Too Bold? How About "Too Absurd"?

At first I thought that the headline writer was confused. "California tax reform plan much too bold for Capitol," it said above George Skelton's column today. "Too bold" could maybe have more than one meaning. Surely Skelton wasn't throwing in with the idea that massively shifting the tax burden to the lowest income levels in society was too good an idea. But I think that is, in fact, what he's saying.

"I would sign it immediately" if it were a bill, Schwarzenegger told reporters. "Without any doubt."

Of course, this is a governor who constantly seeks out things new and bold. And the tax proposal was all of that -- much too new and bold for most Capitol denizens, especially those representing special interests.

As Genest told me: "It shouldn't come as any surprise that lobbyists in Sacramento are in favor of maintaining the status quo unless they are confident that the change will serve their interests. That's why they're called 'special interests.' "

Nowhere in Skelton's article does he quote any figures or statistics citing the practical effect of the Parsky Commission's plans. He doesn't mention that, under the plan, taxpayers making over $1 million dollars a year would save $109,000 annually on average, while taxpayers making between $40,000 and $50,000 would save four bucks. He doesn't mention that the proposal would result in a net loss of revenue to the state, causing wider budget deficits. He does manage to mention critiques of the business net receipt tax from the side of business and industry, but offers no critiques from the opposite end, a la Jean Ross' statement that “You could not say, ‘We’re going to tax child care so we can lower the income tax on millionaires.’ But that’s what this does." The fact that the BNRT would hit business payrolls and disproportionately tax companies in the knowledge economy rather than the service economy also doesn't make it in. Skelton never mentions that, by taxing all businesses in the state, the BNRT would effectively tax rents.

He just says it's "too bold."

The Parsky Commission was practically designed to shift wealth upward. It should surprise nobody that this is what it ended up doing. That is bold, but not in the way that Skelton means it, I don't think.

He does give voice to where Karen Bass may steer the debate:

Bass was holding her tongue, trying not to express disappointment in the commission. When she first proposed its creation, the speaker envisioned the panel proposing something more practical and simple: reducing the sales tax rate and spreading it to currently untaxed services.

She promised a "thorough and objective public review" of the panel's recommendations.

Good idea, but don't stop there.

"My biggest message to dysfunctional Sacramento is to get something done," Parsky says. "If you've got a better idea, get it done."

There's no question that flattening and broadening the sales tax base is a decent enough idea. Under the constraints of minority rule, it may be the best one lawmakers can get, and it would prove popular if enacted. We'll see if the Parksy Commission report is dumped in favor of that.

Bass On Activism And The Legislature

This Los Angeles magazine interview with Karen Bass is really illuminating about her life and her early activism, which she says started in middle school during the civil rights movement. Bass, a student organizer, antiwar activist and advocate for the poor in South LA, has a deep connection to the grassroots world outside Sacramento. And yet she is boxed in by circumstance and the minority rule in California to do things that directly conflict with her personal interests. This is a fascinating passage:

Why did you start the Community Coalition for Substance Abuse Prevention and Treatment in South L.A.?
In the ’80s, crack cocaine took off as an epidemic, and I became obsessed by it. It was the first time that a drug impacted across class lines in the African American community, and it was also the first time in history a drug trend impacted both genders equally. It was really beginning to reshape the landscape in the inner city. I wanted to find a way to address the drug problem that did not involve massive incarceration—that could get at the root causes—and at the same time I wanted to build an organization that would help create, recruit, and train a next generation of activists. We’ve been around for 19 years.

Does the coalition show up at your office to protest what you’re doing in the legislature?
Absolutely. They’re organizing a protest right now. They are nice enough to call me up and tell me when they’re going to be protesting.

Would you be out there with them if the job didn’t preclude it?
No question. One thing that’s a little funny, if you don’t mind me going off the record—OK, I’ll say it on the record. I would have been protesting, but even when I was making these decisions, I was still in contact with the groups that protest to tell them to continue, because I understand better than ever how important those protests are. So it is quite interesting to be in a position like this.

There's a very good reason why Bass' current position feels unnatural, beyond just the inside v. outside dynamic. It's because she thought she was going from a position of weakness, as an outside activist, to a position of strength, as a legislative leader. However, the truth was the opposite. At least as an activist she was free to advocate and maybe make substantive gains. As a leader in this legislature, she cannot. By rule. Because the minority holds sway.

Anyway, I found it to be a very interesting article.

America's Worst Legislature

Trying to appease the cowards running for higher office in the Assembly rank and file, Karen Bass has dropped the sentencing commission out of the prison reform package.

The sentencing commission was among the most controversial provisions of the Senate prison plan. But on Monday, Senate leader Darrell Steinberg, D-Sacramento, said “a real sentencing commission, with teeth, is my top priority” for corrections legislation.

Steinberg spokeswoman Alicia Dlugosh said Monday that the Senate leader would like to see any legislation passed by the Assembly “realize the same dollar figure in savings as the Senate bill.”

