Flap’s California Morning Collection: June 17, 2011

Posted 1 CommentPosted in California, California Budget, California Economy, California Unemployment, Flap's California Morning Collection, Jerry Brown

A morning collection of links and comments about my home, California.

The big news in California today is the Jerry Brown veto of the California State budget yesterday. A budget passed over the objections and votes of the California GOP. In other words, Brown vetoed (the first such veto in California history) his own Democratic Party’s majority passed budget.

So, what is everyone concerned about in the Capitol today?

Why, it is whether California Legislators will get paid.


In the meantime, the California economy continues in a downward spiral and unemployment actually increased this past month.

No word on the ridiculous Amazon Tax, but I assume that it was vetoed with the California Budget veto yesterday. But, I could be wrong. How convenient for the Governor though.

On to the links…..

California loses 29,200 jobs in May, a blow to recovery

California’s economic recovery stumbled in May as employers shed 29,200 jobs from payrolls, a surprisingly large loss in a state that had been on the mend. The state’s unemployment rate still dropped to 11.7%,  from 11.8% the month before, according to numbers released this morning by the federal  Bureau of Labor Statistics.

The numbers follow a slate of bad economic news throughout the country. The nation added just 54,000 jobs in May, and its unemployment rate grew to 9.1%. The previous three months, it had added an average of 220,000 jobs a month. Home prices have dropped in California and the nation to surprising lows as sales slow.

California has the second-highest unemployment rate in the nation, after Nevada, although Nevada’s unemployment rate dropped significantly in May, to 12.1% from 14.9% the year before.

California had added an adjusted 14,900 jobs in April, after cutting a net 11,600 in March. It experienced five straight months of job growth from October through February.

“We do know that the picture is not terribly rosy,” said Johannes Moenius, an economist at University of Redlands.

Brown’s big budget bet

Gov. Jerry Brown’s veto of the new state budget Democrats passed this week represents a gamble that California’ deadlocked Legislature can find its way to a bipartisan solution that has evaded it all year.

Brown, in his veto message, blamed Republicans for refusing to go along with his proposal for a special election at which voters would be asked to ratify the extension of about $10 billion in taxes due to expire at the end of this month.

Brown also slammed his fellow Democrats, indirectly, by describing the budget they passed as filled with “legally questionable maneuvers, costly borrowing and unrealistic savings.” He noted that it would leave the state’s books unbalanced for years to come and add billions of dollars of new debt to the California’s already overburdened balance sheet.

But Brown’s rejection of the budget does not guarantee he is going to get anything better from the Legislature in the days and weeks ahead.

Republicans remain opposed to new taxes, and even to extending the temporary taxes that are about to expire. Democrats remain opposed to making the kind of spending cuts that would be required to balance the budget without those taxes. There appears to be very little middle ground.

Los Angeles Dodgers and Los Angeles Marathon: Judge extends McCourt talks, deal might be close

Superior Court Judge Scott Gordon on Thursday rescinded his finding that Frank and Jamie McCourt were at an impasse in their settlement talks, and he set a hearing for later today to determine if a deal had been reached. “I think we are close,” said Jamie’s lawyer Dennis Wasser, according to AP. “Hopefully, we can get it done tonight.

Dan Walters: If California legislators get paid, vetoed budget is giant charade

That presumes, of course, that the Democratic budget somehow put pressure on Republicans. In fact, it may have had the opposite effect of increasing their leverage on Brown to make concessions to get his centerpiece, an extension of expiring sales, income and car taxes, on the ballot.

A complicating factor is that Steinberg, Pérez and public employee unions really don’t want the fall election that Brown seeks on taxes, fearing – with good reason – that voters would reject them.

Still another is the new state law that strips legislators of salaries and expense checks, about $400 per day each, if a budget is not passed by June 15.

Controller John Chiang has appointed himself the law’s enforcer. Legislative leaders contend that Wednesday’s budget action complies, but Brown’s declaration that the budget was unbalanced gives Chiang grounds to stop the paychecks if he wishes.

Chiang was waffling Thursday, saying he wants “to complete our analysis” before deciding whether to pay lawmakers at the end of the month.

If Chiang pays legislators, the rejected budget will look like a giant charade by Democrats to evade the law.

Non-Californians at UC campuses get summer subsidy

A taxpayer subsidy that out-of-state students enrolled in the University of California system have been receiving for years is under scrutiny as the schools search for extra revenue.

During the regular school year, nonresidents pay up to three times as much as students from California, bringing the universities a few hundred million dollars. But partly due to measures taken to boost summer enrollment, they are spared from paying higher fees for summer classes.

“It seems out of sync,” said Steve Boilard, director of higher education policy for the Legislative Analyst’s Office.

Enjoy your morning!

Video: Governor Jerry Brown Vetoes California Budget – Now What?

