Heat Halts Sacramento Light Rail

Apparently the budget isn’t the only thing that has come to a screeching halt in Sacramento.  KXTV is reporting that extreme heat affected light rail service overhead wire connections at 7th and K streets Monday, disrupting train service shortly after 3 p.m.

Sacramento Department of Transportation crews were working to repair the connections for the Blue and Gold Line services.   

Passengers traveling on the light rail from Meadowview and Folsom toward the central business district were urged to board buses at 16th Street. Travelers going from Interstate 80 at Watt Avenue should board buses at Alkali Flat.

Until the train service is restored, buses will travel between the Alkali Flat/La Valentine light rail station along K Street to the Archives Plaza station. The buses will stop at each station on the way to pick up and drop off light rail passengers.

Information courtesty of  News10/KXTV/ All Rights Reserved

Budget Debate Continues – Sen Bob Dutton Speaks on Oil Severance Tax

Sunday night Assembly Democrats passed a $23.4 billion package of cuts, tax and fee increases, and accounting tricks designed to close a gaping hole in the budget for the fiscal year that starts Wednesday.  On Monday, the California Senate followed suit acting upon the same package of legislative measures.

The Democratic majority vote solution is comprised of a package of bills that made deep cuts in state spending, raised taxes on cigarettes, imposed a new tax on oil production and raised or imposed new fees on property insurance policies, vehicle registration and drivers licenses. 

Part of the debate circulated around the new oil severance tax.  During the Senate Floor debate Senator Bob Dutton (R-Rancho Cucamonga) rose to speak regarding the potential effect of the new oil severance tax on jobs in California:

Governor Arnold Schwarzenegger made it clear this morning he won’t sign a package of taxes and cuts approved by Assembly Democrats last night as a way of balancing the state budget.

“I will veto any majority vote tax increase bill that punishes taxpayers for Sacramento’s failure to live within its means,” the governor said in a prepared statement. “The Legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline. We do not have time for any more floor drills or partial solutions. It’s time for the Legislature to send me a budget that solves our entire deficit without raising taxes.”

It’s sort of sun-rises-in-the-east news, since the governor had already said he did not favor further taxes or fees as part of the budget-balancing solution. But it does blunt the effects of the squeeze play Democratic legislators were attempting.

Senate Pro-Tem Darrel Steinberg (D-Sacramento) announced that the Senate will reconvene this afternoon at 4pm to continue budget discussions.

Democrat Majority Budget “Fix” Advances to Senate

Typically, tax increases and budget votes require a two-thirds majority. Since just over one third of the Assembly is controlled by Republicans, that means Democrats need at least a handful of GOP votes.  However, late Sunday night Assembly Democrats passed a $23.4 billion package of cuts, tax and fee increases, and accounting tricks designed to close a gaping hole in the budget for the fiscal year that starts Wednesday.  The vote was made without a single Republican vote courtesy of a legislative loophole which requires only a simple majority vote for “fee” increase.

Sunday night’s package holds nearly $2 billion in tax and fee hikes including: a 9.9 percent tax on oil production, a $1.50-per-package tax on cigarettes and a $15 per vehicle registration fee.

While tax hikes normally require two-thirds approval, Democrats argued that by eliminating an 18-cent per-gallon excise tax on gasoline, the net revenue to the state becomes zero and thus doesn’t represent a tax hike. Sunday’s bills then would replace the excise tax with an equivalent fee, which Democrats argue does not require a two-thirds vote.

Bloomberg’s budget team reports ,”Democrats, who control the legislature, are at an impasse with Republicans and Schwarzenegger over whether to make up the difference with spending cuts or tax increases. Absent a fix by July 1, the state will begin issuing IOUs to pay bills.

The State Assembly spent nearly two hours Sunday night debating Assembly Bill 39, which included the fee increases.   The bill ultimately passed, 44-30, with two Democrats voting no.

While the plan was debated on the floor, Bass was exchanging words with Senate Minority Leader Hollingsworth and negotiating with the governor on an alternative and.

The leader of the Assembly’s minority Republicans, Sam Blakeslee (R-San Luis Obispo), said the proposal is illegal and Democrats would set back budget negotiations by passing it.
Meanwhile the Senate adjourned at 9:30 p.m.  Senate President Pro Tem Darrell Steinberg (D-Sacramento), said that senators would take up the majority vote package this morning.

Gov. Arnold Schwarzenegger has vowed to veto any budget package that includes tax increases, and he vetoed a budget last winter that contained a similar tax ploy.

