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Shocker: California Businesses Voting With their Feet and Leaving the State
The $5 Million a Year San Francisco Tax BreakTwitter notwithstanding, California for many years has not been business friendly and now the businesses are giving up and simply either leaving or expanding in other states.
Buffeted by high taxes, strict regulations and uncertain state budgets, a growing number of California companies are seeking friendlier business environments outside of the Golden State.
And governors around the country, smelling blood in the water, have stepped up their courtship of California companies. Officials in states like Florida, Texas, Arizona and Utah are telling California firms how business-friendly they are in comparison.
Companies are “disinvesting” in California at a rate five times greater than just two years ago, said Joseph Vranich, a business relocation expert based in Irvine. This includes leaving altogether, establishing divisions elsewhere or opting not to set up shop in California.
“There is a feeling that the state is not stable,” Vranich said. “Sacramento can’t get its act together…and that includes the governor, legislators and regulatory agencies that are running wild.”
The state has been ranked by Chief Executive magazine as the worst place to do business for seven years.
“California, once a business friendly state, continues to conduct a war on its own economy,” the magazine wrote.
That is about to change, at least if Lieutenant Governor Gavin Newsom has anything to say about it. Newsom is developing a plan to address the state’s economic Achilles heels, and build on its strengths. It will be unveiled at the end of July.
“California has got to get its act together when it comes to economic development and job creation,” he said.
While not all companies investing elsewhere are doing so for economic reasons, some are shopping around for lower costs, lighter regulations, stable leadership and government assistance and incentives.
The most popular places to go? Texas, Arizona, Colorado, Nevada, Utah, Virginia and North Carolina, said Vranich. All rank in the Top 13 places to do business, according to Chief Executive.
California has great weather and ample natural resources, but the far left Democratic nature of its politics is stifling to business.Unemployment is high and entitlement costs associated with this and rampant illegal immigration are a definite drag to business development.
I do not foresee the California business climate improving anytime soon. No matter what former Democratic Mayor of San Francisco Gavin Newsom says or creates with Nanny State commissions, businesses are voting wit their feet and leaving.
California’s economy will stagnate much like Michigan’s with little or no growth and for the forseeable future.
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Flap’s California Morning Collection: July 1, 2011
A morning collection of links and comments about my home, California.Happy New Fiscal Year, California!
It is a happy day for most California taxpayers as the California Sales Tax has decreased one percentage point and motor vehicle registration fees have decreased, as interim tax increases expire.
It is not a happy day for hybrid automobile drivers since they will no longer have free rein driving in HOV – car poll lanes on California freeways.
But, oh well, I don’t drive a hybrid but do buy products subject to the sales tax.
California starts the new fiscal new year with a state budget which is unusual. But, alas, the budget is really a sham, full of gimmicks and slight of hand. But, hey, it passed California Democratic Controller John Chiang’s review and California Legislators will receive their paychecks. Just for your information, floor sessions are scheduled today so that our fair members of the California Assembly and State Senate can get their per diem for today and, of course, holiday pay for Monday.
It is all about the money.
With those happy thoughts it is onto the links:
Jerry Brown signs budget after making more cuts
California has a balanced budget for the fiscal year that begins today, after Gov. Jerry Brown on Thursday signed the spending plan to close what had been a $26.6 billion deficit when he took office in January.
The governor used his line-item veto to cut an additional $23.8 million from the state’s $86 billion general fund. He also cut another $234 million of spending from bond funds, largely the high-speed rail fund, in a move that could jeopardize BART’s plan to replace aging rail cars. Money also will be blocked from reaching Muni and Caltrain projects.
The governor also signed a bill, which is part of the budget package, that will take $130 million from cities across the state and could force some of those cities to disband.
At a low-key bill-signing ceremony that was closed to all but a photographer, a TV cameraman and a radio reporter, Brown praised lawmakers for doing “an extraordinary job with a budget nobody really liked anyway.” He went on to say, “It really does put our fiscal house in much better shape, but we’re not finished.”
Among the line-item vetoes the governor made in the general fund are a $22.8 million cut to courts. That money would have funded a part of the governor’s realignment plan to shift some inmates to county jails. The implementation has been delayed, and so court officials were expecting the cut.
The governor saved nearly $2 million by eliminating the California Postsecondary Education Commission, which he called “ineffective,” and cut $200,000 from the budget for the Commission on the Status of Women. Because of complicated accounting, some of the money doesn’t fall under the veto total.
Assembly Republicans celebrate ‘death’ of higher tax rates
Your wallets will start feeling heavier tomorrow.
That was the message from a handful of Republican Assembly members this morning as they applauded their resistance during budget talks to approving temporary tax extensions. The budget plan passed by the Legislature this week assures that those taxes will expire at midnight, which the legislators say will save the average Californian about $260 each year.
“This is a great day for California,” said Assemblyman Tim Donnelly, R-Twin Peaks. “The death of these taxes is the rebirth of our economy.”
As the legislators gathered in front of a pair of SUVs at Downtown Ford in Sacramento, Assembly Republican leader Connie Conway said that someone buying a $20,000 car this weekend would pay $300 less in taxes and fees than if they bought the car today.
“We’ve held the line. We’ve not negotiated. We’re very happy that July 1st is coming,” said Assemblyman Steve Knight, R-Palmdale.