The bill passed last week by the Senate, AB 14 XXX would save the state an estimated $600 million, according to an analysis of the bill. But the Assembly seemed poised to make key changes that would reduce those savings by about $220 million.

Among the other changes expected to be made by the Assembly would be the elimination of a provision that would change some crimes which can be either felonies or misdemeanors --known as “wobblers” – exclusively to misdemeanors. The Assembly bill expected to come up for a vote this week would leave the state’s wobbler law unchanged.

Assembly Democrats also balked at a provision in the Senate bill that would allow some sick and elderly inmates to finish their sentences under house arrest.

Bass said she hoped to pass the sentencing commission as stand-alone legislation later in the year. First of all, the year ends on September 11, and second, adding the commission to a must-pass reform package was the whole point. If lawmakers objected to it as part of a package, they're not going to turn around and support it in isolation.

Punting on this issue will ensure that federal judges will be mandating reductions of the prison population 10 years down the road. The only reform worth doing in the package now clarifies parole policy, devoting resources to those who need to be monitored instead of the blanket supervision that has turned our parole system into a revolving door. But that will not be enough to turn around the prison crisis for the long-term, without finally doing something about our ever expanding sentencing law.

This also shows the complete dysfunction of the leadership. Darrell Steinberg may not go along with the limited version, and I don't blame him. His chamber has now stuck their neck out three times on tough votes - Tranquillon Ridge drilling, HUTA raids and now this - that the Assembly has quashed. I wasn't unhappy about the first two, but if I was in the Senate, I'd be pissed about all these controversial votes I was needlessly taking. You'd think Karen Bass would have a sense of her caucus and know that she couldn't pass whatever she and Steinberg and the Governor hammered out in private. Because she's on her way out the door in 2010 she has no leverage over the caucus, because everyone's termed out and running for something else they have no fealty to the Assembly, and because they all live perpetually in fear they won't take a vote they know would help future generations deal with a crisis.

As I've said, a broken process will almost always produce a broken result. But individual lawmakers need to be called out. Particularly the three Assemblymembers running for Attorney General who think they're showing off their toughness. When all of them lose, they'll probably attribute it to other factors. They should be reminded of this day.

Living 21 Years In The Past

The SacBee reports that Tough On Crime types are trotting out the same symbols that Lee Atwater used in 1988 to sink a Democratic Presidential candidate.

Willie Horton's shadow haunts the Capitol as lawmakers wrestle with how to cut $1.2 billion from state prisons without endangering public safety.

More than two decades after Republican presidential candidate George H.W. Bush used televised ads of murderer Horton to paint presidential opponent Michael Dukakis as soft on crime, state GOP lawmakers are slapping Democrats with a similar charge over proposed prison cuts.

The politically explosive issue, coupled with opposition from some law enforcement groups, is making many Democrats jittery – especially those with aspirations for higher office.

I'm hearing that a lot of this nonsense is being pushed by astroturf front groups for the prison guard's union. And considering that Horton was the kind of violent offender who would be exempted from any changes in the law under the plan on offer, it's simply baseless. But this may be more about getting prison guard money and law enforcement support in future elections. But it has the effect of legitimizing the kind of nonsense that has destroyed our prison system, given us the highest recidivism rate in the nation, put the prison health care system in the hands of a federal receiver due to Constitutional violations, and drawn a demand from federal judges to reduce the population by 44,000.

And it's working, of course.

Bass proposes to eliminate a provision in the Senate-passed plan that has attracted the most intense opposition.

Known as "alternative custody," the controversial proposal would allow the release of up to 6,300 low-level, nonviolent inmates who are elderly, medically infirm, or have less than a year remaining on their sentences.

Inmates released under the plan would be subject to electronic monitoring under "house arrest," which could include placement in a residence, local program, hospital or treatment center.

Because blind people with one leg are dangers to society, and we should spend more money warehousing them than we do on the average higher education student. Makes perfect sense. Not to mention the fact that the judges will probably release these same offenders anyway, as part of the federal mandate.

The real fear is that the Assembly will water down the sentencing commission so that lawmakers will have to affirmatively pass their recommendations into law instead of having to pass legislation to prevent those recommendations from being enacted. Assembly Majority Leader Alberto Torrico, running for Attorney General, basically says in the piece that he wants such a change. It's a subtle but important difference; essentially the recommendations will be easier to kill under the weakened standard. And so we continue the endless Tough On Crime march that has put us into a ditch.

Meanwhile, as John Myers notes, intransigence on sensible prison reform will simply increase the eventual budget deficit:

Then there's the never-ending state budget blues. The original prison plan, when added to February's budget cuts and gubernatorial plans to reduce prison spending, was a $1.2 billion part of the deficit solution written into law; the original bill, alone, was estimated to save as much as $600 million. But that was with those alternatives to prison cell custody and fewer crimes resulting in felony one-way tickets to the joint. The 'Plan B' version, say staffers, may come up as much as $200 million short (and that's assuming all of the original savings estimated were valid).