CA Budget: Sen Republican Leader Hollingsworth responds to Assm Speaker Bass

Sacramento - Senate Republican Leader Dennis Hollingsworth (R-Murrieta) issued a statement regarding Assembly Speaker Bass’ comment about reforming government.

Speaker Karen Bass: “Any attempt by the Governor and Senate Republicans to push for those right now would be immoral.”

“The Democrats need to get serious about solving the 24 billion dollar problem.  The people of California clearly told us on May 19th that they expect us to do our jobs and solve this problem with no new taxes.  Republicans, the Governor, the Treasurer and the Controller all agree we have a 24 billion dollar problem,” Hollingsworth said.

“One of the few protections the people have against unlimited taxes being placed on them is the 2/3 vote requirement.  Reaching further into the pockets of California taxpayers to pay for bloated programs, continued fraud, abuse and wasteful spending is immoral.”

CA Budget: Sunday Night Lights

SACRAMENTO (AP) — California lawmakers are preparing to meet again to consider California’s $24.3 billion budget shortfall before the state is forced to start issuing IOUs.

Both houses of the Legislature have scheduled Sunday night sessions, although Democrats and Republicans remain divided about how to solve the deficit. Timing is running short, with the new fiscal year beginning Wednesday.

Democrats met with Republican Gov. Arnold Schwarzenegger a day earlier. He offered new moneysaving proposals on funding state pension benefits and administering health and human services programs.

Democrats want to avoid IOUs being sent to state contractors by cutting $11 billion in spending and using other solutions to save cash. They would address the rest of the deficit later.

Schwarzenegger and Republicans want to address the entire deficit at once.

The Associated Press
Copyright 2009 / All Rights Reserved

GOP lawmakers balk at Democrats’ California budget plan

California’s budget mess got even messier Wednesday, with the failure of legislators to reach a compromise on spending cuts, the state controller warning he will issue IOUs next week instead of checks, and no clear idea of what to do next.

Facing a $24 billion deficit, Democrats put up for votes a bill containing about $11 billion in spending cuts. The measures required two-thirds majorities to pass but fell short in both chambers on mostly party-line votes, with Republicans saying the reductions did not go far enough. Democrats then called it a day rather than stage a drawn-out spectacle.

Democrats also proposed $1.9 billion in tax increases on oil extraction, tobacco and car registrations, but those were not put up for a vote Wednesday given fierce Republican opposition.  The following video clip is from Senator Roy Ashburn’s (R-Bakersfield) Senate Floor speech during yesterday’s budget debate.

Ashburn Speech on Democrats Unreal Budget Proposal from CA Senate GOP on Vimeo.

The question now is whether the two sides can find a compromise in time to avoid a fiscal meltdown. Both parties have drawn lines in the sand.

CA Assemblyman Juan Arambula re-registers as an Independent

A California assemblyman has split from the Democratic Party as both houses of the Legislature head toward a contentious vote this week on a plan to bridge the state’s $24 billion budget gap.

Juan Arambula confirmed today that he has re-registered as an independent.

Formerly a moderate within the Democratic caucus, Arambula is scheduled to be termed out next year from his Central Valley district, which encompasses portions of Fresno and Tulare counties.

It is not immeditely clear how Arambula’s decision will affect the coming budget vote, which includes more than a dozen bills that will require a two-thirds majority in both houses to take effect immediately.

Arambula was contacted just as one of his Assembly committee meetings was scheduled to start. He said he did not have time to discuss his reasons prior to the meeting.

Two weeks ago, Assembly Speaker Karen Bass named Arambula to head the Assembly Public Safety Committee in a shuffle necessitated by the departure of former Assemblyman Curren Price to the Senate.

Arambula was removed by Bass from the Assembly Budget Committee and a budget subcommittee on state administration upon being named chairman of the public safety panel.

Arambula has a reputation for speaking his mind and not necessarily voting in lockstep with the Democratic caucus.

Three years ago, then-Assembly Speaker Fabian Núñez ordered Arambula to move into the Assembly’s “doghouse,” a shoe-box sized Capitol office often reserved for lawmakers in disfavor with their party’s leader.

Arambula was relegated to the tiny, fifth-floor office of 807 square feet after refusing to fall in line with Democratic leadership on a record $37.3 billion bond package passed Friday.

Arambula also was stripped at the time of his chairmanship of the Assembly Committee on Jobs, Economic Development and the Economy.

Weeks later, Núñez relented, reinstating Arambula as committee chairman and offering his old office accommodations back.

Arambula is a former member of the Fresno County Board of Supervisors and the Fresno Unified School Board.

The son of immigrant farm workers, Arambula possesses a master’s degree in educational administration and policy analysis from Stanford University and a law degree from the University of California, according to the biography posted on his Web site.