Gov. Jerry Brown’s original budget plan required at least two Republican votes each from the Assembly and the Senate. It would have held steady the rates for income and sales taxes and vehicle license fees. Instead, all of those rates will drop under the spending plan that Brown is expected to sign into law today.
Texas Gov. Rick Perry wows conservatives in the OC: “Heavy on candor, light on pander”
Republican Texas Gov. Rick Perry was a whirlwind in the Golden State Thursday, racking up the miles, talking up his record — and meeting with potential supporters and donors.
And he’s not even running for President — yet.
Perry held a breakfast with San Diego insiders yesterday, and today hit Los Angeles, two events in Orange County and then flew to Sacramento.
We checked in with Jon Fleischman, publisher of the popular GOP website FlashReport, who co-hosted a grassroots meeting of 60 Republicans in Newport Beach for Perry with OC GOP chair Scott Baugh. He said the Lonestar State gov’s initial reviews from party activists and conservative stalwarts were strong.
“He was really, really impressive. He comes off as a very genuine — heavy on candor and light on pander,” said Fleischman. “Part of what we’re looking for is someone who has authenticity….who resonates, and has an ability to connect.”
“He’s got a very strong record of accomplishment that will appeal to GOP voters,” Fleischman said. “This is someone who isn’t going to have any problem going into meetings with major donors and blowing people away.”
So is he running? Bet on it, says The Flash.
UC Berkeley out-of-state student enrollment soars
The number of out-of-state students is soaring at UC Berkeley, with new figures showing more than a quarter of newcomers on campus – freshmen and transfer students – won’t be from California this year. That’s up from 23 percent last year, and 15 percent two years ago.
More important for the campus, the nonresidents pay nearly three times the tuition of in-state students, and will bring in $80 million this year, up from $54 million last year, spokeswoman Janet Gilmore said.
The trend is similar throughout the University of California, although Berkeley far outpaces other campuses in its zeal to bring in the lucrative outsiders.
Across UC’s nine undergraduate campuses, 14 percent of the freshmen and transfer students who plan to enroll this fall are from out of state, up from 11 percent last year, and 9 percent the year before, according to figures released Thursday.
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Day By Day June 30 and July 1, 2011 – Just in Time
Good morning everyone as we prepare for a major holiday weekend, national fundraising numbers are filtering out of D.C.. Yeah Obama is able to raise some big money and everyone is waiting to see what Michele Bachmann is able to raise.And, California sales taxes, plus motor vehicle registration fees decrease because of the California GOP’s resistance to tax increases. Good job, California GOP.
As the POLS flee Washington and Sacramento for the 4th of July, we can have solace that it could be worse, since the NBA, NFL and the state of Minnesota are now effectively shutdown.
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Flap’s California Morning Collection: June 29, 2011
A morning collection of links and comments about my home, California.
Well, the Democrats in the California Legislature passed a state budget last night using rosy scenarios and some more dramatic cuts, if revenues do not arrive next January. Everyone agrees this is not a “balanced” budget but with the pre-agreement of Democrat Governor Jerry Brown will be signed into law. Democrat Controller, John Chiang will more than likely say it is balanced enough to allow California Legislators to finally receive their paychecks. After all, that is what is the most important for Sacramento Pols.
But, Californians will have their taxes lowered on July 1.
On to the links:
Democrats pass austerity budget for California
The Legislature passed an austerity budget Tuesday night that would cut from universities, courts and the poor, shutter 70 parks and threaten schools but would not — by officials’ own admission — restore California’s long-term financial health.
The UC and Cal State systems would face about a 23% funding cut, among the steepest in the proposal. Cash grants for the needy would fall, a program to help thousands of teen mothers get an education would be suspended and hundreds of millions of dollars would be siphoned from mental health programs.
The state park closures would be the first ever. Courts would face what the state’s chief justice has described as crippling reductions.
In an optimistic forecast, lawmakers built in an extra $4 billion of revenue. If all that cash does not materialize, K-12 schools — which had so far survived negotiations relatively unscathed — would face a cutback equal to shortening the academic year by seven days.
California Budget Deal Leaves GOP out in Cold
California’s budget is closely watched because the state is the most populous, has the largest economy and issues the most debt of any state in the U.S.
In budget talks of past years, Republicans typically extracted policy changes such as corporate tax breaks in exchange for their budget votes. But this year, their refusal to extend taxes left them with little negotiating power.
“We started a dialogue to put a cap in state spending, and we also asked for a reform in public pensions,” Sen. Bob Huff, the Republican vice chairman of the senate budget committee, said in floor comments. But he said Republicans were ultimately “iced out” of the budget process.
Republicans’ absence from budget-making is expected to be especially noticeable during boom times and under Democratic administrations, when Democrats could potentially raise spending more than in the past and wouldn’t require Republican help to do so, said Bruce Cain, a political-science professor at the University of California, Berkeley.
However, a budget supported only by Democrats cannot boost or extend taxes unless Democrats make up two-thirds of the legislature. So during tough times—such as this year, as California emerges from recession—Republicans can still stymie Democrats by blocking their attempts to raise revenue through taxes.
“One hand is still tied behind the majority party’s back,” Sen. Mark Leno, the Democratic chairman of the senate budget committee, said in comments on the senate floor.
Good news for David Dreier from redistricting panel? Perhaps
Things may be looking up for Rep. David Dreier.