In some years, a $200 million gap in the California state budget may not be the end of the world. But this is no ordinary year; cuts a fraction of that size are forcing all kinds of shutdowns of state services. And if this plan becomes the new way to go on prisons, it's going to leave a lot of budget watchers -- and Californians -- wondering what happens next.

Democrats are wrong if they think they can finesse the right into taking the charge that they are "coddling murderers" off the table. Just look at eMeg, claiming that a sentencing commission would reverse three strikes, about as factual a charge as Sarah Palin's "death panels." They'll always be smeared, so they might as well do the right thing for once.

Burton Demands "No" Vote On Offshore Drilling In The Budget

This is a big deal. John Burton just sent out an action alert to CDP delegates and supporters urging them to vote AGAINST an element of the budget negotiated by the Democratic leadership. Specifically, he wants the offshore drilling at Tranquillon Ridge voted down.

As you may have heard, legislative leaders and the governor have reached a tentative budget deal that the Senate and Assembly could vote on as soon as tomorrow.

One part of the package is a Republican-written bill that would allow offshore drilling in state-controlled waters off California’s coast for the first time since the devastating 1969 oil spill off the Santa Barbara coast. This proposal is an affront to all Californians and we must urge lawmakers to vote it down.
This sweetheart deal for one oil company was negotiated behind closed doors, without any legislative hearings to allow public comment.

It strips the State Lands Commission – which has approved or rejected oil leases for the past 150 years – of this power and gives it to a commission controlled by the governor’s administration. This commission would have unlimited authority to rewrite the lease to benefit the oil company.

The offshore drilling plan does not solve either this year’s budget problems or systemic problems. That’s because its promises of future revenue are not actually written into law.

This Republican offshore drilling scheme endangers California’s environment. It would further pad the pockets of oil executives. And it does virtually nothing to solve the state’s current or future budget problems.

Ironically, the same Republican legislators who support this sweetheart deal are the ones who refused to vote for our Democratic leaders’ proposal for an oil-severance tax like the one levied in every other oil-producing state.

Please call your local lawmaker and urge him or her to say NO to new offshore drilling. Say NO to jeopardizing our coastline for minimal budget help this year or in the future.

At the end of the email, Burton reminds readers that these kind of backroom deals are part of why "it’s so important to have a majority-vote budget in California so Republicans cannot hijack the budget process to make bad policy changes that are extraneous to the state budget." A-men to that, but tell it to the Democratic leaders who helped negotiate this.

Karen Bass was asked today by reporters why the offshore drilling bill was included in the budget agreement, and she replied, "It comes down to $100 million dollars." Apparently you can put a price on despoiling the coastline and destroying the environment. Turns out it's 1/880th of total budgetary spending.

It's good to see the Chairman of the CDP picking up on a campaign by the Courage Campaign and amplifying it. The offshore drilling plan will be considered in a separate trailer bill. It can be defeated.

Scenes From A Failed State

Karen Bass, on a budget deal that closes a $26 billion dollar deficit with deep cuts, local government raids, gimmicks and offshore drilling, without any new revenues:

“I would characterize this budget as shared pain and shared sacrifice"

Yes, it sounds shared to me.

Arnold Schwarzenegger, talking about a budget that will bankrupt localities, treat the elderly, disabled and blind like common criminals, throw millions off of children's health care and temporary assistance and ensure public education's status as the worst-funded in the nation:

"We accomplished a lot in this budget agreement," said Schwarzenegger, adding that negotiations at times were "like a suspense movie."

Fun!



This flag was seen in Southern California yesterday. That's a distress signal. I share the sentiment.

Deal Talks Break Down Over Prop. 98 Suspension

Hopes for a deal on the California budget faded last night as the Big Five could not agree over the big issue of whether and how to suspend Prop. 98, the mandate for education funding.

The education money discussion is not new; much of it dates back to the February budget negotiations, which resulted in a ballot measure asking voters to offer blessings upon a supplemental payment. Voters rejected that measure, Proposition 1B.

And as with most education financing debates, this one lands squarely back at the maze of formulas and calculations that embody the 21-year old funding guarantee enshrined into the state constitution by voters, Proposition 98.

In a nutshell, the current debate focuses on whether schools are owed money in the future to make up for some of the recent spending reductions, and whether that obligation (the so-called "maintenance factor") should be codified in law as part of the current $26.3 billion deficit deal.

"The Prop 98 law is so confusing," said Senate President pro Tem Darrell Streinberg to a throng of reporters outside the governor's office, "that we want to make sure that there is clarity."

My belief is that education leaders will win this money in the courts, no matter how long Arnold and the gang put it off. The lawsuit has already been filed. The Democratic leadership want to just deal with the $11 billion dollars in essentially stolen money from schools inside the budget agreement by promising the money in the out years, while the Republicans and Arnold don't.

So if you wanted a 2010 campaign slogan, you have the source material.

