tax from nine point three percent to
10 percent for families with taxable income over $272,000 a year and to eleven percent for
families with taxable incomes over $544,000 a year (51% support among 'No' voters)
59% support prohibiting corporations from using tax credits to offset more than fifty percent of the
taxes they owe (55% support among 'No' voters)
In addition, voters oppose the kind of spending cuts outlined by the Governor.
Now, I'm sure I'll hear "eat it, you pipe dream librul hippie" because of the structural issues that prohibit these kind of tax solutions. But the reason that the legislature has such desperately low esteem right now is that they fail to publicly even advocate for the solutions Californians plainly want, or the breakage of the structural barriers that would provide it. This failure caused the May 19 debacle and will cause further problems for the Democrats in the state if they are not careful. A political party seen as devoid of principle will not be a successful political party forever. What Californians desire, essentially, is leadership. And they will punish those who refuse to give it to them.
UPDATE by Brian: I've posted the slides for the Binder Research presentation over the flip.
Via OC Progressive, Assemblywoman Noreen Evans, Chair of the Budget Committee, spells out slowly for everyone the structural problems and false assertions about the California budget process. If you have non-political junkie friends who want to understand this in a quick and easy way, pass them this link.
This is a very good place to start. Evans puts the lie to three big myths about California:
1) The "runaway spending" assertion. Um, no. Population and inflation accounts for 68% of the increase. I LOVE how Evans cites the tough on crime sentencing laws as a key element of over-spending, in this case on prisons (20% of the inflation and population-adjusting spending increase). Ballot-box budgeting with no dedicated funding stream (separate from the initiatives voters stopped lawmakers from raiding yesterday, which have funding sources) also contributes to the problem. And there are the prior tax cuts like Prop. 13 and Arnold's VLF cut (which would have filled this ENTIRE current deficit). To cover for this we sell bonds and now have to pay out interest to service that debt. The problems beget more problems, and necessitate more cuts because the conservative veto resists taxes.
2) There's all these "waste" in the budget. Again, no. The Performance Review of 2004 found virtually nothing that would save the state any real money.
3) It's just all that messy partisanship from both sides. No. The Democrats have made $40 billion in cuts over the past several years. The Norquistian Yacht Party won't budget because they don't have to. Evans details the 2/3 requirement and the conservative veto, and cites Norquist himself!
Seriously, pass this to your friends. Facebook it and Twitter about it. If you internalize these concepts, the solutions are obvious - we need to restore democracy and give our elected officials a budget process and a Constitution they can actually navigate.
And while we're at it, let me debunk one other myth. The one that says all California has to do is sell San Quentin and all that surplus property and save the state. Well, the money raised from selling state property would not be able to be used to balance the budget.
Under the terms of Proposition 60A, approved by voters in November 2004, proceeds from the sale of any state surplus property can only be used to pay the interest on $15 billion in budget-balancing bonds sought by the GOP governor and approved by voters in March of the same year.
Once the bonds are paid off - the Legislative Analyst estimated at the time that cash from the sale of surplus property would speed retirement of the 30-year notes by a "few months" - sale proceeds would be deposited in the state's reserve account for emergencies.
Because the Citizen's Commission process that actually determines legislator salaries is clearly hopelessly br-
Declaring that elected officials must share the pain of California's fiscal crisis, an independent commission voted today to impose an 18 percent pay cut for statewide elected officials and all members of the Legislature.
The California Citizens Compensation Committee, which sets salaries for state officers, earlier voted in favor of a more modest 10 percent pay cuts in an April 29 meeting in Sacramento. But the action couldn't stand because the seven-member board lacked the required four votes.
But today the commission voted 5-1 to make a deeper reduction in elected officials' salaries because of Gov. Arnold Schwarzenegger's announced plans to lay off 5,000 state workers.
The only reason this didn't pass before is that the Governor didn't do his job to keep the required amount of appointees on the committee. Of course, by his logic, aren't these state workers? Shouldn't they all be fired so we can "live within out means?"
Now that the already-in-place process did what it was supposed to do, clearly we can all agree that Abel Maldonado is the kewlest man evah. Two snaps up with a circle, Abel. Two snaps.
Well, this is it. After three months of argument, threats, projections, facts and figures, the special election on the budget has finally arrived. Voters now get to decide the fate of six ballot measures that will impact the near-term budget deficit and the long-term manner of budgeting in the state. Well, a FEW of the voters get to decide. I popped by my local polling place just to see the crowd size - I already voted absentee - and let's just say that the traffic was, er, light.