He lives in Fresno with his wife, Amy. The couple has four adult children.

California’s Budget: Tough Choices or Budget Magic?

One of the inherent problems with California’s budget is that time and again lawmakers have managed to put off difficult decisions and pending “disasters” through a series of  band-aid budgets, shell games and ‘kick the can down the road’ solutions.  Now the state faces a $24 billion deficit, and

The menu of options to close California’s massive deficit is short and seemingly clear: Cut spending, raise taxes or borrow.  But faced with a money crunch the likes of which the Golden State has never seen, Gov. Arnold Schwarzenegger and legislators have pulled a less obvious tool out of the box. Call it budget magic – the simple reincarnation of budgetary gimmicks and paper mache solutions.  Mike Zapler looks at some of the “proposed solutions”: 

“Need an extra $2.3 billion? Easy — just make people pay more of next year’s taxes this year, by increasing paycheck withholdings and estimated tax payments.

“How about selling a chunk of a state insurance fund? That’s good for a cool $1 billion on paper, even if experts say it’s highly uncertain the sale would fetch that much, if it can be executed at all.

“Expenses still too high? Here’s a really creative one: Push back state employees’ monthly paychecks in June 2010 by a single day — from June 30 to July 1 — and thus onto the next fiscal year’s books. Just like that, $1.2 billion “saved.”

Those are just some of the maneuvers — or, to use a less charitable term, gimmicks — that the governor and lawmakers have suggested to help fill a $24 billion shortfall through June 2010. The proposals add up to about $10 billion, depending on what one defines as a gimmick.

Yet as Reason Online points out, finding places to cut costs without reducing the state to post-apocalyptic squalor is not the difficult task some lawmakers would make out to be.  As explained in California’s political newspaper Capital Weekly a few weeks prior:

[N]ew revenue estimates released by the Department of Finance this week place the state’s general fund revenues at $85.9 billion—nearly $4 billion higher than they were just five years ago.

  

Even with the depleted funds caused by plunging home prices and a global economic slowdown, Gov. Schwarzenegger’s budget is still larger than his first budget in the 2004-05 budget year.

 

But in that first budget year, state spending was at $79.8 billion. Over the next two years, state spending jumped by more than 21 percent, to more than $101.4 billion in the 2006-07 budget year.

So the question still remains.  Will lawmakers sit down and make the difficult decisions that lay before them?  Or will they once again take the easy way out through a game of budgetary charades, leaving perhaps an even bigger problem for the coming year?

 

Budget Update: Schwarzenegger says he’ll veto Dems plan for balancing budget

Democrats unveiled their spending proposal Wednesday, and got some tepid reviews from the governor and Republican lawmakers.

Capitol Weekly reports,  “The state’s budget standoff seemed either to be approaching its final chapter, or on the verge of unraveling entirely, depending on your vantage point in the state Capitol Wednesday. “Democratic leaders met with the governor to walk him through their new, $23.3 billion budget plan Wednesday morning. Afterwards, Schwarzenegger walked out of the meeting to face reporters, and discuss all the things in the plan that he didn’t like.

“I cannot sign a budget that has tax increases in it,” Schwarzenegger said. He also criticized Democrats for adopting temporary budget solutions that did not solve the state’s fundamental spending problem, and for failing to cut state worker pay.

You can watch exerpts of the governor and legislative leaders discussing the Democrats’ budget here.

One thing is clear — the budget will have to be tweaked before it is signed. 

The LAT’s budget team reports, “Gov. Arnold Schwarzenegger told the leaders of the Assembly and Senate on Wednesday to scrap their plan to raise taxes to help close the state’s budget deficit, but the two Democrats insisted they would move ahead next week with a vote of the full Legislature.”

Mike Zapler loks at the major differences between the governor’s plan and the Democrats’ proposal . “The Democratic proposal has much in common with Schwarzenegger’s budget plan, calling for cuts to education, the social safety net and prisons. But the differences between the two approaches threatened to trigger a protracted stalemate, despite warnings that the state must pass a budget soon to avoid running out of money next month.

California puts 90-day hold on foreclosures

California is imposing a 90-day moratorium on housing foreclosures under a new law that took effect Monday.

The California Foreclosure Prevention Act, or Assembly Bill X2 7, which Governor Arnold Schwarzenegger signed in February, is meant to push banks and loan servicers into lowering mortgage payments of homeowners in financial trouble.  Lenders must prove they tried to modify the delinquent loans before they can begin foreclosing.  The California program reflects a similar to the Obama administration’s Making Home Affordable program that began in March.