The San Dimas Republican was penciled into a new congressional district dominated by Democrats under the first draft maps by the state’s redistricting commission, but he had reason for hope under a new concept unveiled Friday.
“It could potentially save one of the Republican seats in Los Angeles,” said Paul Mitchell, a redistricting consultant and Democratic political consultant who identified the potential beneficiaries as Dreier or Rep. Gary Miller, R-Diamond Bar.
Rob Wilcox, spokesman for the redistricting commission, cautioned Tuesday against drawing conclusions from the very conceptual maps, which he characterized as “visualizations” rather than actual proposals.
Boundary lines were drawn, in part, to increase the number of likely Los Angeles-area Latino congressional seats in consideration of the federal Voting Rights Act, meant to protect the voting power of minority groups.
The conceptual maps were shown to the redistricting commission for comment, then line drawers went back to the drawing board.
The boundary proposals targeted only a handful of congressional districts — none safe for Dreier — but their location suggested that a district could be drawn near his home that could make him a viable candidate, according to Mitchell.
Dan Walters: California’s new budget relies on shaky assumptions
The much-revised state budget that Gov. Jerry Brown and Democratic legislative leaders have cobbled together solves their political problem, at least for the moment.
It means a budget will be in place for the new fiscal year that begins Friday and the state can now ask bankers to buy billions of dollars in short-term revenue anticipation notes needed for cash flow purposes.
It means that legislators, whose salaries and expense checks had been suspended by Controller John Chiang for non-action on the budget, will be paid again.
It means that Democrats didn’t have to meet demands from Republicans, whose votes would have been needed for the tax extensions Brown and the Democrats originally sought.
However, it doesn’t mean that the chronic fiscal crisis is over, and the budget’s shaky assumptions mean it could fall apart in months.
Gov. Jerry Brown vetoes farmworkers’ bill
Gov. Jerry Brown, whose signature more than three decades ago gave agricultural workers the right to unionize by secret ballot, vetoed a bill Tuesday that would have made it easier for farm laborers to organize.
The proposal has been the top legislative goal for years for the United Farm Workers, whose founder, Cesar Chavez, had strong ties to Brown. It would have allowed the union to bargain for employees without holding an election — by simply collecting signatures from a majority of workers on cards saying they wanted representation.
Gov. Arnold Schwarzenegger vetoed similar measures four times during his seven years in office. Supporters of the latest bill had been hopeful that Brown, a Democrat who often spoke of his relationship with Chavez during his gubernatorial campaign last year, would approve it.
In his veto message Tuesday, Brown cited his work with the union 36 years ago.
“I am not yet convinced that the far-reaching provisions of this bill … are justified,” Brown wrote.
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Flap’s California Morning Collection: June 28, 2011
A morning collection of links and comments about my home, California.Yesterday afternoon Democratic Governor Jerry Brown and Democratic Legislative leaders announced a new agreement on a majority-vote California state budget. Here are the details:
It maintains parts of the package Brown vetoed nearly two weeks ago:
— $150 million cut each to University of California, California State University
— $150 million cut to state courts
— $200 million in Amazon online tax enforcement
— $2.8 billion in deferrals to K-12 schools and community colleges
— $300 million from $12 per vehicle increase in DMV registration fee
— $50 million from fire fee for rural homeowners
— $1.7 billion from redevelopment agencies
— Higher tax receipts (now worth $1.2 billion from May and June)The new budget rejects some parts of that package:
— $1.2 billion from selling state buildings
— $900 million from raising a quarter-cent local sales tax
— $1 billion from First 5 commissions
— $500 million cut in local law enforcement grants
— $540 million deferral to University of California
— $700 million in federal funds for Medi-Cal errorsAnd it adds the following:
— $4 billion in higher projected revenues in 2011-12, with triggered cuts
— 1.06 percentage point sales tax swap that redirects money to local governments for Brown’s “realignment” plan rather than to the state. Sales tax rate will still fall 1 percent on July 1.The $4 billion “trigger” plan bears some explaining.
First, the plan requires Brown’s Department of Finance director, Ana Matosantos, to certify in January whether the $4 billion projection is accurate. She will use revenue totals for July to December and economic indicators to project the remainder of the fiscal year.
The “trigger” cuts are essentially in three tiers, based on how much of the extra $4 billion comes in.
Tier 0: If the state gets $3 billion to $4 billion of the money, the state will not impose additional cuts and roll over any balance of problem into the 2012-13 budget.
Tier 1: If the state gets $2 billion to $3 billion of the money, the state will impose about $600 million of cuts and roll over the remainder into the 2012-13 budget. The $600 million in cuts include a $100 million cut to UC, a $100 million cut to CSU, a $100 million cut to corrections and a $200 million cut to Health and Human Services.
Tier 2: If the state gets $0 to $2 billion of the money, the state will also impose up to $1.9 billion in cuts, including a $1.5 billion reduction to schools that assumes seven fewer classroom days. It also includes a $250 million elimination of school bus transportation (except for that which is federally mandated). Cuts will be proportionate to how much of the first $2 billion in revenues the state gets. State will also impose the Tier 1 cuts.
Talk about gimmicks. This budget is all smoke and mirrors with assumptions that are not within the realm of possibility.
Look at the Amazon Tax for example. Is there anyone who believes the state will capture $200 million in additional revenue when Amazon et. al. say they will cease their associate businesses in California if the law is signed. Plus, they plan to challenge the legislation in state and federal courts and what will that cost the State of California.
