Yacht Party Throws Cogdill Into The Ocean

There's some overnight craziness going on in Sacramento. The Yacht Party staged a putsch, deposing their leader in the middle of the night.

Around 11 p.m., a group of GOP senators, unhappy with the higher taxes that Senate leader Dave Cogdill of Modesto agreed to as part of a deal with the governor and Democrats, voted to replace him in a private caucus meeting in Cogdill's office. Shortly before midnight, it was still unclear who would replace him.

Cogdill's ouster could be a major setback to budget negotiations. Cogdill was a lead negotiator on the budget package and had committed to voting for it. If he were removed from his leadership post, a new Senate minority leader would likely try to renegotiate the deal, which lawmakers spent three months forging [...]

Sen. Mark Leno (D-San Francisco), noting that Cogdill helped negotiate the budget and pledged to vote for it, said the Republican's caucus mates should join him -- or replace him.

"You ought to follow your leader or choose a new one," Leno said.

They took Leno's advice.

We've been following this at Calitics all night. Apparently Cogdill, Maldonado, Cox and Asburn abstained from the leadership vote, which was unclear for a while until the rump Yacht Party chose as their leader Dennis Hollingsworth, who's 12 shades of crazy but with the Yacht Party it's all a matter of degree. Everybody knew Cogdill was a goner (including Cogdill, he offered his resignation over the weekend), but what's crucial here is if the negotiations are already over. The big question is this - would Dems have to re-negotiate with a new Senate Minority Leader on this, or are there three votes locked up?

John Myers asked Hollingsworth if he would ask for the budget to be re-opened, and he simply said "a majority of Republicans oppose tax increases." That's a no, to me.

Steinberg's on the floor right now congratulating Hollingsworth and saying "We're tired of waiting." Hollingsworth, in his speech, says "I honestly don't know how the vote is going to turn out." And now voting has begun on the $14.4 billion dollar tax package.

...which failed. All the necessary GOP votes abstained.

Budget Follies: By the Skin Of Its Teeth

A day after Calitics called the roll of the Yacht Party on the budget deal to be voted upon tomorrow in the State Senate, Shane Goldmacher does the same and comes up with just three Republicans who haven't signaled a no vote:

The field of potential Republican votes for the budget compromise in the Senate -- widely viewed as the most challenging caucus to corral support -- has narrowed so significantly that only three members have yet to throw cold water on the tentative deal.

That happens to be the bare minimum of Republican votes needed to pass the $40 billion-plus budget plan.

Those three are Senate Republican leader Dave Cogdill, Sen. Dave Cox of Fair Oaks and Sen. Roy Ashburn of Bakersfield.

Neither Ashburn, Cox OR Cogdill said they would actually vote for the budget, by the way. You can read all of the statements at the link. It should be noted that normally, the Senate would need only two Republican votes to pass, but since Mark Ridley-Thomas' seat is vacant (he was elected to the LA County Board of Supervisors in November) until the March special election, it takes three.

That basically means that full caucus unity is needed from the Democrats, and these three votes would have to come through, for the budget to pass. And we know that Lou Correa is wavering.

And the outside pressure is on. Opportunists like Steve Poizner are slamming the deal, and advocacy groups on both sides are urging a no vote.

GOP conservatives were incensed at the notion of a colleague supporting tax hikes, while labor and environmental groups were mad at what they consider Democratic concessions.

"If we're going to win elections in 2010, we have to say that we're the other party – that we're going to stop tax increases," said Jon Fleischman, a conservative blogger and a vice chairman in the state Republican Party.

Jeanine Meyer Rodriguez, spokeswoman for the state council of Service Employees International Union, representing 750,000 workers statewide, was upset by spending restraints and billions in budget cuts in the proposal.

"We're making it clear to all the legislators that if they vote for this, they're not representing our members," she said.

This morning's Republican press release painted the budget as a necessary evil, so the skids are being greased for passage. Still, with nobody owning the bill and lots of variables, it's entirely possible that it goes down tomorrow. Given some of the details, I'm not convinced that's a bad thing. But clearly, tomorrow should be... interesting.