Posted 1 CommentPosted in California, California Budget, California Legislature, Jerry Brown

I am returning Senate Bill 69 and Assembly Bill 98 without my signature

Who knows?

Brown announced the veto in a press release Thursday. “Unfortunately, the budget I have received is not a balanced solution,” his statement said. “It continues big deficits for years to come and adds billions of dollars of new debt. It also contains legally questionable maneuvers, costly borrowing and unrealistic savings. Finally, it is not financeable and therefore will not allow us to meet our obligations as they occur.”

Read the governor’s official veto message here.

The plan contains higher taxes, billions of dollars in delayed payments to schools, and various accounting maneuvers to balance the books. Brown had previously warned that he would not sign a budget containing such accounting gimmicks.

Democratic leaders in the Assembly and Senate said the plan they passed Wednesday was crafted without input from the administration.

It is unclear whether state lawmakers will receive their paychecks in the wake of the veto. Under a  law passed by voters last year, legislators lose pay if they fail to send the governor a budget by June 15. Lawmakers said Wednesday they believe the budget they passed meets that test, but Controller John Chiang, California’s chief financial officer, will decide whether to issue their paychecks.

Brown’s veto is the latest twist in a budget process that has been just as divisive and partisan as it was under his predecessor, Arnold Schwarzenegger.

The ball is back in the California’s Legislature’s court, which I am positive they do not appreciate, especially if the California Controller decides to withhold their paychecks.

The Democrats who control the Legislature will either have to make more cuts or make some sort of deal with the Republicans to raise revenue – but in return for something. The likelihood of a deal with the GOP is extremely unlikely.

Plus, the unions who own the Democrats don’t want a tax election before 2012, because they wish to use their campaign cash to win a 2/3’rds super majority in the Legislature at the November 2012 general election.

So, it is the Schwarzenegger years all over again = budget gridlock and accounting tricks. But, Brown vetoed THAT budget today – so, what is next?

All eyes and ears in the California Legislature today will be on California Controller John Chiang to see if they get paid.

Bet they move fast, if their paychecks are withheld.

Flap’s California Morning Collection: June 16, 2011

Posted Posted in California, California Budget, California Three Strikes Law, Flap's California Morning Collection

A morning collection of links and comments about my home, California.

Well, California has a “balanced” budget, albeit a Democrat majority vote one and questionably balanced. It will be within the purview of California State Controller John Chiang to decide whether the passed budget legislation is indeed balanced or he is empowered by California law to ding (meaning withhold) the paychecks of California Legislators.

California Governor Jerry Brown continues (supposedly) to negotiate with the Republicans in order to schedule a tax election or pass tax extensions to make budget revenues easier for him and the majority Democrats. No deal so far.

Brown who can either sign, allow it to become law or veto the budget has scheduled a High Noon 12 PM PDT news conference and we will all learn more then – if it doesn’t leak out before = likely. Brown has 12 days to take or not take action.

So, on to the links.

California Democrats pass budget with taxes, cuts and tricks

Democratic lawmakers passed a rare on-time state budget Wednesday over Republican objections, but the plan — balanced with a blend of taxes, cuts and clever accounting — faces an uncertain fate at the hands of Gov. Jerry Brown.

After warning for months that devastating cutbacks to schools and public safety would occur without the renewed taxes that Brown has sought but has been unable to sell to Republicans, Democrats averted the most severe reductions.

But they did so by returning to old strategies that have papered over California’s deficits for years: delaying the payment of billions in bills, skipping debt repayments and penciling in money that may not materialize.

Using their new authority to pass a budget on a majority vote — and under threat of lost pay if a spending plan was not approved by Wednesday — the Democrats pushed through provisions to hike car registration fees and local sales tax rates and force online retailers, such as Amazon.com, to collect sales tax.

The plan would also cut more deeply into higher education, the courts and local law enforcement.

“It is not perfect. It is Plan B,” said Senate President Pro Tem Darrell Steinberg (D-Sacramento), who nonetheless called the package “worthy of the governor’s signature.”

Democrats said they hoped Brown would continue to negotiate with Republicans for the taxes he wants, to make some of their cutbacks unnecessary. But their blueprint puts Brown in a political pickle. It asks him to break two pledges central to his campaign for governor: no new taxes without voter approval and no more smoke-and-mirrors budgeting.

Brown has not said whether he will sign the document; he has 12 days to decide.

Fight Breaks Out on California Assembly Floor During Budget Debate

A fight broke out Wednesday on the Assembly floor as Assemblyman Warren Furutani confronted Assemblyman Don Wagner over comments deemed offensive.

The two members jawed angrily in each other’s faces before Furutani, D-Gardena, appeared to give Wagner a shove, prompting several colleagues to separate them in the final minutes of the day’s budget session.

The dispute brought the house to a standstill for a couple of minutes during debate over a controversial redevelopment plan.