So here are a few lessons as we watch the results tonight:
• Money Isn't Everything - This race may finally put to rest that axiom of California politics about cash being king. The No side - and mind you, groups only raised money opposing for certain ballot measures - raised about $4.5 million dollars, all told. The Yes side raised over $26 million. Despite this 6.5:1 advantage, most polls show the first five measures on the ballot, the ones that actually affect the budget, going down to defeat. Prop. 1C, which had NO money against it and the state Democratic Party along with millions from G Tech (the makers of lottery machines) behind it, has consistently polled the worst among all measures. The No on 1A folks used a strategy that conserved dollars but did get out the message, in particular through Web and Google ads. But they were obliterated on the air and through mailers, and based on the fact that Arnold Schwarzenegger skipped town and Budget Reform Now doesn't even have a headquarters tonight, it appeared not to matter.
• No Credible Messengers - The main reason these ballot measures are poised to fail is that, in general terms, absolutely no politician in this state has the trust of the people. Nobody could sell the message on the Yes side because nobody could even sell themselves. I've heard about internal polls with the legislature in single digits and the Governor below 30%. We have a crisis of confidence in California, and that stands to reason, considering the extent to which process has overwhelmed personality, making the state largely ungovernable without major revisions to that process.
• Take The Message You Want - The Yacht Party will certainly try to paint this as a victory for their anti-tax jihad, and it's highly likely that the dwindling state political media, and even possibly the Democratic leadership, will believe them. However, regardless of conservatives being "emboldened," the fact is that progressives opposed the special election for very specific reasons, and Democratic leaders must reconcile with that as well. The constraints on governance here in California are undeniable. And yet the time has come to stop finding ways around the mountain of structural problems and pick up the shovel and start digging through the mountain. It won't take overnight, and in the meantime there are solutions - some painful, some creative - that the leadership will have to take. But the message from the electorate, including those that sat this race out in anger or frustration, is that people don't want gimmicks and spending caps and service cuts. They want a functioning government and they don't see one, and they will continue to punish these people who call themselves leaders until they start acting like it.
• Musical Chairs - Curren Price will win election to SD-26 today, shrinking the need for Republican votes to reach the 2/3 threshold in the Senate to 2. At the same time, this will increase the need for Republican votes to reach the 2/3 threshold in the Assembly to 4. There are more targeted seats in the Assembly, so in the short term this is a slight net win. But it's obviously not optimal, and that Assembly seat may not get filled, if the SD-26 odyssey is any guide, until late fall.
When you go beyond the headlines, there are several interesting elements of the Governor's May Revise - which by the way, was illegally delivered, under the February budget agreement, but hey, what's the law, right?
We know some of the major portions of the Governor's plan - cutting education, thousands of state employee layoffs, lots of borrowing (something like 40% of the gap through revenue anticipation warrants), selling public landmarks, etc. First of all, with respect to selling off public property, easier said than done.
Case in point: the governor's plan a while back to sell EdFund, the state's student loan guarantee fund. It was projected to bring in $1 billion, but still hasn't been sold (and was last valued at 50% of its original estimate). I mention that because in this proposal, the governor suggests $1 billion for selling off part of the State Compensation Insurance Fund. Maybe it's an easier deal than EdFund (and others in the past), but...
Some other interesting pieces:
• Despite the fact that Schwarzenegger adamantly insisted there will be not tax or fee increases as part of any solution, there in fact are new fee increases included. The Governor seeks higher fees, but significantly, those fees would hit some of the most vulnerable citizens in the state. For example, he raises fees for residents living in veterans homes throughout the state, adding $2.8 million dollars. What's important here is that he betrays his own rhetoric by raising some fees inside his own revised plan.
• While the budget deficit exists because of an historic drop in revenue during this Great Recession, instead of temporarily cutting various services, the Governor's revised budget would cut them permanently, particularly in programs like Medi-Cal, In-Home Supportive Services, SSI/SSP, regional centers, Cash Assistance Program for Immigrants. This despite, once again, the Governor reconciled his raid of local governments by saying that "hopefully the economy comes back." But even if it did, the permanent cuts to programs serving the most vulnerable elements of society would remain. The vast majority of those cuts would be implemented regardless of the outcome of the May 19 ballot measures.
• Never one to let an opportunity in crisis to slip by, the Governor would also allow the first new offshore drilling off the California coastline in 40 years, putting a major dent in any possible depiction of Schwarzenegger as some kind of environmentalist. Despite not being able to tax the severance of oil from California land, the Governor would lease new offshore drilling sites to bring in $100 million from the state. And this would nullify a ruling by the State Lands Commission that denied further oil leases. As recently as last summer, Schwarzenegger vowed not to allow new drilling off the California shore.