Wednesday Is Deal Day

In addition to a deal on the federal stimulus, it looks like - and I stress looks like - the Big Five have reached an agreement on a state budget deal.

Legislative leaders and Gov. Arnold Schwarzenegger have reached a tentative deal to close the state's projected $40 billion budget gap, according to sources close to the negotiations.

Staff members are working out some drafting issues, one source said, but a vote is scheduled for Friday.

Details of the pact are still emerging, but the plan involves tax increases, cuts and borrowing. The state also stands to receive billions in federal stimulus money as the package approaches closure in Washington.

Sources said Tuesday the plan would raise sales taxes by one cent on the dollar, increase income taxes across the board and hike the vehicle license fee from the current .65 percent of the vehicle's value to 1.15 percent. The taxes would last a minimum of two years.

These are generally flat increases (though the VLF is progressive based on the value of the car). They are not permanent, which means the structural revenue gap remains a long-term issue. They will be combined with up to $20 billion dollars in painful spending cuts (depends on what we get from the federal stimulus). And there are (at least) two big cappers that Republicans are getting in exchange for these revenue hikes.

As a tradeoff for new taxes, Republicans demanded that the deal include a limit on future state spending. Under the tentative agreement, the restriction would require the state to place money into a rainy-day fund after reaching a limit determined by state revenues over a 10-year period.

Voters would have to approve the spending limit, likely in a special election later this year, and it is particularly controversial among education groups who constantly seek more state money for schools. Concerned that the state's powerful teachers' union would try to kill the spending restriction at the ballot, budget negotiators included a provision that would extend the new taxes to five years if the spending cap passes [...]

Republicans and Schwarzenegger also asked for business-friendly changes in environmental and labor laws, emphasizing that looser regulations would help the economy rebound in California. While sources said unions have been successful in fighting labor changes, the deal exempts some major state highway projects from environmental review to hasten construction.

Let's take these one at a time. The spending cap (here called "brilliant" by high Broderist hack Dan Weintraub) is a pretty terrible idea, and it has failed virtually everywhere it has been tried. However, it is moderately popular in the state among voters, and Arnold will no doubt characterize it as a "reform," so I wouldn't say it's entirely sure to be rejected. However, combining it with an extension of the tax increases is a dumb strategy on the part of spending cap advocates. First of all, it seems unconstitutional, on the grounds of one initiative dealing with multiple issues. Second, you set up a situation where anti-cap advocates can offer a simple message - vote No to lower your taxes - which is the message that has won countless statewide elections in the past 30 years.

Then there are the environmental and labor reviews. It looks to me like liberals got most of what they wanted on this front. The exemptions are unfortunate, but increasing the gas tax and raising emissions standards will hopefully decrease the worst environmental effects.

There are a couple other elements, however. First, the state lottery sale, passed last year, will have to be on the ballot, and this budget counts on that for a short-term $5 billion dollar infusion of cash. It's just unlikely to me that anyone's going to buy it at that price, and it could fail at the ballot. And then there's the real capper for the Yacht Party - another corporate tax giveaway:

They would get a major break in state taxation from such a shift while their rivals from other states, such as Microsoft, could be hit with higher California taxes, but whether the shift would mean a net increase or decrease in state revenues is a highly contentious aspect.

The Franchise Tax Board has contended it would be a loss, but advocates say it would be a gain because California would become more attractive to job-producing investment.

Two years ago, a version of the "single sales factor" bill was attached to the final deal on the state budget, but, under fire from liberal groups, was rejected in the state Senate. And now it's part of this year's crisis-tinged negotiations, possibly as a sweetener for Republicans to vote for higher consumer and personal taxes.