But supporters acknowledge the California Foreclosure Prevention Act won’t stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.

While the latest moratorium is an effort by lawmakers to slow the tide and give homeowners every possible means of saving their home, it is important to remember: this does NOT immediately stop foreclosures. 

• The guidelines concerning this new policy are as follows:
• The loan was recorded between Jan. 1, 2003 to Jan. 1, 2008;
• The loan is the first mortgage or deed of trust;
• The borrower occupies the property as their principal residence when the loan becomes delinquent; and,
• The Notice of Default (NOD) has been recorded on the property.
• This policy does not apply to lenders who have already complied with an existing mortgage modification program which meets national guidelines, homeowners who have already surrendered the property, filed bankruptcy, or contracted with another organization to avoid foreclosure.

Lenders and loan servicers that already have a comprehensive and systematic loan modification program in place are exempt from the law. Such programs call for loans to be modified by lowering interest rates for at least five years, deferring or reducing part of the principal, or providing up to 40 years to repay the loan.

For more information go to the California Department of Corporations site where the official regulations spelling out the program are listed in detail.

Gallup Reports: “Conservatives” Are Single-Largest Ideological Group

Just months removed from the election of President Barack Obama Gallup has reported new polling data showing that ”conservatives” comprise the largest ideological group in the United States with nearly twice as many Americans saying they are “conservative” as those claiming to be “liberal”.

 

According to the study, 40% of Americans interviewed in national Gallup Poll surveys describe their political views as conservative, 35% as moderate, and 21% as liberal.  This represents a slight increase for conservatism in the U.S. since 2008, returning it to a level last seen in 2004. These annual figures are based on multiple national Gallup surveys conducted each year, in some cases encompassing more than 40,000 interviews. The 2009 data are based on 10 separate surveys conducted from January through May. Thus, the margins of error around each year’s figures are quite small, and changes of only two percentage points are statistically significant.

To measure political ideology, Gallup asks Americans to say whether their political views are very conservative, conservative, moderate, liberal, or very liberal. As has been the case each year since 1992, very few Americans define themselves at the extremes of the political spectrum. However, “Conservatives” are still the single largest ideological group.

One of the more interesting segments of the study comes from Gallup’s data regarding gender and political orientation.  While young voters and Latinos are being widely credited with helping propel Barack Obama to a commanding victory, but an even greater source of support for Obama appears to have come from unmarried women, an important but often overlooked demographic.  According to US News, unmarried women – a group that includes single, separated, divorced, or widowed women – voted for Obama over Republican opponent John McCain by a whopping 70 to 29 percent in November’s election.   

However according to Gallup, conservatism outweighs liberalism among both genders: 

The bottom line from Gallup: Although the terms may mean different things to different people, Americans readily peg themselves, politically, into one of five categories along the conservative-to-liberal spectrum. At present, large minorities describe their views as either moderate or conservative — with conservatives the larger group — whereas only about one in five consider themselves liberal.

Deadlines, HUH… What are they good for?

Monday’s the deadline for Gov. Arnold Schwarzenegger and the Legislature to close a $24.3 billion deficit so the state controller can get emergency loans to help California avoid running out of cash next month. But the budget deficit remains far from being solved, and without a solution the state will probably be forced to delay payments to local governments, vendors and others at the end of July.

The deadline itself became moot last week when Schwarzenegger refused to allow Controller John Chiang to take out emergency short-term loans. Instead, the governor gave the Legislature an ultimatum: Solve the budget, or shut down government operations.

From Monday on, Schwarzenegger said, every day that passes without closing the deficit is a step toward insolvency.

“Now, the controller has already said that the deadline is June 15th,” the governor said Friday in a public appearance in Escondido (San Diego County). “In fact, this week I sat down with the controller and also with the treasurer. We all agreed that after June 15th, every day of inaction jeopardizes our state’s solvency and our ability to pay schools and teachers and to keep hospitals and ERs open.”

The state’s priorities for getting things paid fall in this order: education and debt payment, special funds, pension obligations, payroll and Medi-Cal payments.

Tic toc on the solvency clock:  Only 47 days left to MELTDOWN!

50 Days Till Meltdown?

State Controller John Chiang released the state revenue report for May today, and bottom line: Things are getting worse.

Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said.

He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.

“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement.

Reuters has more on the story here.

SEIU Airs TV Ad Backing New Taxes

One of California’s most powerful union groups is spending $1 million in a television advertising blitz to urge Gov. Arnold Schwarzenegger and the Legislature to solve the state’s budget crisis with both spending cuts and new taxes.

