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Flap’s California Morning Collection: June 15, 2011
All eyes are on California Capitol today, as the the Legislature faces a 11:59 PM deadline to pass a balanced budget or have their own paychecks affected. Any odds at some sort of “balanced” budget will pass when legislator’s own bank accounts are on the line?The answer is: YES.
Both the California Assembly and Senate have morning sessions this morning and the poop is that they will pass a majority vote “balanced budget.” Remember California Democrats hold overwhelming majorities in both houses, but lack the 2/3’rds super majority in order to raise taxes.
The California Legislature is facing an almost $ 10 Billion budget shortfall and is required by law to balance the books. Some of the proposals leaked out of the Capitol for the Democrat majority only plan include:
- Increasing the state sales tax by 1/4%
- Increasing car/vehicle registration fees by $12 each
- Imposing the “Amazon Tax” or internet sales tax collection requirements for online retailers who do not have a physical presence in California
- Charging rural homeowners a fee for firefighting services
- Cutting the budget of the California Court system by $150 Million
There are others, but the Democrats are floundering since most of the above will face certain court challenges or have no realistic ability to either cut spending or raise revenues. In other words, it is a SHAM and GIMMIC budget. Whether Democrat Governor Jerry Brown will go along with this Democrat majority only budget is uncertain.
Brown will continue to negotiate with the Republicans and hope for a better deal. The Republicans have no incentive to deal with the Governor unless some real reforms become reality – if even that.
So, on to the links:
Field Poll: Support Slipping for Jerry Brown, Tax Extensions
Gov. Jerry Brown still has public support for his tax plan, but the margin has slipped, and so has his public approval rating, according to a Field Poll released today.
The poll comes as legislative Democrats – frustrated by months of failed budget talks between Brown and Republican lawmakers – prepare today to take up a budget of their own.
Though Brown’s public approval rating has slipped just two percentage points since March, to 46 percent, many Californians who previously were undecided about Brown made up their minds against him. Thirty-one percent of voters disapprove of Brown’s job performance, up from 21 percent in March.
Fifty-two percent of registered voters surveyed said they would be willing to extend temporary tax increases to close the state’s remaining $9.6 billion budget deficit, a drop of nine percentage points from March.
Highlights of the Democratic budget planHighlights of the Democratic budget package that lawmakers plan to vote on Wednesday, according to Assembly budget staff:
TAXES AND FEES
$900 million –- Raise local sales tax rate by 0.25 percentage point
$300 million –- Raise annual car registration fee by $12
$200 million –- Require online retailers, such as Amazon.com, to collect sales taxes
$160 million –- Impose fee on residents in fire zones
CUTS
$500 million –- Cut spending on a local law enforcement program (could be offset by a vehicle tax hike, if GOP agrees)
$300 million –- Reduce spending on University of California and California State University systems by $150 million each
$150 million –- Reduce court spending
DEFERRALS
$2.85 billion –- Delay paying schools and community bills until the next fiscal year
$540 million –- Delay paying some UC bills until next fiscal year
OTHER
$1.2 billion -– Revive a new version of proposal to sell state buildings,and then lease space back
$1 billion –- Assume state wins lawsuit to take money from early-childhood programs
$800 million -– Additional unanticipated tax revenue
$750 million -– Cancel repayment of old school debts
$700 million -– Assume federal government will pay some Medi-Cal bills
Conservative heat to end redevelopment
Who would have guessed that California conservative icon Tom McClintock, the former longtime legislator from Ventura County and current congressman representing a district in Northern California, would step up at a critical time to give Democratic Gov. Jerry Brown a boost in promoting one of his controversial budget proposals?
The answer is, anyone who paid attention to McClintock’s position as a legislator on the issue of redevelopment. As a property rights advocate, he was a leading foe of redevelopment. Now he’s stepped up and released a You Tube video in which he calls on supporters to urge their state lawmakers “to abolish these rogue agencies.”
The video comes just as city governments and other redevelopment advocates are sounding the alarm about a potential vote in the Legislature on two developing bills to accomplish most of what Brown is seeking. One bill would abolish redevelopment agencies; the other would allow specific agencies to stay in business, but only if they agreed to turn over most of their current flow of property tax revenues to their local school districts.
Enjoy your morning!