Always wanting something for their "base," those Republicans. And by the way, I think we may be a little premature in calling this a done deal. Dave Cogdill says it's the best the GOP could get, but won't even commit to voting for it HIMSELF:

"My deal, one more time, has always been that I would try my best to get it to a position where I felt it was as good as I could get and I was willing to release my members," Cogdill said in a brief interview in the hallway outside his office. "That's where I am. So I'm not guaranteeing any votes; it's up to them (his members) to make that decision."

"But I've negotiated it to the point where I think it doesn't get any better," Cogdill said.

Asked if he specifically would support the package, Cogdill hedged, "We're waiting to see all the language and all of that so I'm not ready to commit who the votes will be at this point."

Not a guarantee at all. This still could be torpedoed when the votes come in.

Steinberg's Game Of Chicken

We figured that when Darrell Steinberg assumed the leadership post in the Senate, there would be less accommodation and more risk-taking from the Democratic caucus. Well, this potential deal floated in today's LA Times would certainly fit that description.

State lawmakers began moving toward a deal this week to close California's deficit with the help of steeper car fees that would cost many drivers hundreds of dollars annually, according to people involved in budget talks.

Under the plan, GOP lawmakers -- most of whom have signed anti-tax pledges -- would vote to triple the vehicle license fee that owners pay when they register their cars every year in exchange for a ballot measure that would impose rigid limits on future state spending. Motorists' annual license fees would rise from 0.65% of the value of their vehicles to 2%. For a car or truck valued at $25,000, the increase would be $336.

The higher fees would generate $6 billion annually, helping to fill a budget gap that is projected to reach nearly $28 billion over the next year and a half.

The proposal is being championed by incoming state Senate leader Darrell Steinberg (D-Sacramento). Democrats and advocates for the poor have opposed strict state spending limits, saying they would cripple government services.

Steinberg may be gambling that voters would reject the limits, as they have in the past.

This would be a simple restoration of the VLF to the levels put in place by Pete Wilson (yes, Wilson; the increase, which was meant to occur during poor economic times, only triggered under Gray Davis). It is not a progressive version or a "feebate," and it does not increase for higher emission-producing cars and trucks. So it's not the best way to restore the VLF, in my view.

And the exchange, a ballot measure to restrict state spending, is a long-sought Yacht Party agenda item. I'm guessing it would be substantially similar to the version voted down in 2005. A spending cap is simply a way to ratchet down government and eliminate needed services which the public has said time and again they not only want, but are willing to pay for.

I understand Steinberg's reasoning on two levels:

(1) It's probably correct that Democrats and unions would fight like hell to stop a ballot measure with a spending cap. These are tough economic times, however, and they're projected to continue in the near future, so cutting spending may look more attractive to voters.

(2) This would be a stake through the heart of Yacht Party rhetoric about taxes. You can see the effect of what this would do by just listening to talk radio:

Prospects for the plan, however, immediately began to dim after details were published on the Los Angeles Times website. Angry phone calls from constituents, advocacy groups and talk radio hosts prompted lawmakers to publicly distance themselves from the proposal.

I mean, this came out on the same day when Senate leader Dave Cogdill wrote an op-ed entitled Cut, Don't Tax. And Arnold Schwarzenegger made cutting the VLF the signature piece of policy in his platform in the 2003 recall election. For him to reverse it just 5 years later would be humiliating.

Ultimately, Republicans are probably too spineless to agree to this - they'd fear primary elections in 2010, although directly after an election would probably be the best time to pull this off, with the most distance between now and the next election. But Democrats should think hard about this as well. Is it really worth having to fight a ballot measure that would cripple the state? It may well be, especially considering there's probably no other way to raise needed revenue.

It's quite a gamble.

State Republicans' Big Idea - Fix The Budget By Breaking The Law

This is really kind of incredible, what "law and order" Republicans have been reduced to.

Saying the ailing economy is putting enough stress on taxpayers, Senate Republican leader Dave Cogdill said Tuesday that Republicans will oppose any tax hikes to bridge California's budget deficit.

Cogdill suggested the deficit, which he pegged at $16 billion for the fiscal year beginning July 1, could be wiped out through service cuts and tapping into the reserves of voter-approved initiatives intended for early childhood education, mental health services and transportation [...]