As recently noted, the American Federation of State, County and Municipal Employee Union is circulating pledge forms to lawmakers that might have attracted takers in budget battles past.  The union wants the legislators to sign statements of support for up to $44 billion in new or higher taxes on the wealthy, oil companies, tobacco and other industries, products and people. 

The ad will begin airing starting today in the Sacramento, Los Angeles, San Francisco and San Diego media markets and essentially challenges Schwarzenegger’s claim that voters who rejected the May 19 special election budget reform initiatives were casting votes against new taxes.

Senate Dems Proposal: Tap Into Rainy Day Fund

“Senate Democrats unveiled a budget plan Tuesday that would stave off the deepest proposed cuts to California’s health, welfare and student-aid programsby dipping heavily into the rainy-day fund (RDF) that Gov. Arnold Schwarzenegger wants set aside in case the economy continues to sour,” the LAT’s Shane Goldmacher reports.

The Senate Democrats’ plan he outlined would save those programs largely by tapping into a $4.5-billion reserve included in Schwarzenegger’s budget. The Schwarzenegger administration has argued that the money should be tucked away in case the economy continues to suffer or program costs exceed those budgeted, such as for fighting wildfires. Democrats would lower the reserve to as little as $500 million.

It would appear that in exchange for dipping into the proposed RDF Senate Democrats are willing to accept $13 billion of $16 billion in cuts proposed by Gov. Arnold Schwarzenegger.

Senate President Pro Tempore Darrell Steinberg, (D-Sacramento) said they also would back $8 billion in other solutions – largely funding shifts and accelerated personal and corporate tax withholding (aka more budget gimmicks)– that the governor has proposed to close a $24.3 billion deficit.

States use rainy day funds (RDFs), or budget stabilization funds, as a cushion against financial shocks.  All states with RDFs regulate deposits into and withdrawals out of those funds. Most states build RDFs through the deposit of year-end surpluses. Withdrawal rules generally specify that funds may only be used to cover budget shortfalls or emergencies when authorized by the governor or legislature.

Schwarzenegger declared the Democrats’ approach to dealing with the state’s projected $24-billion deficit “hallucinatory.”

In an Era of Cuts, Lawmakers Continue to Take Full Salary

In a year of multibillion-dollar deficit, major program cuts and mandatory salary reductions for state and Capitol workers, state legislators still make a rather nice living.

Four of every five lawmakers are accepting full pay of $116,208.  Besides salary, lawmakers are entitled to about $35,000 annually in tax-free per diem for living expenses, plus use of a leased vehicle, with gasoline and maintenance.  Only seventeen of the 120 legislators have rejected the car and six have turned down per diem.

The SacBee reports that California’s legislators are the nation’s highest paid but make considerably less than many top officials of large cities, counties and school districts, records show. Upon leaving office, legislators receive no pension or health benefits.

While the Senate and Assembly have control over budgets and programs affecting millions of Californians, they can’t control the pay of their own members, which is set by an independent commission. Voter passage of Prop 112 nearly two decades ago created an independent panel of gubernatorial appointees to set salaries for lawmakers and constitutional officers.  The commission voted last month to impose an 18 percent pay cut, which would drop legislators’ salaries by $20,917 annually – from $116,208 to $95,291.

But there’s a catch: California’s constitution allows state officeholders’ salaries to rise – but not fall – in the middle of their terms, so the pay cut cannot be imposed until December 2010 for 100 lawmakers and 2012 for 20 others.  However, lawmakers can impose their own pay cut by requesting that the State Controller issue a deduction.

In fact three legislators immediately cut their salaries by the 18 percent approved by the pay commission – Assemblyman Mike Eng, D-Monterey Park; Sen. Abel Maldonado, R-Santa Maria; and Sen. Alan Lowenthal, D-Long Beach.

Are all legislative leaders likely to volunteer to take an 18 percent pay cut before it’s required by law? No. But if they did, it would transform Californians’ perceptions of state leaders – showing them as actual leaders.  It would create a sense that we are all in this together.

Instead they continue to forge a two tiered system that demonstrates what’s good for the gander is not good for the goose.  They have shown a willingness to quickly end welfare-to work programs and eliminate health insurance for 1 million children from low-income families.  They have demonstrated a willingness to cut the pay of teachers, public safety officers and government workers – yet they seem unwilling to suffer alongside  the common man.  Then again, perhaps its harder than I think to live on a mere $150,000 a year.

And who knows — next time legislative leaders go out on a limb to craft a compromise on a budget, as they tried to do with the May 19 propositions, voters might actually respect them enough to pass it.

California Budget: Is Off-shore Drilling Part of the Solution?