So, the Democrats have made a deal that will hopefully get past the Democratic Controller John Chiang in order to restore the Legislators pay. But, in all reality, this budget deal is a sham based on wildly exaggerated revenue assumptions – a rosy scenario at the extreme.
On to today’s links……
Dan Walters: Will Democrats’ rosy-scenario budget work?
When governors and legislators face seemingly big budget deficits, they often turn to gimmicks to balance income and outgo on paper.
The most creative have been what Capitol cynics call “rosy scenarios.”
The politicians conjure up some new source of revenue, swear it is legitimate and then use the projected windfall to close their gap.
Former Gov. Arnold Schwarzenegger was an early advocate of rosy scenarios, such as assuming that the state could get as much as $1 billion from new gambling compacts with Indian tribes, or it could seize a half-billion dollars from punitive judgments in lawsuits.
Later, he counted revenues from peddling the state’s workers’ compensation insurance business and state buildings. His rosiest scenario occurred last year, when his initial budget assumed that the federal government would give the state as much as $7 billion in extra cash.
None of those funds materialized, but that doesn’t prevent Capitol politicians from dusting off another rosy scenario.
Gov. Jerry Brown and Democratic legislators, whose hopes of winning Republican support for tax extensions vanished, ginned up a new budget Monday, just days before the 2011-12 fiscal year is to begin.
Brown vetoed one Democratic budget, saying it was so gimmicky that Wall Street bankers would not give the state billions of dollars in short-term operating loans. And Controller John Chiang followed that by decreeing that since a balanced budget wasn’t enacted by the constitutional deadline of June 15, he’d cut off legislators’ salaries and expense payments as a new state law requires.
Brown and Democrats went back to the budgetary drawing board, and a new rosy scenario emerged – that above-expectation tax revenue this year means the state will collect an extra $4 billion during the fiscal year.
Brown ditches special election, plans more cuts
Gov. Jerry Brown on Monday abandoned his plan to hold a special election this year on whether to renew expiring tax hikes and instead said he will balance California’s budget with a combination of spending cuts and a projected increase in normal tax revenue.
Brown announced the latest approach at a news conference during which he was accompanied by the leaders of the state Assembly and Senate, both fellow Democrats. They agreed to pursue a budget for the coming fiscal year without support from Republicans, who had refused to accept an extension of expiring temporary tax increases, which had been the centerpiece of the Democratic approach.
Brown had hoped to extend a series of tax increases that are expiring this week, but he needed two Republican votes in each house to bring the proposal before voters.
After six months of talks with a handful of GOP lawmakers, Brown said he finally gave up on the idea Sunday night after receiving a text message from one of the lawmakers.
“We had some very serious discussions. I thought we were getting close, but as I look back on it, there is an almost religious reluctance (among Republican lawmakers) to ever deal with the state budget in a way that requires new revenues,” Brown told reporters during a brief news conference.
Instead, the Democratic leaders said they would pursue a ballot initiative to bring tax increases before voters in November 2012.
In some early fallout from the political upheaval expected under proposed new districts for California lawmakers, the campaign arm for House Republicans said it would begin airing a TV ad slamming Rep. Lois Capps (D-Santa Barbara) over her position on Medicare.
“Congress is debating big changes for Medicare, and Congresswoman Lois Capps voted for the most extreme plan. Capps voted for the plan the media says would ‘decimate Medicare,'” the narrator says in the spot that the National Republican Congressional Committee said would begin airing Tuesday.
Republicans see Capps as among the most vulnerable of the Democrats under the redistricting. Her district, derided as the “ribbon of shame” for its blatant gerrymandering, forms a narrow, 200-mile coastline band that runs from Oxnard to the Monterey County line. Under the first round of proposed new maps, her district would shift considerably and become less Democratic than currently.
Enjoy your morning!
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California, California Economy, Flap's California Morning Collection, Freedom of Speech, Los Angeles Dodgers, Texas
Flap’s California Morning Collection: June 27, 2011
A morning collection of links and comments about my home, California.
A new Field Poll says there’s an uptick in the number of those who aren’t following government and political news.
The poll, out today, says about 25 percent of California voters say they pay attention to such news “only now and then” or “hardly at all.”
That’s up from 16 percent who said so in 1979 and 20 percent in 1999.
What do voters list as a main source of public affairs news? A majority, 56 percent, said television, while 44 percent said the Internet and 33 percent read newspapers.
And where are they getting that television news? Twenty eight percent said CNN, 22 percent said Fox, and 8 percent said Comedy Central’s The Daily Show.
Dan Walters: California vs. Texas provides very stark job comparison
On June 17, the California Employment Development Department reported a tiny decline – just two-tenths of 1 percent – in the state’s unemployment rate to 11.7 percent in May.
It was, to put it mildly, underwhelming, since a deeper look at the data reveals that the decline was not because payrolls had expanded markedly, but rather because the state’s labor force had shrunk as jobless workers gave up looking for work.
California’s “seasonally adjusted” non-agricultural employment had increased by a minuscule 2,000 in the preceding year while the “unadjusted data” showed a decline of 40,000 employed people from a year earlier.
The Texas Workforce Commission released a similar report on June 17 – similar in form, but decidedly dissimilar in tone.