It looks to me like Arnold is holding out simply so he can prove a point. His effort to insert privatizing social services eligibility at the last minute is flawed enough that even the Yacht Party might have trouble stomaching it. The proposed cuts in the deal are really intolerable but not what the Governor promised at the outset. It's unclear whether the Governor will get his anti-fraud provisions, also inserted late into the process. And it's completely unclear, given the deal likely to come out, why we had to wait two weeks for virtually the same deal.

Whatever budget deal ultimately is passed -- and in this economy it'll only be a temporary fix, at best -- virtually the same agreement could have been reached weeks ago [...]

Democrats produced a stop-gap plan supported by Assembly Republicans that would have staved off IOUs. They proposed $3.3 billion in cuts to education and other programs that would have kept the cash flowing, at least for a few weeks. It would give them time to negotiate more cuts. Schwarzenegger rejected the idea and persuaded Senate Republicans to follow.

That's where the governor began bobbling the ball, although his coaches figured he was playing to his fan base, what's left of it.

Issuing IOUs will cost the state roughly $26 million in interest for July, the state controller's office estimates. The IOUs also prompted Wall Street bond rating agencies to lower California's credit to near junk status. That potentially could cost the state $7.5 billion over 30 years, according to the treasurer's office.

Schwarzenegger, aides say, calculated that Democrats wouldn't negotiate seriously without facing a deadline, such as the latest: most banks refusing to accept IOUs. Negotiating piecemeal would get nowhere, the governor believed.

But he might have dodged IOUs completely. Guess it doesn't rankle much that the state he has governed for nearly six years must now pay bills with scrip.

Schwarzenegger's clumsy attempt at the Shock Doctrine, when the deal Democrats were willing to agree to was painful enough, was about as irresponsible as a chief executive could be.

Multi-Pronged Attack

It's sad that one comment can mean more to a debate than years of attacking public employees and public works and months of attempting to destroy the California dream. That should be disqualifying enough. But Governor Hot Tubs and Stogies' "let them eat cake" comment in the New York Times has gained some traction. Apparently this was a target big enough for everyone in Sacramento to hit. The Assembly Democrats included it in a video showing the Governor's hypocrisy during recent budget talks.



And that's great. Narrative-setting can be powerful and important. That's what's behind the Governor's idiotic crusade to criticize legislators for legislating while he stamps his little feet. At least for today, I think the Democrats are getting the better of ol' Hot Tubs and Stogies.

But I'm more excited about this:

Labor groups file initiative to repeal corporate tax breaks included in recent budget deals.

These are the massive corporate tax breaks, which could cost the state up to $2.5 billion dollars a year, agreed to in secret by the Governor and the Legislature during the February budget agreement. In a time of recession, the state's political leadership, hijacked by the 2/3 requirement, gave away billions of dollars to the largest corporations in America while crying poor about social services for the indigent and the needy. And those corporate tax breaks are the ONLY permanent tax changes made in the budget this year.

Damn right they should be repealed. They offend the conscience, cost the state needless cash, and do nothing to help the vast majority of businesses (80-90% of the proceeds of these tax breaks will go to just 200 corporations).

Bottom line: Budgets are about values, and they are about priorities. Before lawmakers take health coverage away from children whose parents are struggling to make ends meet, eliminate financial aid for students who understand that hard work and a college education provide the best promise of future success, or shutter state parks that protect California's natural environment and provide affordable recreational opportunities, they should reverse these permanent and massive giveaways that will compromise the state's long-term financial security.

With newfound spunk from Democrats, at least in the Assembly, and serious moves by progressive advocates to reverse the horrible decisions made in past budget years, I think the ground is being prepared for a legitimate reform of the broken structure that has brought us to this point.

Get Yer Souvenir IOUs Today!

Bloomberg reports that people are lining up for those souvenir Arnoldbucks.

Controller Chiang said the warrants can be transferred between individuals, setting up the possibility that a secondary market for the IOUs may develop. Already ads are appearing on Web sites such as Craigslist offering cash for the IOUs at below face value.

In such a transaction, the person who gets the IOU would get most of the cash they were due the state, while the person buying the IOU might then hold onto it until maturity and earn the face value plus the 3.75 percent interest.

At least one person offered to buy an IOU at more than face value as a keepsake.

“I am interested in purchasing a ‘State of California IOU’ as a souvenir,” the ad reads. “I figure it would be an interesting thing to have around when my grandchildren are fighting over my stuff after I’m dead and gone. I will pay two times face value (up to $100, or $50 face value) for a warrant/IOU.”

Of course, after July 10, the deadline that banks like BofA and Wells have given for exchanging these IOUs for cash, souvenirs may be the only value for these IOUs for a few months. Maybe Arnold will go to a baseball card convention and sign them himself!

Here's another FAQ about who receives IOUs and who does not. The unemployed, SSI/SSP recipients, state employees and retirees, IHSS and Medi-Cal providers will NOT receive IOUs. Welfare recipients, contractors with the state, local governments, and income tax refund recipients WILL get them. Felix Salmon made a handy chart that suggest the haves will keep getting paid and the have-nots won't, and that's somewhat true, but some have-nots who have the benefit of their services being partially provided by the Feds will get paid as well. In general, where you stand does depend on where you sit, in this crisis. This again makes clear that the idea of California debtholders, who get priority of payment in the state constitution over everything but education, getting stiffed by the state is a ridiculous one that pretty much cannot happen, and lowering bond ratings should be rightly seen as Wall Street gouging.