When the topic of off-shore drilling comes up, it’s difficult to forget Cosco Busan and the disastrous global spills which followed.  However, new technology has significantly decreased the risks of off-shore drilling allowing for more efficient extraction of the resource with little risk.  Now California’s budget deficit has once again ignited talks of off-shore drilling.

An estimated 18 billion barrels of oil are believed to lie below off-limits coastal waters within 50 miles of land. In fact approximately 95% of the known reserves off the coast of California are less than 50 miles out – but currently off limits. In addition to these massive oil reserves, there lies an estimated 10 trillion cubic feet of natural gas just off shoreline.

“The Schwarzenegger administration has not given up hopes of renewing off-shore oil drilling as part of the budget deal . Capitol Weekly’s John Howard reports, “An attempt to make an end-run around the three-member State Lands Commission and place authority over offshore oil leasing in the hands of the governor’s budget-writing office is being pushed by the Schwarzenegger administration over the opposition of many environmentalists, the commission itself and Democrats who represent coastal areas.

“This project is good for California,” Tom Sheehy, a ranking official of the state Department of Finance, said at a recent Lands Commission hearing about the lease sought by Plains Exploration & Production, or PXP, a Texas-based independent oil and natural gas producer. The company wants to drill slant wells through from a federal platform just outside state waters off Santa Barbara County.

The plan, which would be in effect through 2022, is known as the Tranquillon Ridge project.  And according to the governor’s office in May, allowing the project would bring $100 million in revenue in 2009-2010 and $1.8 billion over the next 14 years. 

The State Lands commission rejected the proposal on a partisan, 2-1 vote earlier this year.

“In the wake of the Commission’s decision, a new effort has emerged in the Capitol to get the project approved. A draft of bill language is circulating before the budget conference committee that would take authority over the lease away from the State Lands Commission – which has handled offshore oil leases since 1938 – and give it instead to Schwarzenegger’s Department of Finance.”

LA Times Story Sheds Light on California’s Budget Debacle

For the average citizen, California’s budget debacle is providing tremendous insights into some of the reasons California faces such a difficult task in digging its way out of a massive budget hole. 

Example 1A, political influence of the unions.  Today the LA Times takes a look at how California’s budget crisis has opened a rift between unions and Democrats.  One of the more intriguing quotes from the story was this:

The union leaders say they are appalled that Democratic leaders are talking openly now about decimating government programs without first making a stand for bigger, broader tax hikes that could substantially offset budget cuts.

Apparently the unions weren’t part of the majority electorate that rejected Propositions 1A through 1E on May 19th.  Propss 1A through 1E would have increased taxes by $16 billion and were defeated by a nearly two-to-one margin.

Despite the defeat, the the American Federation of State, County and Municipal Employee Union is circulating pledge forms to lawmakers that might have attracted takers in budget battles past.  The union wants the legislators to sign statements of support for up to $44 billion in new or higher taxes on the wealthy, oil companies, tobacco and other industries, products and people.

The story is a vivid demonstration of how the Capitol’s usual political alliances – which some argue have helped wrought the current fiscal climate - are being tested by the state’s severe financial problems as interest groups scramble to hold onto as much as possible of the state’s shrinking coffers. 

The other side of the story is pointed out by Reason Online.  The free market think tank believes that finding places to cut costs without reducing the state to post-apocalyptic squalor is not the difficult task some lawmakers would make out to be.  As explained in California’s political newspaper Capital Weekly last week:

[N]ew revenue estimates released by the Department of Finance this week place the state’s general fund revenues at $85.9 billion—nearly $4 billion higher than they were just five years ago.

  

Even with the depleted funds caused by plunging home prices and a global economic slowdown, Gov. Schwarzenegger’s budget is still larger than his first budget in the 2004-05 budget year.

 But in that first budget year, state spending was at $79.8 billion. Over the next two years, state spending jumped by more than 21 percent, to more than $101.4 billion in the 2006-07 budget year.

The world politic is not everyone’s cup of tea.  However, as the current budget battle continues to unfold - for the average concerned taxpayer - it will provide new insights into the realities of Calfiornia politics.

Schwarzenegger proposes 15% flat tax for California

Gov. Arnold Schwarzenegger has reminded a commission now studying an overhaul of the state’s tax system that no idea should be off the table.  Still facing a $24 billion deficit, California  must cut expenses or find some new money — or both — and must do it before the month is out.

The governor told the editorial board of the Sacramento Bee that he hoped the commission would not be afraid to propose something like “straight tax.”  The Governor suggested a 15% rate.