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Flap’s California Morning Collection: June 14, 2011
A morning collection of links and comments about my home, California.The California State Budget deadline looms tomorrow for the California Legislature. If a state budget is not passed, legislators have their pay docked – now, you see the urgency. In the meantime, California Republicans are not moving to support tax extensions which means the Democrats who are in the majority may pass a budget with accounting gimmics – like the under former Governor Arnold Schwarzenegger.
Now, the links:
Faced with loss of pay, Democrats are crafting alternative state budget
Facing a Wednesday deadline for passing a budget or forfeiting pay, Democrats in the Legislature are quietly drafting a spending plan they could pass without the GOP votes needed for tax increases or extensions.
The alternative plan would keep paychecks coming even though talks between Gov. Jerry Brown and Republicans have snagged on the issue of taxes.
“We will have a budget,” said Nathan Barankin, a spokesman for Senate President Pro Tem Darrell Steinberg (D-Sacramento).
Barankin and others close to the process declined to provide details. But a fallback blueprint would almost certainly rely on accounting moves and other measures that would merely paper over the state’s remaining $10-billion shortfall: Democrats, who have sharply cut back many programs already, have little appetite for further reductions.
Chronicle will not be pool reporter for Michelle Obama visit
Remember a couple of weeks ago when The White House got ticked off at Comrade Marinucci for posting video of activists protesting President Obama inside a San Francisco fundraiser? To Team Obama she was violating an unwritten rule on a print reporters posting video and they threatened to exclude The Chronicle from being the pool reporter in the future.
To other sentient beings, Comrade Marinucci was — and pardon the technical term here — “reporting the news.” News that MANY other non-journalists who were there at the fundraiser were recording with various camera phones. And she was perfectly within her rights to do so, The Chronicle has asserted.
Why we’re re-telling you this story: First Lady Michelle Obama comes to the Bay Area Tuesday and neither Comrade M — nor anybody at The Chronicle — will be the local pool reporter. Handling that gig will be two reporters from the Oakland Tribune. One is the Trib’s hunky, bearded political reporter Josh Richman and the other is a higher education reporter.
So just to get this down for the record, we asked the White House what was up. And with all due respect — as we’re sure he’ll do a terrific job — why was a higher ed reporter chosen to do the pool reporting on a political event in San Francisco?
The White House responded that pool reporters are chosen on a rotating basis.
More competitive seats under draft political maps, PPIC says
The number of competitive seats in the Legislature and in California’s congressional delegation would jump significantly under draft maps released Friday, according to an analysis by the nonpartisan Public Policy Institute of California.
More competitive seats could give Democrats a better chance of securing the two-thirds legislative majority needed to raise state taxes in future years, which would require capturing two additional seats in both the Assembly and Senate.
Under tentative proposals by California’s new redistricting commission, the number of competitive Assembly seats would rise from nine to 16; competitive state Senate seats, from three to nine; and competitive U.S. House of Representative seats, from four to nine, PPIC concluded.
No formula is considered foolproof in calculating the number of competitive seats. Analysts use different approaches and reach differing conclusions, serving as grist for lively debate.
PPIC defined a competitive seat as one that falls between a five-point registration advantage for Republicans and a 10-point advantage for Democrats, which it said reflects the fact that Democrats are more likely to cross party lines.
Democrats currently hold 52 of 80 seats in the Assembly; 25 of 40 seats in the state Senate, and 34 of 53 seats in the U.S. House of Representatives.
Dan Walters: The Big Stakes? Two-thirds Margin
There are many ways to view the new congressional and legislative district maps released last week by the state’s new independent redistricting commission, from the personal to the cultural to the geographic.
But to Capitol insiders, the most meaningful aspect is whether the Democrats can gain two-thirds majorities in both legislative houses and thus hegemony over tax policy.
Democrats are two seats shy of two-thirds in each house now, and that’s why the state budget is, as usual, stalemated. Republicans are refusing to vote for nearly $10 billion a year in tax extensions.
“We need four Republicans,” Gov. Jerry Brown declared Monday as he assembled a gaggle of business, labor and local government leaders to support extending the temporary taxes a few extra months and then asking voters to continue them for five years.
However, the tax extensions don’t play very well with voters in recent polling. Some Democratic leaders and their union allies have mused about plugging the budget gap with accounting gimmicks, loans and other one-time revenues, and concentrating political resources on getting two-thirds majorities in 2012 elections.
Enjoy your morning!
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Flap’s California Morning Collection: June 13, 2011
A morning collection of links and comments about my home, California.This week the California State Assembly and State Senate face a Wednesday constitutional deadline to pass a budget. California Jerry Brown is looking for Republican votes for tax extensions and so far has not obtained them.