Texas’ unemployment rate was 8 percent, two-thirds of California’s jobless rate, and its seasonally adjusted year-to-year job growth was a robust 2 percent (2.7 percent in private employment).
“We’ve added 92,300 jobs in Texas so far in 2011,” said TWC Commissioner Ronny Congleton. “That is a trend that we hope to continue until all Texans have good jobs earning good wages.”
Texas had fewer than a million unemployed workers in May while California had more than 2 million. Texas’ jobless rate was under the national average, while California’s was the second highest in the nation. Texas has accounted for nearly half of the nation’s job creation since 2009.
“Growth in the Texas economy is gaining steam,” says a recent analysis by the Federal Reserve Bank of Dallas. Clearly, Texas and other states are emerging from recession while California’s recovery, if it exists, is decidedly weak, as several new economic reports note.
Court overturns ban on video game sales to kids
The Supreme Court ruled Monday that it is unconstitutional to bar children from buying or renting violent video games, saying government doesn’t have the authority to “restrict the ideas to which children may be exposed” despite complaints that the popular and fast-changing technology allows the young to simulate acts of brutality.
On a 7-2 vote, the high court upheld a federal appeals court decision to throw out California’s ban on the sale or rental of violent video games to minors. The 9th U.S. Circuit Court of Appeals in Sacramento had ruled that the law violated minors’ rights under the First Amendment, and the high court agreed.
“No doubt a state possesses legitimate power to protect children from harm,” said Justice Antonin Scalia, who wrote the majority opinion. “But that does not include a free-floating power to restrict the ideas to which children may be exposed.”
Video game makers and sellers celebrated their victory, saying the decision puts them on the same legal footing as other forms of entertainment. “There now can be no argument whether video games are entitled to the same protection as books, movies, music, and other expressive entertainment,” said Bo Andersen, president and CEO of the Entertainment Merchants Association.
Dodgers file for bankruptcy protection
The Los Angeles Dodgers filed for bankruptcy protection in a Delaware court Monday, blaming Major League Baseball for refusing to approve a multibillion-dollar TV deal that owner Frank McCourt was counting on to keep the troubled team afloat.
The Chapter 11 financing permits the Dodgers to use $150 million for daily operations and buys time for the team to seek a media deal and ensure the team’s long-term financial stability, the Dodgers said in a news release.
“There will be no disruption to the Dodgers’ day-to-day business, the baseball team, or to the Dodger fans,” the statement said.
Dodgers players will be paid on Thursday, a source confirmed to ESPN’s Tim Kurkjian.
Baseball commissioner Bud Selig announced last week that he wouldn’t approve a Dodgers television deal with Fox Sports that reportedly was worth up to $3 billion. That left McCourt cash-starved and facing the prospect of missing the team payroll this Thursday, leading to an MLB takeover.
McCourt defended his running of the team, saying he had made it profitable and successful. He also said the Dodgers have tried for almost a year to get Selig to approve the Fox transaction.
“The Dodgers have delivered time and again since I became owner, and that’s been good for baseball,” McCourt said. “We turned the team around financially after years of annual losses before I purchased the team. We invested $150 million in the stadium. We’ve had excellent on-field performance, including playoff appearances four times in seven years.
“And we brought the Commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise.’ Yet he’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn’t achieve with the Commissioner directly.”
Enjoy your morning!
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California, California Citizens Redistricting Commission, Flap's California Morning Collection, Jerry Brown
Flap’s California Morning Collection: June 23, 2011
A morning collection of links and comments about my home, California.Questions abound over what’s next at Capitol
Anticipating Gov. Jerry Brown’s next move on the budget is as beguiling as parsing the mutterings of an oracle on a snowy mountain top.
Does he have any other surprises to spring on Democrats?
Is he any closer to persuading a handful of Republicans to vote for tax extensions?
The developments over the past week were stunning: Brown’s veto, the first in modern California history; then Controller John Chiang’s unprecedented decision to not pay legislators, declaring that the budget the Democratic-controlled Legislature approved was not balanced.
Here are some other questions that beg to be answered as the Capitol tries to sort out what just hit it:
Q What effect will Chiang’s decision to forfeit pay to legislators have on budget negotiations?
A Legislators say they would never vote out of personal interest over principle, but for those who need to make payments on apartments in Sacramento as well as on their district homes, the financial crunch could be an effective motivator to get something done
One could argue that legislators already voted for their financial interests by passing what many said was a get-out-of-town budget to meet the constitutional deadline, so the evidence of self-interested votes is already there.
Q Despite all the gnashing of the teeth over Chiang exceeding his authority in judging whether the budget passed muster, will anyone have the guts to challenge his ruling?
A Someone, undoubtedly, will challenge the ruling. But it’s at the risk of further disenchanting the public, which voted to punish lawmakers if they didn’t pass a budget on time. It would be in the Legislature’s best interest if they took their lumps and arrived quickly at a balanced budget.
Q What if the Legislature approves a budget, Brown signs it, but Chiang rules it is not in balance?
A Then, you might have a real constitutional crisis. But Chiang might as well open up his exploratory committee for the governorship.
Q What’s Brown’s next move?
A First he’s got to find a way to calm the emotions of angry Democrats, who felt betrayed by Brown’s veto and Chiang’s decision to withhold their pay. Brown started the healing process Tuesday by meeting with Democratic caucuses from both houses.