And I'll allow Karen Bass to explain exactly who's responsible for this particular outcome of IOUs and lowered bond ratings.

Small businesses, students, seniors, and taxpayers will all start receiving IOUS. This shameful day didn't have to arrive. In fact, Governor Schwarzenegger had several opportunities to prevent it.

On June 12 Governor Schwarzenegger unilaterally blocked the Controller's authority to secure short-term loans to avoid the cash crisis. He said, "let them have a taste of what it is like when the state comes to a shutdown -- grinding halt."

On June 25 after the governor called Senate Republicans to his office for private meetings, $4 billion in immediate cash solutions that had been passed on an overwhelming bipartisan majority in the Assembly were killed in the Senate.

Most recently, the governor vetoed a comprehensive package of budget solutions supported by majorities in both houses of the legislature that would have resolved the $19.5 billion deficit, left a $4.0 billion reserve, avoided the cash crisis and prevented IOUs [...]

We did offer, as a sign of good faith, to begin work immediately on reforms regarding restructuring Medi-Cal and eliminating fraud in the IHSS program. We also committed to working with the governor on other reform legislation for him to sign. But the governor wouldn't take "yes" for an answer. So California businesses, taxpayers and students will be receiving IOUs simply because Governor Schwarzenegger thought it was more important to immediately force last minute changes such as reducing future employee pensions, fingerprinting elderly and disabled Californians who receive services, and denying kids food stamps if their families can't access a computer to sign them up for the program.

See Noreen Evans for more.

The budget gap grows by $25 million a day and we have wasted billions of taxpayer dollars because the Governor wants to teach everyone a lesson. I hope that IOU secondary market is bigger than eBay, because those suffering with the consequences of dysfunction are going to need the help.

Arnold Plays The Gingrich Role, Threatens Government Shutdown

(UPDATE: I got a copy of the Budget Conference Committee report, will give more info later)

The plot thickens. The Governor today threatened to veto the work of the bipartisan Budget Conference Committee and reject any bill that, essentially, doesn't hew to his desire to destroy the social safety net of the state. The Democratic leadership countered that they'll pass the bill anyway.

Democratic legislative leaders vowed today that the Legislature will pass a "share the pain" budget-balancing plan early next week - with or without tax increases -- that will close the state's spending deficit without completely shredding California's social services safety net.

The vows by Senate President Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, came about an hour after Gov. Arnold Schwarzenegger said he wouldn't sign a plan that was balanced with tax increases.

The rhetorical staking out of ground by the key figures in the current version of the state's ongoing fiscal melodrama came a day after the Legislature's joint budget conference committee, on a party-line vote, adopted a plan that included about $2 billion in new oil production and cigarette taxes to help bridge a $24 billion budget gap.

Let's take a brief look at what else the conference committee has done. They resisted some of the worst health care cuts, including the total elimination of Healthy Families (the SCHIP program). They reduced education spending significantly in both K-12 and higher ed. They reduced corrections spending by a fairly large amount. Despite the fact that state parks pay for themselves, Democrats agreed to cut state participation in park funding, replacing it with additional fees on park admissions. They agreed to increasing withholding by 10%, which amounts to an interest-free loans from citizens to the state. According to Karen Bass, they agreed to 45% of the Governor's proposals in full, and 93% in part.

So the idea that Democrats are not cutting spending is simply unreasonable and wrong. At the same time, they rejected additional cuts to state worker salaries. They rejected the end of Cal Works or Cal Grants or In-Home Support Services. And some of the Governor's proposals, like borrowing from local governments, were rejected unanimously.

I don't even much like what the Democrats came up with. But they did not agree to completely wipe out the social safety net, calling for moderate increases in revenue on constituencies who have been getting away with murder, pretty much literally, for decades, to pay for the externalities in health care costs that they impose on the public. As Noreen Evans explains:

Californians expect their schools to be good, a safety net to be available to the needy, a college education to be affordable for working families, their air and water to be clean, and their parks to be open and kept up. In order to meet their expectations, we must to pursue new revenues. Today, for the greater good, we approved two new tax proposals that won’t impact most Californians.

Establishing a 9.9 percent tax on oil extracted from California would generate $830 million in FY 2009-2010 and $1.1 billion in future years. This precise proposal was part of the governor’s budget proposals last year. Increasing the excise tax on cigarettes by $1.50 per pack generates $1 billion in FY 2009-2010.

Tax increases require a 2/3 vote. Absent the pursuit of new revenues, wider and deeper cuts will be required. Getting new revenues requires a mere 6 Republican votes: 2 in the Senate and 4 in the Assembly. It is undemocratic that the votes of 6 Republicans can veto the votes of 75 Democrats.