There are two principal arguments for a flat tax—growth and fairness. Many economists are attracted to the idea because the current tax system, with its high rates and discriminatory taxation of saving and investment, reduces growth, destroys jobs, and lowers incomes.  By dramatically lowering rates and ending the tax code’s bias against saving and investment, it would boost the economy’s performance when compared with the present tax code. 

Shifting California to a flat tax system is not a new idea.  Previously the Pacific Research Institute (PRI), a free-market think tank based in California, released the results of a study to determine a revenue-neutral flat income tax rate for California. The report found that a 3 percent flat income tax for all Californians would help smooth the revenue roller-coaster from economic booms and busts.  Coupled with the elimination of current tax loopholes, PRI suggested that a 3% rate could result in an extra $10 billion flow into the state coffers.  That’s virtually half the current deficit. 

The flat tax does have its detractors who suggest that a it taxes the wealthy at the same rates as the poor.  Of course for those who don’t find the flat tax agreeable, there is always the Fair Tax.

In State Budget Cross-hairs: Capitol staff pay YES – Lawmakers pay & per diem NO

Working to close a $24 billion dollar deficit, Capitol Weekly now reports that Legislative leaders are considering forced furloughs for more than 2,000 Capitol staffers.  Each furlough day per month would amount to a 4.5 percent pay cut.

Capitol sources said the possibility of furloughs was floated privately among the leadership of both houses. Legislative employees, unlike most Civil Service, state-government workers, are not subject to collective bargaining agreements. Capitol workers could be furloughed through administrative action not requiring legislation.

Yet as Legislative leaders consider furloughs for staff, one item seems to remain off radar – per diem.  The average legislative and executive staff salary is $63,790, yet as one might imagine State legislators annual salary rates slightly higher.  Lawmakers earn $116,098 a year plus $173 in tax free per diem for each day they are in session. This “desk” per diem, as it’s called, is designed to cover the cost of keeping a second home in Sacramento.

The current rate was increased in October from the prior rate of $170.  Even then California’s economy, jobs, revenues and budget were hurting, but that did not stop the state Victim Compensation and Government Claims Board from slightly raising the per diem rate.

The Board is required by state law to set per diem no lower than the rate paid to federal employees traveling to Sacramento, currently $173.  For the state’s 120 Assembly and Senate members, the increased rate adds about $600 per year to their checkbook — maybe more, maybe less, depending upon the duration of a legislative year. For taxpayers, the hike amounts to about $72,000 annually.

Senator Harman makes AG bid official

Republican state Sen. Tom Harman has formally declared his intentions to run for attorney general in 2010.  Senator Harman made his announcement official via the following YouTube announcement:

Also eyeing the race is former state Senator, Republican Chuck Poochigian, who lost to current Attorney General Jerry Brown in 2006. 

The expected Democratic field includes District Attorney Kamala Harris, Los Angeles City Attorney Rocky Delgadillo,  Assembly Majority Leader Alberto Torrico of Newark.   Assemblymen Ted Lieu of Torrance and Pedro Nava of Santa Barbara as well as former lawmaker Joseph Canciamilla of Pittsburg are also considering a run at the office.

California Budget: The slashing of state agencies begins

A legislative budget committee voted unanimously Wednesday to eliminate state agencies altogether, taking dead aim at an administrative layer of gubernatorial bureaucracy that oversees most of the state’s departments.

The 10-member panel — six Democrats and four Republicans — also voted to eliminate the Office of the Secretary of Education, which lawmakers said is unnecessary because the state already has an elected Superintendent of Public Instruction and a State Board of Education.

The Governor recommended last month that lawmakers consolidate more than a dozen boards and commissions to save $50 million. Schwarzenegger also began laying off 5,000 rank-and-file state workers. The Legislature’s move Wednesday appeared to be a sharp retort directed at higher-paid administrative appointees who oversee the departments that provide direct state services.

Under the agencies move, the state would dismantle at least eight offices, from the State and Consumer Services Agency to the Environmental Protection Agency, and eliminate any duplicative administrative positions. The committee did not know how many positions would be eliminated or how much money would be saved and asked the nonpartisan Legislative Analyst’s Office to report to the Legislature on how far the Legislature could cut.

Schwarzenegger told lawmakers Tuesday that they should eliminate the Integrated Waste Management Board as a first matter of course before making any other cuts. The board would save the state no general fund dollars, but it has become an easy target because it contains ex-legislators who earn six-figure salaries while serving on the board.

The budget conference committee on Tuesday instead recommended that the state eliminate the Department of Conservation and the Department of Toxics Control while moving their functions to the Integrated Waste Management Board (IMWB). The committee also recommended that the IWMB members become part-time and take reduced pay.