Wednesday, his staff restarted discussions with Democratic legislative staffs on various budget alternatives, including one that would bypass Republicans with another straight majority vote.
Q But wouldn’t that require an all-cuts budget that Democrats are reluctant to do?
A Nobody said this was easy. Brown has to thread the needle so that he avoids any hint of gimmickry while minimizing the damage of finding an additional $9.6 billion to cut (on top of nearly $12 billion already).
Democrats see real fight in California special election
When Republican Craig Huey got into the runoff in California’s 36th district special election, it came as a surprise. An even bigger surprise: it looks like Huey might actually have an outside chance at winning.
Before the May 17 “jungle primary” to replace retired Rep. Jane Harman (D) observers were expecting a race between two liberal Democrats, Los Angeles City Councilwoman Janice Hahn and California Secretary of State Debra Bowen. Instead, Huey came in second to Hahn thanks to low turnout and a fractured Democratic field. Both advanced to a run-off that Hahn seemed almost certain to win.
Yet Democrats appear to be treating this race as a real fight. Hahn’s campaign went hard after a third-party web ad that depicted the Democrat as a stripper. Even after Huey personally denounced the video as racist and sexist, Hahn alleged coordination between him and the outside group that made it.
“We’re fighting hard in that race,” House Minority Leader Nancy Pelosi told the Post Wednesday. “It’s not as easy a race, as overwhelming a race and Democratic seat as people like to think it is.” In reference to the anti-Hahn ad, Pelosi said, “It’s a contest, and they know that.”
Saying that Oxnard and Simi Valley are “like oil and water,” a Ventura-based community organizing group presented alternative political district maps to a statewide commission on Wednesday that would politically sever Simi Valley from the rest of Ventura County in all legislative and congressional districts.
The plan, presented to the Citizens Redistricting Commission at a hearing in Oxnard, was immediately backed by Supervisor John Zaragoza of Oxnard and Thousand Oaks Mayor Andy Fox.
CAUSE, a group that advocates for the interests of low-income and minority residents of the Central Coast, presented detailed maps to make adjustments to draft Assembly district proposals released by the commission earlier this month. The adjustments would keep the populations of each district at the required level.
The proposal — which CAUSE called the “Oxnard-Thousand Oaks unity map” — would resolve complaints that the commission’s draft plans split both cities into parts of two different Assembly districts. It would unite both cities and put them in the same district, which would include Camarillo.
To accomplish that, the alternative would place Simi Valley in Los Angeles County-based Assembly and Senate districts. The commission already has proposed to do that in its congressional district maps.
Christopher Lanier of CAUSE said the revised proposal would properly separate any part of Oxnard from any district that also includes Simi Valley. The two cities, he said, “are like oil and water.”
Thousand Oaks Mayor Fox was less reluctant.
“This process has in some ways pitted communities against communities,” he said. If any part of Ventura County is to be politically excluded, “it makes more sense to put Simi Valley and Moorpark with Santa Clarita.
The commission will accept written testimony on its draft maps through Tuesday. It is scheduled to release revised drafts on July 12, before voting on final plans that must be submitted to the secretary of state by Aug. 15.
California budget cuts slash monitoring of gang parolees
While state prison officials plan to move tens of thousands of inmates to county jails in a highly publicized budget move, they began another money-saving effort last month: removing GPS tracking devices from hundreds of paroled gang members.
Corrections officials had been monitoring about 950 gang members statewide through GPS, but budget cuts are forcing them to cut the number to 400 by July 1, said Oscar Hidalgo, spokesman for the California Department of Corrections and Rehabilitation.
“We have to make some difficult choices,” Hidalgo said. “Obviously, during better fiscal times, we would work to increase those numbers once again.”
The reductions, which are saving the state $6 million, include the removal of tracking devices from 40 of the 60 gang members monitored in Sacramento County. The cuts come at a particularly difficult time for local law enforcement agencies, especially the Sacramento Police Department, which is disbanding its gang unit next week.
“We’re not going to have any gang detectives in a week,” Officer Laura Peck said, adding that the 14-member unit is being shifted to other duties because of impending layoffs.
“Hopefully, the community is watching and the community can call us if they see any type of suspicious activity,” she said.
Enjoy your morning!
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California, Flap's California Morning Collection, Jerry Brown, John Chiang, Jon Huntsman, Poker, Tobey Maguire
Flap’s California Morning Collection: June 22, 2011
A morning collection of links and comments about my home, California.California Controller John Chiang decided yesterday afternoon that he would withhold paychecks from California Legislators since they did not pass a “balanced” budget by the deadline as specified by Proposition 25. Now, remember they did pass a budget which was quickly vetoed by Democrat Governor Jerry Brown. This budget was not “balanced” enough for the California Controller.
Oh well – back to the drawing board.
However, this is not stopping these same Legislators from soliciting campaign cash this week.
Monday, Republican Sen. Bill Emmerson was looking to bulk up his campaign chest for re-election next year.
Tuesday saw nine legislators making the restaurant rounds from Spataro to Chops to Esquire Grill and beyond: Democratic Assemblymen Marty Block, Das Williams and V. Manuel Pérez, and Sen. Curren Price; plus Republican Assembly members Dan Logue, Katcho Achadjian, Chris Norby and Diane Harkey, and Sen. Sam Blakeslee.