You won't read much of this fine print in the discussion of the budget, or the glorifying media profiles of the "Governator." But it's important, because every aspect of this reveals him as a cheap fraud.
I have several questions about this sudden restatement of the budget deficit for the next year. First of all, this is not an independent assessment by the Legislative Analyst, but from the Department of Finance. No report was released accompanying the budget revise, just some raw numbers in a letter to the legislature. Apparently a dual revision, one based on whether the ballot measures pass and one based on whether they fail, will be illegally delivered on Thursday, despite the fact that the February budget deal calls for it to be released on May 28. The Governor is getting around this by calling the release a "summary," allowing them to AGAIN show no numbers, just a "trust me" belief that the deficit is now $15 billion, $21 billion if Props. 1C, 1D, and 1E go down.
Taking a closer look at the $15.4 billion deficit projection, aides to Schwarzenegger say that a full $7.4 billion of that is in the fiscal year that ends just 50 days from now; the remaining $8 billion is in the 2009-2010 fiscal year.
That $8 billion in the '09-'10 year matches up with March's projection by Legislative Analyst Mac Taylor. And given that Controller John Chiang announced last Friday a $2.1 billion shortfall in anticipated revenues for the current year... that leaves about $5 billion in what budget watchers might call "new" deficit in this announcement.
That doesn't make a lick of sense. I believe Chiang's numbers that we're $2 billion short in tax collection in the current year through April 30. I do not at all believe a Governor who has lied repeatedly about budget projections throughout his entire career, claiming $5 billion in new deficit in the last 50 days of the budget year. Especially because there are no independent numbers to check.
Like Legislative Analyst Mac Taylor, I would not be SURPRISED that we're not $15 billion out of balance. Some expenditure increases contributed to this deficit, and clearly the worsening economic picture has strained the revenue side. But I'm funny this way - I actually want to see the data. The Governor has spent the entire special election trying to scare people into compliance; would anyone but this Hail Mary pass with one week to go past him?
I think the sand has come out of the eyes of most everyone in Sacramento, and seeing their May 19 solutions sinking, the legislative leadership has returned to the drawing board, where a deficit somewhere between $14-$16 billion dollars for FY 2010 must be wrestled with. Unsurprisingly, conservative lawmakers and the media have foregrounded cuts as the first among all other options.
So where might they look?
For starters, the state would spend down its $2 billion reserve, Steinberg said.
State leaders are eyeing a possible $5 billion reduction in school spending allowable under the state's constitutional education guarantee when revenue drops. Education groups say that could threaten valuable programs and prevent schools from rescinding layoff notices they issued this spring.
"Schools would have to look at extracurricular programs, library hours, transportation," said Scott Plotkin, executive director of the California School Boards Association. "An awful lot of things not required by the law that are desirable are going to start falling by the wayside." [...]
Schwarzenegger aides have warned public safety groups he may propose an early release of up to 38,000 prisoners, split between 19,000 undocumented immigrants and 19,000 low-level offenders. The governor may also seek to house those who commit "wobbler" crimes in county jails rather than in state prisons.
The plan would save an estimated $335 million in 2009-10 and $849 million in 2010-11.
It proposes to hand over undocumented immigrant prisoners to United States Immigration and Customs Enforcement, though public safety officials questioned whether the federal government would agree to such a plan. The plan also would release 19,000 "nonserious, nonviolent, non-sex offense" inmates in the final six months of their sentences.
I don't see ICE terribly happy with the state plopping 19,000 undocumented immigrants in their laps.
On the flip side of this, I think it's important to recognize the solutions out there that involve no cuts, ones that must become part of the conversation immediately. For example, federal guarantees for municipal bonds would save the state billions of dollars that could be diverted to closing the budget gap. While it appeared that Congress was unmoved by this proposal, the Treasury Department could step in.
The Treasury, for instance, is working on a plan to help cities, school systems, hospitals and other agencies borrow money at cheaper rates. The credit crisis made it more expensive to get money for buildings, ballparks and other projects. The problem has been particularly acute for those with lower credit ratings, which require them to pay more for their bonds.
Officials are considering options including the creation of a federal agency that could back the bonds, aiding bond insurers that backstop municipal bonds or simply providing subsidies that could lower the rate for municipalities.
This is not a direct pass-through to the budget, but the savings would be felt in future scorings of overall revenue and spending.