But Arnold wants to destroy the state of California like a good little neo-Hooverist, so he said no.

The Dem leadership appears to want to have this fight for the moment, so they ought to realize one thing: Arnold will ultimately be responsible - and reviled - in a government shutdown situation. No question about it. Not 1 in 10 Californians can even NAME a Democrat in the legislature. If the ship sinks, Arnold will be perceived as the skipper. And so, if and when Arnold vetoes the bill, the Democrats should send it back - with MORE tax fairness solutions, daring Arnold to prolong the agony. That resets the battle and draws clear lines between those who want the richest companies in America to sacrifice along with ordinary Californians, and those who want to protect the rich completely. Unfortunately, the Dems are tipping their hand that this will not be the case.

But Bass and Steinberg seemed to be reconciled to the likelihood that the tax hike proposals would fail next week. Steinberg said that if they did, the package they sent the governor would have a reserve $2 billion smaller than he had sought.

We have a couple days to change this dynamic. The progressive movement around the budget has stiffened spines a bit so far. Time to make the calls and emails.

This is funny:

Schwarzenegger added that he wants a budget plan that will bridge the entire projected deficit of $24 billion, not a stopgap measure to "kick the can down the alley."

The plan must consist of permanent solutions to the state's fiscal problems, not one-time revenue that sparks ongoing spending commitments, Schwarzenegger said.

When Schwarzenegger was reminded that his own budget plan contains some one-time revenue proposals, such as acceleration of income tax payments, he smiled.

"Very good point," he said. "We don't want to add to the problem."

The cyborg is not running on all cylinders. He has a single-minded purpose to kill the California dream and even these extremely moderate revenue enhancements.

...Document here:


June 16 2009 Conference Report -

Bass And Steinberg Statement Considered Harmful

George Lakoff writes today that this could be a moment of freedom for California Democrats. Their compromised ballot measured having gone down in flames, they can now focus on the only solution to what ails the state: democracy. They can include in every public utterance until the moment the 2/3 rule is repealed the theme that California's democracy is broken, and that we must restore it with a majority vote for budget and revenue matters. The time for half-steps and non-fixes must be over.

Up to now, Democrats have been acting like sheep being herded by the Republican minority. They need to show courage and stand up for what they believe. That’s what the voters are waiting for [...]

Get rid of the 55% proposals. People understand that majority rule means democracy. 55% means nothing.

Even if you don’t address taxes and just address the budget process, the Republicans will still say you’re going to raise taxes. You may as well go for real democracy.

And finally, get a unified message that can be supported by the grassroots. Do grassroots organizing for 2010, starting now. Organize spokespeople to get that message out. Organize bookers to book your spokespeople in the media. You Democrats are a majority. Act like it. The public will respect you for it.

Unfortunately, Darrell Steinberg and Karen Bass failed the first test, stuck in a mindset that will bring the state to ruin. First, Steinberg.

"The voters have spoken and they are telling us that government should do the best it can with the money it has. We will immediately and responsibly get to work to balance the budget and head off a cash crisis in July. Delay is not an option. The necessary decisions we must make will only get harder with time."

That is not what voters are telling you. As I said yesterday, you cannot reconcile the supposed anti-tax fervor with the passage of a transient occupancy tax in conservative Palmdale with 64% of the vote. California is a big state and no one message from a statewide election can predominate, but the mass boycott of the polls certainly suggests that we don't want to do your job anymore. I know it's been so long since Democrats exercised their Democratic muscles and principles in Sacramento, but this election called out the political leadership for failed governance. And everyone who has studied this for half a second understands that the failure will continue until the structural barriers are removed. And so making this absurd and vindictive statement about voter intentions both misses an opportunity to refocus the discussion and angers the grassroots further.

Here's Bass:

"There are many difficult choices and a lot of hard work ahead of us. We now have to responsibly fill the budget hole that has been caused by the national recession and deepened by the failure of today's ballot propositions. I hope the bipartisan cooperation between the Legislature and the Governor that went into this effort will continue as we move forward - the people of California clearly expect us to work together to get the job done. And we will.

The people of California could give a rat's ass who works together with who. They don't want to see this level of dysfunction anymore. Bipartisan cooperation was clearly rejected last night, because inevitably that gives leverage to the minority and provides unworkable non-solutions.

Where is the argument for DEMOCRACY in these statements? Since 1978 that democracy has crumbled and needs to be completely rebuilt. Everyone knows this but refuses to say it out loud. This is why the legislature and the Governor have historically low approval ratings. People are starved for actual leadership and see none. Only democracy will save us. This failed experiment with conservative Two Santa Claus Theories has now become deeply destructive. Because the democrats have provided no leadership and ceded the rhetorical ground, California public opinion holds the contradictory beliefs that the state should not raise taxes and also not cut spending. And if it persists without leadership and advocacy to the contrary, nothing will change.

Republicans Go NO on May 19 Special

I'm a but surprised that they rejected everything on the ballot, but I think the bare fact of tax increases in the budget has colored their opinion on all the measures (which is fine with me, if they want to look a gift horse in the mouth).