Today, these lawmakers continue the quest: Democratic Assemblymen Ben Hueso, Sandré Swanson and Henry T. Perea and Sen. Noreen Evans; plus Republican Assemblymen Brian Jones and Don Wagner, and Sens. Doug LaMalfa and Mark Wyland.
Who ever said these POLS would be starving with or without balancing the California budget?
On to this morning’s California links.
Tobey Maguire Sued Over Multi-Million Dollar Illegal Poker Game; DiCaprio, Affleck & Damon Involved
Spider-Man star Tobey Maguire is among more than a dozen high-profile Hollywood celebrities being sued in connection with a mega-millions illegal gambling ring that ran high-stakes underground poker games, Star magazine is reporting exclusively.
Maguire, 35, won more than $300,000 from a Beverly Hills hedge fund manager who embezzled investor funds and orchestrated a Ponzi scheme in a desperate bid to pay off his monster debt to the star and others, it’s alleged.
An FBI investigation into Brad Ruderman, the CEO of Ruderman Capital Partners, uncovered how he lost $25 million of investor money in clandestine poker games held on a twice weekly basis in suites at the luxury Beverly Hills hotel, Four Seasons, and the Viper Room on Sunset Boulevard.
Brown Plots New Budget as California Lawmakers Forfeit Pay for Being Late
California Governor Jerry Brown has drafted a plan to pass a budget through the Legislature that sidesteps Republicans who blocked a previous effort, according to two people with knowledge of the matter.
Brown’s proposal comes as legislators have been forced to forfeit pay for every day they fail to send a balanced budget to the governor past a June 15 deadline. He vetoed a spending plan sent to him by Democrats last week, saying it used legally doubtful maneuvers and one-time fixes.
“I’ll be sharing some very specific ideas tomorrow,” Brown said to reporters as he left a meeting with Assembly Democrats yesterday. “There will be several ideas I’ll propose.”
Timm Herdt: Brown can’t get 4 votes; how can he get 81?
Legislators, Democrats and Republicans alike, know all that and they simply won’t swallow the bitter medicine that the grown-up Brown says is the only alternative if he doesn’t get the chance to ask voters to weigh in on extending current tax rates.
From the legislators’ perspective, when compared to their other choices, the idea of muddling through for another year without solving the state’s chronic fiscal problems doesn’t seem like such a terrible option.
Thus far, Brown hasn’t wavered from the plan he put forth in January. But the new fiscal year begins a week from Friday.
“The next step is the governor’s,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Monday. “If he wants to suggest a budget with significantly deeper cuts to education, health care and public safety, we’ll take a look at it.”
If Brown is forced to take that step, know this: It won’t be nearly as popular as his veto.
Huntsman to hold California fundraisers
Jon Huntsman, fresh off his campaign launch, will host three high dollar California fundraisers next week.
The former Utah governor will be in San Diego on June 26th, and Orange County and Los Angeles on June 27th. Dinner with Huntsman will cost donors $1,000, while a VIP cocktail reception will cost the primary election maximum of $2,500. Huntsman is also soliciting high dollar bundlers to raise money on his behalf and offering them perks like a seat at the head table and extra VIP tickets for high dollar commitments.
Enjoy your morning!
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California Controller John Chiang Says California Budget NOT Balanced and Refuses to Pay Legislators
Controller John Chiang discusses his decision to halt paychecks for all 120 state lawmakers after they failed to come up with a balanced budget by the June 15th deadline, during an interview with the Associated Press in Sacramento, Calif., Tuesday, June 21, 2011. Chiang said that he found the plan passed by Democrats on a simple majority vote last week was not balanced and therefore lawmakers did not meet the requirement for getting paid under Proposition 25, passed by the voters in November
Well, it will really hit the fan now about the California budget. It will be donkey against donkey.California lawmakers must forfeit their pay as of mid-June because the budget they passed last week — which Gov. Jerry Brown vetoed less than 24 hours later -– was not balanced, the state controller said Tuesday.
Since last week, Controller John Chiang, a Democrat, has been pondering whether to pay lawmakers. They passed budget legislation on June 15, meeting their constitutional deadline for only the second time in a quarter-century, but their plan relied heavily on accounting schemes to paper over the state’s deficit. In his veto message, Brown said he could not sign such a plan.
Chiang, who issues the state’s paychecks, said Tuesday that it wasn’t sufficient to keep their pay coming.
Voters approved a law last fall that empowered legislators to pass a budget with a simple majority vote but also threatened to strip them of pay for every day the blueprint is late. The measure makes no mention of approving a balanced budget, but other laws on the books dictate that state budgets be balanced.
Chiang’s decision is widely expected to spur a lawsuit, and lawmakers had begun questioning his authority over their pay even before he made his decision.
Yeah, here come the lawsuits and the California supreme Court will ultimately decide the issue. But, if I were the Democrats who hold an overwhelming majority in the Assembly and the State Senate, I would get busy and pass another budget – one that is balanced.
But, then again, the majority Dems would have to vote for unpopular cuts in spending and they don’t really want to do that.
Pity…..