But making deeper cuts into social services begins to run against logic, Steinberg said. With CalWorks, for instance, the federal match is "so significant," that to cut $1 is to turn away $4 or $5 in federal dollars.
"At some point, it makes little sense to cut even deeper," he said. "But, let's assume we make significant and broader cuts. Then, you're looking at corrections and public safety. ... I wouldn't take it as a complete given that the other side is really willing to vote for a cuts-only strategy."
If Republicans don't go along with new revenues, Steinberg said Democrats may have to resort to a simple majority vote on fees, the same tack he took last winter before Schwarzenegger vetoed the effort to force negotiations. "But we're not going to lead with that," Steinberg said.
They ought to go ahead and lead with it. The problems we face in Sacramento are governance problems, which favor solutions that kick the can down the road instead of facing up to current challenges. In such an environment, bold solutions that finally remove the structural revenue gap and end budget dysfunction are really the only step forward. The majority-vote fee increase is a bold, albeit short-term, step, certainly preferable to counter-cyclical and counter-productive spending cuts, and the pressure on the Governor to accept it will increase as the summer marches on. The long-term solution, of course, comes in building the rationale for restoring democracy to the legislature by ending the conservative veto over the process and returning to a simple majority to run government.
Jackfolsum alludes to it, but I wanted to highlight it as well. Arnold got tripped up a little bit today in front of the Jesusita Fire, caught in between telling Californians what they wanted to hear, or telling them they're all going to die. It's pretty amusing:
One of Schwarzenegger's strengths has been to respond to emergencies and assure local residents he will provide all support necessary. But that message clashes with his statements earlier this week that fire services would be jeopardized if voters reject the ballot measures on May 19.
Because he declared a state of emergency for the Santa Barbara fire, he said he was able to get the federal government to pay for 75 percent of the costs.
"This is very helpful for us because as you know, we have a financial crisis in California," Schwarzenegger said. "But I wanted to make sure you all know, even though we have this crisis, we will not be short of money when it comes to fighting these fires."
Oops! But Arnold's "strong leader/warrior/protector" shtick clashes with his "vote for my spending cap or you will BURN BURN BURN!!!" shtick. So he backpedaled.
"First of all, let me just make it clear, because there's always the question that comes up, what happens to the fire departments and to the budget if those initiatives don't pass," Schwarzenegger said. "The first thing you should know is, I will always fight and get every dollar I can for public safety, that is the important thing you should know."
"No. 2, it is very clear that when the initiatives fail there will be $6 billion less that will be available, so therefore there will have to be additional cuts made, if it is in law enforcement, fire, education," he added. "...But I will fight for every dollar, and will always make sure we have enough manpower and enough engines and helicopters ready to fight those fires."
Interesting use of "when the initiatives fail," not "if" there. Arnold reads the polls, I guess.
He really has no idea what he's doing. He wants to scare and please at the same time, so it comes out like mush.
Come to think of it, Arnold sounds a lot like the Californians seduced by the Two Santa Claus Theory, who want to cut services in general but protect services in particular. So maybe he's just giving the people what they want.
The Budget Reform Now folks, on the heels of one ad narrowing their focus to Props. 1A & 1B, have released yet another, basically with the same script only substituting a teacher for the firefighter, warning of $16 billion in cuts if 1A & 1B fail to pass. 1A & 1B do NOTHING in the current budget year or the next. Nothing at all. Arnold Schwarzenegger and his cadres are exploiting a crisis with fearmongering tactics to gain a spending cap they can use to ratchet down state services forever.
This is very simple. If 1A's spending cap would immediately limit state services $16 billion dollars below the baseline funding needed to provide services at the current level, then $16 billion in services aren't at risk with the failure of 1A. They're at risk with passage. And that risk would be permanent, and would increase every year, well and above the two year extension of tax increases.
Arnold obviously doesn't give a damn about the current budget gap. Heck, he probably enjoys it; he can use his new furlough tools and threaten to set the state on fire and a host of other right-wing options. The golden goose for him and his rich supporters is the spending cap. And those Democrats who enable him in this effort ought to understand what they're supporting - a permanent reduction in services for the state's most vulnerable citizens. "What's your solution," is the phrase thrown around at us. The problem is we know theirs.
UPDATE: The latest brilliant idea from the Governor: raid local governments if the Props fail, a direct contradiction of his deal with cities to stop raiding their budgets five years ago. Under yet another Prop. 1A from 2004, the state can borrow 8% of property tax revenues (about $2 billion), which would have to be repaid with interest in three years. The credit cards are open for business again! While this measure represents 10-15% of the total projected budget gap, it would decimate services at the city and county level, services that - voila! - the state would need to step in to provide. Also the Governor cannot pull this off unilaterally: it would require a 2/3 vote of the legislature.