Democrats, meanwhile, are likely to oppose Cogdill's suggestion to borrow money from three initiative-created funds: the county-based First Five commissions for children, established by Proposition 10; Proposition 63 to expand mental health services; and the Proposition 42 gas sales tax for transportation purposes.

Sen. Darrell Steinberg, the Senate's incoming president, said "no way" will he allow proceeds from Proposition 63, which he sponsored, to be used to defray the budget deficit.

"The voters of California passed an initiative which specifically prohibits the state Legislature from taking the money to balance the budget," said Steinberg, D-Sacramento, adding that such a raid on the initiative would be "unlawful."

The idea here is that if we only overturned three initiatives and defied the will of the people, and broke standing law in the state of California, then everything would be fine and we could place a gold brick in everybody's mailbox.

In other words, the Republican budget strategy is based entirely on embezzlement.

Frank Russo got out of a Yacht Party press conference and they basically said the same thing. From his notes:

This is their play: You need to have “reforms” in order to save money and balance the budget without raising taxes. All the Democrats do is talk about raising taxes. We are the only party that is talking about reforms and something other than taxes. The dems literally have no proposals. We’ve been criticized in the past for not being specific and forthcoming with our proposals (I lambasted them last year mercilessly for this) so here we have these ideas.

Take a look at the ideas and you find they are proposals to change the substantive laws in a number of areas and they are using the 2/3 vote requirement and the extreme financial emergency we are in as leverage to get things passed that they otherwise don’t have the votes for.

This is not a budget fight - it's a hostage negotiation. The Yacht Party is playing the part of the hooded figures negotiating the terms of surrender. And big ups to Don Perata for signaling yesterday that he's extremely bullish on surrender, for his part.

Gloria Romero Stands Tall Against The Tough On Crime Crowd

State Sen. Gloria Romero, a.k.a. the only one in Sacramento who gets the prison problem, is really sticking her neck out to deny the rapacious fearmongers more sentencing laws, and she deserves our support.

Republicans are outraged that more than two dozen bills in the Legislature that would create new crimes or lengthen sentences will languish until next year in a committee controlled by Democrats.

Sen. Gloria Romero, who chairs the Senate Public Safety Committee, imposed a one-year moratorium earlier this year on all Senate and Assembly bills that would worsen crowding in California's prisons and jails.

That's what you do when there's a CRISIS. And considering that there have been nearly 1,000 laws in the past 30 years raising sentences for criminal offenders, I would guess that every additional law is completely unnecessary. Of course, that's the bread and butter for those so wedded to the "Tough on Crime" label. So Republicans are miffed:

But Sen. Dave Cogdill, vice chairman of the committee, maintains the panel "shouldn't be holding the safety of the people of California hostage to this situation."

The Modesto Republican concedes prison crowding "is very real, but the reality is any bill that we take action on this year wouldn't become law until January 2008."

Right, because new prison facilities can be conjured in a matter of months. Who's the architect, Merlin?

Romero, the chief force behind the bill to create an independent sentencing commission, is dead right on the optics of the whole prison crisis.

Romero noted the prisons' medical system already is being run by a receivership established by the federal courts. And two federal judges have indicated they are leaning toward creating a judicial panel charged with setting a population cap for the entire system.

"We can try to look like we're tough on crime, but how tough are we if at a certain point the receiver takes over the entire system?" she said, noting that 30 of the state's 58 counties already have established population caps for their jails.

That's all some of these legislators care about, looking tough while in actuality squandering our tenuous hold on the prison crisis, increasing recidivism rates, destroying rehabilitation and treatment, and making everyone in this state less safe. It's a simple-minded approach that neglects the very real issue of overcrowding.

Romero is really putting herself out there on this. It may not be a popular position but it's the right one. And she should be applauded, as well as supported in her efforts to create a sentencing commission outside of the political sphere so that this "Tough on Crime" nonsense can be muted.