SACRAMENTO - The California Republican Party on Saturday voted to oppose all six ballot proposals in next month's special election, saying voters must reject higher taxes.

The vote by the party's executive committee followed a lively, hour-long debate that focused on Proposition 1A. The measure would create a state spending cap and bolster California's rainy day fund, two concepts Republicans have long promoted.

But those provisions were overshadowed by triggers in the measure that would extend the sales and income taxes adopted by the state Legislature.

Party chairman Ron Nehring said the vote symbolized his members' dissatisfaction with the entire budget deal struck by the governor and lawmakers in February to close the state's budget deficit, then projected to be nearly $42 billion.

There's a serious divide and a lack of trust between the electeds and the grassroots on both sides of the aisle. And the urgent pleas to pass the initiatives just makes things worse, in my opinion, because defending them inevitably sends you down some blind alleys. Check out Speaker Bass' attempt, which includes one glaring dichotomy.

“If we don’t pass these measures, when we begin to negotiate next year’s budget, we will have a $14 billion hole instead of an $8 billion hole,” Bass said.

People have become confused, she said, over critics’ statements that measures 1D and 1E will take money from children and mental health programs funded through Props. 10 and 63. Bass said the new measures will tap into the prior propositions’ reserve funds and divert the money into very same programs that the propositions were intended to serve: core children and mental health programs.

“If these measure fail, we will have to cut children and mental health programs,” Bass said. “We are not using all the reserves but some of that money, which will otherwise just sit in the reserves.”

Really, Madame Speaker? Wouldn't Prop. 1A divert billions to "just sit in the reserves"? Are you not in favor of that now, because I get confused. How can you coherently argue against the value of cash reserves in programs with stable revenue sources and for the value of cash reserves in the unstable revenue-sourced overall budget? The more the leadership talks about these ballot measures, the more they trip themselves up.

Shorter Bass And Steinberg: Booga Booga!

I've obtained a copy of the email sent to every California Democratic Party member from the Assembly Speaker and the Senate President Pro Tem, trying to scare the membership into supporting the special election ballot measures. It's really unconscionable for them to stretch the truth this much. They conflate apples and oranges to make it seem like an immediate $31 billion dollar deficit is forthcoming if the measures fail, which is simply untrue. They mostly discuss what failure would mean rather than what success would mean. And they neglect the permanent damage that would be caused by the ballot measures in favor of the temporary tax increases. I'll put the whole thing on the flip, but here is the excerpt that kills me.

There seems to be a great deal of misinformation about Proposition 1A, the spending reform measure. This is NOT a spending cap, but rather a mechanism to force savings in good years to protect funding for services when our economy sours. If California had a rainy-day fund like most other states, $9 billion in cuts could have been avoided this year. In the long-run, Proposition 1A will stabilize state spending for critical services.

Um, actually, folks, that's what a spending cap IS. It caps spending and puts money into a rainy day fund. Of course, the way this cap is structured, the rainy day fund would have to take money even in DOWN budget years, due to its stringent, restrictive nature. The line about how $9 billion in cuts could have been avoided this year with rainy day fund money is offered without the knowledge that the money would have had to come FROM somewhere, and would have meant $9 billion in cuts in years prior. Not to mention the fact that it would have had to be replenished almost immediately. With this spending cap - yes, Madame Speaker and Mr. President pro Tem, sorry to burst your bubble but that's what it is - spending will be forced $16 billion dollars below the Governor's baseline budget next years. That's the ENTIRE gain of the $16 billion in temporary tax increases in just one year. And the cap goes on and on and on.

Pathetic. About the only good thing here is the shout-out to eliminating 2/3 for budgets and taxes. I appreciate that, but would appreciate some honesty about the spending cap even more.

Dear Fellow California Democratic Party Member:

At this month’s California Democratic Party Convention in Sacramento, you will be asked to take a position on Propositions 1A, 1B, 1C, 1D, 1E and 1F that will appear on a special statewide election May 19. We strongly urge you to support this package to provide California the short-term revenues to get through these difficult economic times, as well as the long-term reforms to stabilize our budget process and protect funding for vital services. After months of difficult negotiations, we made some of the toughest decisions elected officials could ever make. We closed a $42 billion budget shortfall that threatened to send California into fiscal collapse — halting thousands of jobs, devastating critical education, health, children’s and senior services, and plunging our economy into deeper meltdown.

The tough choices we made will begin the long process of getting California back on track and providing long-term stability to the programs and services we all value.

Make no mistake: the final budget agreement contains important victories that hold true to our shared Democratic principles. In particular, we negotiated four years of desperately needed revenue increases, worth $12.5 billion this year alone. We cannot overstate the significance of this achievement. By doing so, we were able to protect education, health care and safety net services from even deeper cuts.

We were also able to stave off Republican demands to roll back hard-fought environmental and worker protections. And, through Proposition 1B, we will ensure that schools are repaid over time for the painful cuts they have endured because of this budget crisis.