“Every year, the governor tries to eliminate and consolidate a number of boards, commissions and departments, and every year the Legislature rejects that,” said Schwarzenegger press secretary Aaron McLear. “We’re thrilled the Legislature is joining the governor’s call to make government more efficient and cost effective and we look forward to debating with the Legislature in the coming days which proposals make the most sense.”

Violent crime rises in Elk Grove, falls nationally

A severe spike in aggravated assaults resulted in an increase in violent crimes for Elk Grove in 2008, the FBI reported Monday.  Nationwide, violent crime was down 2.5 percent from 2007 figures, according to the FBI Uniform Crime Report.

Even as violent crime dropped throughout much of the region, the numbers suggest that Elk Grove was consumed by a crime wave that managed to skip most large U.S. cities, experiencing a 50 percent increase in aggravated assaults.  According to Elk Grove Police, a large percentage of the aggravated assaults are related to domestic violence situations involving family members.

Regarding the sharp increase Elk Grove Police Officer Christopher Trim made the following statement:
In order to determine why there has been an increase in the number of assaults, we need at least two years worth of statistical data to review. A one-year blip does not make a pattern or trend. There are many different factors that shape crime in each city and at this point, it is too early to pinpoint the reason for the increase.

All told, Elk Grove saw more than one assault per day during the last year, with domestic violence accounting for many of the attacks.

The Sacramento Bee has posted an interactive map of Elk Grove assaults from March 2008 to March 2009 HERE.

California Budget: Schwarzenegger Declares ‘Day of Reckoning’

Since defeat of the propositions on May 19, the Golden State governor has said he will respect the “will of the voters” but will have to bring forth the consequences surfaced from the voters’ rejection.  After a week-and-a-half of budget meetings – this morning Schwarzenegger, speaking before a relatively unusual joint session of the Legislature and other constitutional officers, discussed what programs will be terminated.

Declaring that “California’s day of reckoning is here,” Gov. Arnold Schwarzenegger said that California’s budget crisis will require a transformation in state government and creates an opportunity to make government more efficient.

Among the reforms he said should be enacted are:

• Making school textbooks available in digital formats, freeing “hundreds of millions of dollars that could be used to hire teaches and reduce class sizes.“
• Using privately run correctional facilities as part of an effort to reduce the cost of prisons.
• Giving local governments more opportunity to run things without interference from Sacramento.
• Giving school districts more flexibility “and not tie their hands with strict rules like who is allowed to mow the lawn or fix the roof or do the plumbing.”

Schwarzenegger also repeated his earlier calls for the abolition of some state boards and commissions, which he called “redundant,” and selling off some state property.

The governor’s speech comes just four months after he and lawmakers agreed to a two-year budget package that was intended to close a deficit of $42 billion through mid-2010.

You can view the text of Gov. Schwarzenegger’s speech to the Legislature HERE.

Senate Rejects Pet Sterilization Bill

In the midst of a $24.3 BILLION river of red, yesterday the California State Senate took a few moments to reject one of the legislative session’s most controversial bills, aimed at encouraging — or perhaps compelling — dog and cat owners to have their animals neutered.

Proponents argue that each year nearly one million unwanted cats and dogs are born in California. Left un-spayed and un-neutered, these animals propagate beyond the capacity of local animal shelters, animals rescue groups and the community to accommodate them. SB 250 attempts to address the issues associated with California’s dog and cat overpopulation by increasing the state restrictions that apply to dogs and cats and their owners.

Opponents of the bill see things differently. They believe that SB 250 represents a continued trend of State interference in the personal lives of citizens and their pets. They viewed the bill as essentially a statewide mandatory spay and neuter program which presents problematic policy on several fronts:

• Usurps individual rights supplanting it with government’s authority to make fundamental decisions regarding the health and welfare of pets;
• Dictates a one size fits all solution, constricting local control and flexibility;
• Nothing in statute prohibits a local government from instituting their own mandatory spay and neuter ordinances.

Although most animal owners acknowledge the public  health and public finance problems caused by dog and cat  overpopulation, they oppose government requirements for spaying or neutering animals.  While there is support for altering abandoned animals that will be released from public animal shelters, many oppose the mandatory spaying  and neutering of owned animals.  Yesterday’s vote on the Senate Floor seemed to reflect that sentiment. 

However it is expected that the measure will recieve “Reconsideration” allowing one more opportunity for the bill to be heard and voted upon.

UPDATE June 2, 2009 @ 12:42 pm: SB 250 (Florez) affter being granted the courtesy of “reconsideration” the bill is still short of the number of votes required for passage.