California Governor Edmund G. Brown Jr. provides an update on state budget negotiations as the June 15 deadline for a balanced budget approaches.The question everyone is asking: will a Republican legislature sell out their party and no tax increase pledge?
Now to the links:
Jerry Brown offers state budget update in new videoGov. Jerry Brown said in an online video Sunday that he wants changes in pensions regulations and state pensions to be part of a budget deal, but he still lacks the support from four Republican lawmakers to place those reforms and billions in taxes before voters this fall.
Brown said his plan “will put California’s finances on a firm footing for many, many years to come…but what we don’t have are the four Republican votes necessary to put it to a vote of the people of California.”
He did not outline what those policy changes would entail, but said he was “really perplexed at why a package of this magnitude and this permanence … cannot be allowed for you the people to decide on.
Brown posted the video to his YouTube channel Sunday, just three days before lawmakers are constitutionally required to pass a budget, to give his budget status report to voters.
This year, for the first time, lawmakers’ pay will be docked if no spending plan is in place by Wednesday’s deadline.
Brown plans to hold a Capitol press conference Monday with representatives from many of the various groups that have backed his budget, and the idea of placing higher vehicle, sales and income tax rates before voters, along with changes to state pensions and a limit of future state spending.
GOP attacks bill that would ease local tax votes
Now that Republican lawmakers have voted against a renewal of expiring tax hikes, Democrats are turning to another, more complex way to generate revenue.
A bill proposed by state Senate President Pro Tem Darrell Steinberg and narrowly approved last week would dramatically expand the taxing powers of local governments, school boards and other jurisdictions.
But the bill, SB23-1X, would lead to such a complicated latticework of taxes that opponents say Steinberg is merely pulling a stunt to ramp up pressure against Republican lawmakers.
The Sacramento Democrat said his legislation would give public schools and law enforcement agencies a firmer source of funding if lawmakers don’t come up with one directly.
It would grant sweeping authority to local governments to raise money, with voter approval, through taxes on income, vehicles, alcohol, tobacco, medical marijuana, soda and companies that pump oil in California.
Steinberg introduced his local tax proposal on Friday, soon after the defeat in the Senate of the main bill to renew temporary increases in the statewide sales and vehicle taxes that will expire June 30. It passed, but with only the bare 21-vote majority needed. One Democrat voted against it and three others abstained.
The bill applies to counties, school districts, community college districts and county offices of education. Critics said it would create a logistical nightmare of inconsistent tax policies that likely would be challenged in court and with a ballot referendum seeking to repeal it.
Redistricting: Rohrabacher says he’s staying put
With the release of a round of redistricting maps Friday, I mentioned that GOP Reps. Dana Rohrabacher, John Cambpell, Ed Royce and Gary Miller could be playing musical chairs.
Rohrabacher may be busy in the Middle East, but he found time to make it clear he doesn’t plan to look for a new district to run in.
The latest drafts throw Rohrabacher, R-Costa Mesa, and Campbell, R-Irvine, into the same coastal district (“OCCOAST” on the map). Campbell could run for the proposed Orange-Rancho Santa Margarita district instead – but Dave Gilliard, the consultant for Royce, R-Fullerton, says that Royce has been looking for a home in Orange and considers that the heart of his district.
If Royce stays in Fullerton and the new district surrounding that city, he could face Miller, R-Diamond Bar, since proposed map eliminate the GOP-advantage in Los Angeles County portion of his district. I’d give Royce the edge in that race, since Miller doesn’t live in the county.
Here’s the statement that came last night from Rohrabacher’s camp:
Congressman Rohrabacher announced today that whatever the end configuration of the districts, he will be running in the area of Orange County that he has represented for many years.
“I share a bond both philosophically and personally with these people. This is the area where people want limited government and personal liberty, which is something we share. I am raising my family here and feel very comfortable with the values of the people of this part of Orange County and they feel comfortable with me.”
Rohrabacher believes there’s likely to be shifts in the proposed district lines between now and the election but points to his long standing relationship with the people of the area.
“However the districts are shaped, I’m sure that the candidates and the voters will use this as a way of getting to know each other better. So we end up with districts that are more equal in population and voters who are more fairly represented.”
Enjoy your morning!
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Will California Become Another Michigan?
Dan Walters: Will California become another Michigan?
Has California’s recession-wracked economy finally bottomed out and begun to recover, albeit slowly?