The two-bill proposal compels redevelopment agencies to backfill state coffers and give money to local governments under threat of elimination. Wagner, R-Irvine, testified that it was comparable to a shakedown scheme and referred to the popular HBO show, “The Sopranos.”

That prompted Assemblyman Anthony Portantino, D-La Cañada Flintridge, to demand an apology for the Sopranos reference “as a proud Italian American.”

Wagner retorted that he’d “apologize to any Italian Americans who are not in the Mafia and engaged in insurance scams,” setting off a murmur among lawmakers.

Minutes later, Furutani and Wagner were in each other’s faces and had to be broken up by three other lawmakers. The back of the Assembly chamber was soon flooded with legislative aides who came to see the commotion.

Democrats’ budget bills at a glance

The budget bills Democrats approved Wednesday include a combination of tax and fee increases, spending cuts and revenue assumptions. Democrats and Gov. Jerry Brown previously took steps to reduce the state’s deficit by $11.4 billion, primarily through spending cuts.

Here are some of the key provisions of the latest bills:

Taxes and fees:

— $12 annual fee on car registrations to pay for Department of Motor Vehicle services. The department’s costs previously were covered by a voter-approved increase in the vehicle license fee increase that expires July 1.

— $150 annual fee on homes in rural areas that depend on the California Department of Forestry and Fire Protection for wildfire protection.

— A quarter-cent local sales tax. A 1 percent increase in the state sales tax is scheduled to expire June 30, so consumers would see a net reduction of three-quarters of a cent in the sales tax they pay on goods.

— Requiring online retailers such as Amazon.com to collect California sales taxes, a change projected to net $200 million annually.

Additional spending cuts:

— University of California, $150 million.

— California State University, $150 million.

— California courts, $150 million.

— County offices of education, $50 million.

Field Poll: California voters favor revamping “three-strikes” law

Most California voters see a court order to reduce the state’s prison population by 30,000 inmates as a serious problem, and nearly three out of four say it is time to revamp the state’s “three-strikes” law, a Field Poll out today finds.

The poll comes on the heels of last month’s ruling by the U.S. Supreme Court ordering California to address its prison overcrowding problem, and 79 percent of those surveyed said the matter is serious.

But there were not similar margins of support for Gov. Jerry Brown’s plans to transfer lower-risk inmates from prisons to county jails.

The poll found 51 percent of voters support the plan, with 37 percent saying it is a bad idea. Yet less than a majority of voters would support an extension of temporary tax increases to pay for it, the poll found.

The most significant finding came when voters were asked whether the state’s three-strikes law, which passed in 1994, should be modified to allow judges and juries more discretion when sentencing a criminal for a third felony.

The poll found 74 percent of voters would support allowing that discretion to ease prison overcrowding, with 24 percent opposed.

Enjoy your morning!


Flap’s California Morning Collection Archive

Amazon Internet Sales Tax Legislation Passes as Part of California Budget

Posted Posted in Amazon Tax, California, California Budget, Internet Sales Taxes, Jerry Brown

So, on to California Governor Jerry Brown for either his signature or veto.

For only the second time in 25 years a California spending plan was passed on time. One interesting part of that balancing act is an online sales tax, something lawmakers have been reluctant to approve in the past.

It seems like a no-brainer, the state needs money, so why not tax purchases online? We pay a tax when we buy the same products in the store. But critics say this tax could actually hurt some businesses in California. Those big online retailers, like Overstock and Amazon, have found a way around this law in other states. They just sever ties with businesses they deal with in the states with the tax. So companies that sell product to Overstock could lose Overstock as a client. This has put some small companies out of business.

The California state legislature needed to close a $9.6 billion deficit and this is expected to bring in $200 million a year in revenue. Some so called brick and mortar stores support this; they think it’s unfair that their product is taxed, but the same items online are not. The big question is do the benefits outweigh the possible side effects?

So, what happens next?

California Governor Jerry Brown can either sign the legislation, veto or allow it to become law. Brown has scheduled a 12 noon PDT new conference on the California budget and maybe we will know more then.

No word from Amazon or Overstock.com, but I bet their attorneys are preparing to file the lawsuits as soon as Brown makes his decision.

There will probably be a few court challenges. 

One in federal court regarding the constitutionality of the nexus and the Commerce Clause. The other in California State Court regarding the imposition of a new tax without the 2/3’rds vote requirement of California Proposition 26.

Stay tuned…..and in the meantime, read this piece about yesterday’s legislative vote and what may portend for California.

Flap’s California Morning Collection: June 15, 2011

Posted Posted in California, California Budget, Flap's California Morning Collection, Jerry Brown, Tom McClintock

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 plan

Highlights of the Democratic budget package that lawmakers plan to vote on Wednesday, according to Assembly budget staff:


$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


$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


$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


$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!

Flap’s California Morning Collection: June 14, 2011

Posted Posted in California, California Budget, Flap's California Morning Collection

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!


Flap’s California Morning Collection Archive