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Bud Selig, California, Dianne Feinstein, Flap's California Morning Collection, Frank McCourt, Gavin Newsom, Los Angeles Dodgers, Los Angeles Marathon
Flap’s California Morning Collection: June 21, 2011
A morning collection of links and comments about my home, California.The buzz in the Capitol today is that long time Democratic Senator Dianne Feinstein is not polling well in the latest California Field Poll. In fact, her numbers are the lowest for her since 1992. If any pundit really thinks DiFi is vulnerable, I will refer them to Carly Fiorina who was the last Republican challenger to a California Democratic U.S. Senator who was deemed vulnerable = recently re-elected Barbara Boxer.
DiFi is not going anywhere except back to the Senate, barring any health problems. But, I wonder who the GOP will run in 2012 as the sacrificial lamb?
The poll graphic:
In Los Angeles, everyone is talking about the L.A. Dodgers and the owner Frank McCourt. The Commissioner of Major League Baseball who took over control of the team some time ago from McCourt disapproved a new Fox Sports television contract which may precipitate a sale of the team, lawsuits, and/or a bankruptcy filing. Likely, there will be all of the above, but most folks in L.A. want McCourt and his wife to be gone and the Dodgers to concentrate on baseball.Oh yeah and McCourt owns the Los Angeles Marathon too. I might just have to run in Pasadena next Spring.
OK – on to the links:
Steinberg raises legal questions over pay issue
Senate Leader Darrell Steinberg, D-Sacramento, made it clear that there are legal implications — lawsuit, anyone? — with the decision on legislative pay that state Controller John Chiang is expected to make Tuesday.
Steinberg suggested that any decision by the Controller would be legally questionable.
The question that got Steinberg reverting back to the lawyer that he is: Will you be able to hold out and negotiate all summer if your members are not being paid.
The unspoken suggestion: that legislators would cave on demands of $2 billion to $6 billion more in cuts to schools, universities and public safety to ensure they get their salary and daily expenses.
“It is a bad precedent for anybody in the executive branch to question the quality of a budget passed by the Legislature,” he told reporters after a quick Senate session Monday. “Because to do so is to shift the balance of power … in a way that is dangerous.
“Think about if there was a governor, a treasurer or controller from the other party and they were unhappy with the quality of the budget the Legislature passed, they would have the ability — if Proposition 25 is interpreted in a way some suggest — to say it’s not good enough, we withhold your pay until you make all of the decisions and and all of the cuts that we believe are appropriate.”
The follow-up question: Could withholding legislators’ pay “tip the balance” to legislators accepting the governor’s cuts?
“If it is an attempt to tip the balance, then it is a conflict of interest like California has never seen,” Steinberg said.
Salary matters are best decided by the Citizens Compensation Commission, Steinberg said, and legislators should not be forced to determine their vote based on whether or not they would be paid.
Why McCourt must go, from one baseball blogger
Many kudos on baseball websites today for blogger Larry Behrendt’s detailing of the case against Dodgers owner Frank McCourt, from the interlocking companies that mean the Dodgers now pay rent for their own stadium and parking lots, to the ticket revenue that gets drained elsewhere, to the huge debt and lavish personal spending. Behrendt posted before commissioner Bud Selig stepped in today to nix the deal with Fox. But that’s exactly what Behrendt felt Selig must do…..
Over the next two weeks, Bud Selig will face the defining moment of his career as Commissioner of Major League Baseball….
There is no doubt: Commissioner Selig should reject the Dodgers-Fox contract, seize control of the Dodgers, and sell the team to a responsible owner who will (with the grateful help of millions of my fellow left coasters) restore the team to its former greatness. Selig must act to prevent Frank McCourt from continuing to plunder the team. Selig must act before the team is saddled with even greater debt, while the team’s reputation can still be salvaged and the team is still marketable to a worthy owner….
How much have the McCourts managed to extract from the Dodgers? Well, if we ignore the debt the Dodgers took on so that the McCourts could buy the Dodgers but include the McCourt salaries, the McCourts have withdrawn from the Dodgers anywhere from $109 million (Frank McCourt’s estimate) to $141 million (Jamie McCourt’s estimate). The truth is, the real amount the McCourts plundered from the Dodgers may be more than $141 million – at the moment, all we have to go on is what each McCourt has been willing to admit to.
I(In case you were wondering, during their ownership of the Dodgers the McCourts have paid not one penny in income tax.)Is Lynn Woolsey retiring? Is Gavin Newsom interested in that seat?
We’re getting the distinct feeling that something is up. Just got an “advisory” that Rep. Lynn Woolsey will hold a press conference at her home Monday in Petaluma “joined by Rep. Barbara Lee and friends and family.”
Hmmm. Remember, back in December Woolsey’s peeps told us she was “thinking of” retiring and they’d let us know by June. Tick…tock…tick…
All that Woolsey spokesperson Bart Acocella will say is: “I can tell you that she will make an announcement on the 27th about her future plans.”
Even with the state’s new redistricting plan likely to create a very-different looking 6th District, there’s already a line forming to snag the super-safe Democratic seat-for-life, starting with termed out Assemblyman Jared Huffman and activist and author Norman Solomon, Marin County Supervisor Susan Adams, state Sen. Noreen Evans, D-Santa Rosa, and Sonoma County Supervisor Shirlee Zane.
Here’s another name to toss in the mix: What about Lt. Gov. Gavin Newsom?
Yes, we know the duties of Lt. Gov. are…uh…pressing. Especially when he has to walk the Governor’s dog. But eyebrows raised when Newsom just moved to…wait for it…Marin County to live with his in-laws after they had their second child.
Enjoy your morning!