Or has California become another Michigan, doomed to a semi-permanent state of economic malaise?
Gov. Jerry Brown adopts the former version in his revised state budget. He calls it a “modest drawn-out recovery” and cites “positive economic signs” such as a fractionally declining unemployment rate, growth in manufacturing and rising exports from the state.
But the budget also notes such negative factors as “weak housing markets (and) depressed construction activity,” and Japan’s devastating earthquake. And it says that recovery will be painfully slow, with non-farm employment not reaching pre-recession levels until 2016, nearly a decade after the recession began.
Yes. A Michigan without any manufacturing, since it has left for other countries or states, is my best guess.
Which young couple wishes to wait for housing costs to come down to a manageable levels while social welfare costs, including public education and prisons skyrocket because of illegal immigration?
California may see some slight economic improvement but unless structural budget changes occur and the attitude towards business becomes friendly, California = Michigan.
The population exodus of educated, productive citizens will only accelerate.
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Video: California GOP to Governor Jerry Brown – Do Your Job
Jerry Brown campaigned on the promise that he could bring both parties together and make the tough decisions now. Call Jerry and tell him to make the tough decisions now!A hard-hitting ad by the California GOP that makes an apt point to California Democrats. Where have you been? Especially since they have had control of the California Legislature for decades and Brown has been around California politics for decades.
So, Jerry, why not negotiate with the Republicans and do YOUR job?
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Rep. Eric Cantor: No State Bailouts and No State Bankruptcy
House Speaker John Boehner of Ohio, right, looks on as House Majority Leader Eric Cantor of Va., speaks during a news conference on Capitol Hill in Washington, Thursday, Jan. 6, 2011
In other words, the state as soverign entities in the government will have to figure out their own fiscal solutions for budget shortfalls.House Majority Leader Eric Cantor (R-Va.) issued a new threat against a federal bailout for ailing state governments Monday as GOP leaders girded for a confrontation with President Obama over spending.
Heading into Tuesday’s State of the Union address, Cantor showed no desire for increases in virtually any area of the federal government, and he doubled down on his opposition to new proposed spending on infrastructure and education, even in areas, like transportation, where he acknowledged there were deficiencies.
Cantor flatly rejected any changes in the law that would allow state governments struggling with record budget deficits brought on by the economic recession and rising pension costs to restructure debt, including allowing them to declare bankruptcy.
“I don’t think that that is necessary, because state governments have at their disposal the requisite tools to address their fiscal ills,” the majority leader said, before going a step further.
“I think some … have mentioned this Chapter 9 equivalent for states is somehow going to stave off some kind of federal bailout — we don’t need that to stave off a federal bailout. There will be no bailout of the states,” Cantor said. “States can deal with this and have the ability to do so on their own.”
As it should be.
In California, the Democrat Legislature and Democrat Governor Jerry Brown have the ability to balance the budget without either asking Washington for a bailout or defaulting on its contractual obligations through a state bankruptcy law – which would need to be enacted by Congess and President Obama anyway.
They just need to have the political will.
What Rep. Eric Cantor, the House Majority Leader is saying is: Man up =“States can deal with this and have the ability to do so on their own.”
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Updated: Bankruptcy for the States – Just Say NO
California is always having a fiscal emergency because the Democrats who have controlled the California Legislature for decades spend and spend and spend. Bankruptcy for California is not the answer and I am amazed that it is being considered.Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.
You know, I believe in political accountability and the states are sovereign entities as spelled out in the U.S. Constitution. If California or Illinois have a massive insolvency problem, then the states MUST solve them.
I mean, didn’t they cause their own problems in the first place?
A few weeks ago, the Los Angeles Times posted an online state budget balance calculator for readers to attempt to balance the California budget. It took me about 3 minutes. In California, Jerry Brown, the new and former California Governor and the Democrat dominated legislature can do likewise – if they have the political will.
A California state bankruptcy would stiff retired older workers and state/city/county bond holders immediately and have other long term effects without delivering the needed political will or reforms – to say NO to excessive government spending. Bankruptcy would simply delay the enactment of appropriate budgetary solutions – like cutting spending and prioritizing government spending.
BK would simply reset the clock for the POLS.
Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.
All of a sudden, there’s a whole new risk factor, said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commissions Office of Municipal Securities during the Clinton administration.
For now, the fear of destabilizing the municipal bond market with the words state bankruptcy has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.