I spoke at yet another Democratic Club meeting on the May 19 propositions yesterday, against yet another member of the California Legislature, Julia Brownley (who I really like and respect). One thing I sought to make clear to everyone is that we are going back to the drawing board on May 20 no matter what happens on May 19. The Legislative Analyst already finds the February budget deal to be $8 billion dollars out of balance, and April tx receipts came up $1.8 billion dollars short of the budget projection. Some of us recognize that this means alternative solutions must be gathered right now, because Democratic legislators will be stuck in the chamber with the Yacht Party on May 20 regardless.
I was heartened to hear Assmeblywoman Brownley note that a majority vote fee increase will probably be part of the solution. When the Legislature passed this in December, they raised more money than would be sacrificed if Props. 1C, 1D and 1E failed. An argument could be made that the majority vote fee increase combined with the passage of those props would obviate the need for almost any cuts. I think that's faulty reasoning, since 1D and 1E ARE cuts, to vital services that will cost the state more money in the long run. As for 1C I find it completely unworkable and just a borrowing gimmick.
I do have to say that it would be much easier to swallow this posturing from the ballot measure supporters that they would have no choice but massive cuts on May 20 if everything failed, if they didn't enable massive permanent corporate tax cuts in the last budget deal...
Corporate tax attorneys are chuckling over the absurd deal in the last agreement that lets multistate and multinational taxpayers decide, each year, how much income they want to report to California. Because this was negotiated in private, with no hearings and no independent expertise brought to bear, the result is a giveaway and a national embarrassment, in a state that had prided itself on a fair, successful corporation tax.
Here's how it works. Each state typically figures out what percentage of a large company's business is done in the state, and then taxes that percentage of income. Historically, if 10% of a multistate company's payroll, property and sales are located in the state, then 10% of its nationwide or worldwide income is subject to tax. In the budget deal, California changed the formula to allow companies to choose to make that percentage based only on sales in California.
The entire architecture of the ballot pact that emerged was heavily shaped by leaders' desire to please - or at least neutralize - the state's most powerful political players.
Now, some of those very interest groups protected in the budget deal are bankrolling the campaign to ratify it.
For the oil industry, the package omits a once-proposed 9.9 percent oil severance tax. Energy companies have given more than a million dollars to pass the plan, led by a $500,000 donation from Chevron.
For the liquor, beer and wine industry, increased alcohol taxes were shelved. Alcohol industry heavyweights, such as E. & J. Gallo Winery ($100,000) and California's Beer and Beverage Distributors ($50,000), have all opened their checkbooks.
For the teachers union, the list of ballot measures includes a separate measure to ensure repayment of deep cuts to schools and protections for top-priority programs. The California Teachers Association has contributed $7 million to the passage of Propositions 1A and 1B.
For casino-operating Indian tribes, the state lottery measure avoids any new games that could threaten their gambling operations. Tribes, who could have been major contributors against the lottery proposition, have kept their checkbooks closed.
In the last budget deal, all the industry-specific taxes, all the service-based taxes that wouldn't be so regressive, faded away, and the same groups protected by that fade (including practically every sports team, as sporting event-industry taxes were once on the table) ponied up for the special election. So pardon me if I don't believe your lament that you'll just be forced to cut state services, when you found room for billions in tax cuts to the largest corporations in America and protected every single industry that could donate money for ads and mailers. Let's just say I don't buy the image of a legislature with their hands tied.
The Yacht Party's public relations staff scored a coup by getting one of their press releases into print about those mean, nasty legislators spending all our tax dollars. Now, it turns out that some of the cost-cutting measures put forward by these Republicans have a bit of merit. But it's all a matter of scale. These measures would produce savings in the millions of dollars, which is a lot to the individual blogger who really welcomes your donations (hint, hint), but not so much to a nation-state of 38 million. However, missing from the litany in this article is any measure that would actually put a dent in the budget crisis, like a broader-based sales tax that captures what people consume. AB178, which was also squashed this week, could have added anything from $2 billion-$5 billion to the General Fund. In other words, it would take more than 1,000 bills of the likes of Jeff Denham's AB44, to abolish the Integrated Waste Management Board, to have the impact of Nancy Skinner's AB178. But million and billion sound alike, so the Waste Management Board bill gets in the paper, while the squashing of the bill that would raise almost as much as Prop. 1C all by itself gets... nothing.
More of the essentially conservative slant of the media.