State bankruptcy is a bad idea.
If Jerry Brown cannot balance the state budget, have him call me – I’ll do it for him in about 3 minutes.
As far as an oversight panel for California, as a California voter I reject that idea. If voters don’t like what their POLS are doing, then WE THE PEOPLE will take care of the problem. If insolvency occurs, then the POLS have to go and we will elect others.
No federal bureaucrat or federal judge should be disenfranchising me or other California voters.
Just say NO to State Bankruptcy.
Update:
And, what is Hugh Hewitt pushing here?Jerry Brown looks like he has begun the kabuki dance to the bankruptcy court by first ordering some cuts and then appealing to voters for a tax hike which will fail. (Very few people believe that a tax hike will pass. California is taxed out and any marginal burden will send high income residents and moire businesses fleeing.)
There is as yet no way for the states to file for reorganization, so Congress needs to hurry up. I will ask Congressman John Campbell of the House Financial Services Committee about this today, but there is no other way to proceed except for a reset. The Congress isn’t going to print money for the states to pay their union bills. It is that simple.
Damn Hugh, let Jerry Brown do his job and make the necessary cuts. If the tax increases pass, then that is California’s problem.
I don’t see how a state default or reset, as you call it, will help anyone – except postpone necessary budgetary reforms.
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Bankruptcy for the States – Just Say NO
California is always having a fiscal emergency because the Democrats who have controlled the California Legislature for decades spend and spend and spend. Bankruptcy for California is not the answer and I am amazed that it is being considered.Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.
You know, I believe in political accountability and the states are soveriegn entities as spelled out in the U.S. Constitution. If California or Illinois have a massive insolvency problem, then the states MUST solve them.
I mean, didn’t they cause their own problems in the first place?
A few weeks ago, the Los Angeles Times posted an online state budget balance calculator for readers to attempt to balance the California budget. It took me about 3 minutes. In California, Jerry Brown, the new and former California Governor and the Democrat dominated legislature can do likewise – if they have the political will.
A California state bankruptcy would stiff retired older workers and state/city/county bond holders immediately and have other long term effects without delivering the needed political will or reforms – to say NO to excessive government spending. Bankruptcy would simply delay the enactment of appropriate budgetary solutions – like cutting spending and prioritizing government spending.
BK would simply reset the clock for the POLS.
Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.
“All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration.
For now, the fear of destabilizing the municipal bond market with the words “state bankruptcy” has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.State bankruptcy is a bad idea.
If Jerry Brown cannot balance the state budget, have him call me – I’ll do it for him in about 3 minutes.
As far as an oversight panel for California, as a California voter I reject that idea. If voters don’t like what their POLS are doing, then WE THE PEOPLE will take care of the problem. If insolvency occurs, then the POLS have to go and we will elect others.
No federal bureaucrat or federal judge should be disenfranchising me or other California voters.
Just say NO to State Bankruptcy
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The Interactive California Budget Balancer
The Los Angeles Times posted an interactive California Budget Balancer website yesterday.Try your hand at eliminating the red ink in California’s budget.
The state’s budget shortfall for the rest of this fiscal year and next, estimated to be $28 billion, is the size of the total general fund budget of 12 states combined: Delaware, Idaho, Maine, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont and West Virginia.
We’ve provided a wide range of options — spending cuts and tax increases — that cover most of the proposals made by Democratic or Republican lawmakers. It’s not easy, but it can be done.
I have worked through the numbers a few times and found it fairly easy to balance the budget WITHOUT raising ANY taxes.
See what you can do and either Tweet up your results or leave a comment below.
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California NOT So Bad? Are You Kidding Me?
Jennifer Rubin asks the question.A reader calls my attention to an op-ed in the Los Angeles Times by Bill Lockyer, the state’s Democratic treasurer, and Stephen Levy, the director of the Center for Continuing Study of the California Economy. The two argue that California’s not all that bad.
Read all of her piece.
Let’s see:
- High Unemployment rate = 12.4% – Unemployed people number 2,267,000 up 40,000 from November 2009.
- Massive state budget deficit ($28 Billion) with no hope of balance
- Sky high real estate prices with high foreclosure rates
- California businesses leaving the state in record numbers
I am a native Californian and have lived here for over fifty years and have never seen economic conditions so grim.
The California Democratic Party has had control of the Legislature (except for some brief periods) for most of my life (6 decades). They have simply spent the state into insolvency.
Not so bad?
Ridiculous – it is worse.