But the package and revenues we negotiated will all be for naught if we don’t pass Propositions 1A-1F in May. Unless Prop. 1A is approved, California will lose $16 billion in revenues from the sales, vehicle license and income taxes beginning in Fiscal Years 2011-2013. Prop. 1A also provides the mechanism to restore $9.3 billion in funds to schools. And without Propositions 1C, 1D, and 1E, we will lose another $7 billion in funding.

Losing $23 billion in revenues, on top of the $8 billion deficit projected by the Legislative Analyst, will result in renewed demands for catastrophically deep cuts to schools, hospitals, essential children’s services and senior programs for the foreseeable future.

There seems to be a great deal of misinformation about Proposition 1A, the spending reform measure. This is NOT a spending cap, but rather a mechanism to force savings in good years to protect funding for services when our economy sours. If California had a rainy-day fund like most other states, $9 billion in cuts could have been avoided this year. In the long-run, Proposition 1A will stabilize state spending for critical services.

Passing Propositions 1A-1F is the first step in restoring our state’s fiscal health and voter confidence in state government. This is essential for us to move forward with our shared priorities such as expanding healthcare to all Californians, further reforming the budget process to eliminate the destructive 2/3 requirement for budgets and taxes, protecting against climate change, and ensuring necessary education, health and social services for the people of California.

We hope you will join us in supporting Propositions 1A-1F.

Trigger'd

Robert Cruickshank brings the news that Sacramento leaders decided not to pull the trigger that could have been met by federal stimulus funds flowing into the state, which means that really painful cuts to health care and IHSS (in-home state services), as well as certain tax increases, will be retained. Karen Bass doesn't sound happy:

I am disappointed with the narrow reading of the trigger and the decision made today by the Director and the Treasurer. But it was the last minute changes to the budget demanded by Republican Senators that put the trigger level out of reach and all but guaranteed the higher taxes and cuts to critical programs. We agree with the Treasurer that a portion of the cuts should be restored, and we will work through the budget process to find alternative solutions to a portion of these cuts.

It's completely clear to me that, with another looming budget deficit, the Governor wanted no part of leaving any cuts or tax increases on the table, which would potentially make the deficit bigger. So they read the trigger precisely to ensure that it wouldn't be met. Never mind the very real consequences for the sick, the elderly, the blind, the disabled. A link to all the cuts here.

Robert writes:

It didn't have to be this way. Even putting aside the "narrow reading" issue, this is a failure of both the state and the federal government. Democrats agreed to a bad deal, and the Yacht Party did their best to make the Great Recession worse by destroying the very governmental services that we need to stop the downward spiral and start a recovery. And the US Senate has blame to share, for stripping out $40 billion of the state stabilization funds and generally not being aggressive enough in dealing with the crisis facing all levels government.

California keeps cutting spending, and the recession keeps getting worse. We at Calitics understand that's no coincidence. When will Sacramento?

Indeed.

The Strange Bedfellows Against Prop. 1A

Gov. Schwarzenegger is giving a speech right now at the Commonwealth Club in San Francisco, the kickoff of his campaign for the state budget items in the May 19 special election. In some remarks released earlier, it's clear Arnold is highlighting - and is most concerned about - the spending cap.

“Our state capital is a town that feeds on dysfunction. The special interests, left and right, need the process to be dysfunctional. That is how they control Sacramento. That is how they prevent change.”
[snip]

“But now we have an agreement, passed by two-thirds of the legislature, that puts on the ballot serious budget reform, including a spending limit and a rainy day fund.

“And the very interests, the far left and the far right, that prefer dysfunction over change have already launched a campaign to confuse people and defeat the reform. But this time they are not going to succeed.”

Arnold probably sees this as a selling point, that if Democrats are against his plan, and Republicans are against his plan, then it must be just right. But this Goldilocks centrism masks the extremism of the spending cap plan, which would ratchet down revenues and cut vital services permanently. It also represents a serious miscalculation on the part of the Governor, who apparently still thinks his post-partisan message actually works in this state. That's the same political genius that has Schwarzenegger polling worse than Carly Fiorina in potential 2010 Senate matchups against Barbara Boxer. And even Schwarzenegger's own strategists seem to know that he cannot be the public face of the special election, lest he doom it to failure.

Opponents of the measures say their private polling has shown linking the initiatives to the governor drives down support of the measures. That has been echoed by some supporters of the ballot measures, who have also started testing potential campaign messages.

But (campaign strategist) Adam Mendelsohn said Schwarzenegger’s star power and his ability to get news coverage is still a great asset for the campaign.

“There is no elected official in this state capable of dominating coverage like Arnold Schwarzenegger. The chattering class loves to look at his approval numbers and then cast dispersions, but communicating in a campaign is a lot more complex than just looking at approval numbers.”

Uh, yeah, Mr. Mendelsohn, that's the PROBLEM. He's extremely unpopular with everyone but the Dan Weintraubs of the world. And there aren't 17 million Dan Weintraubs living here.

The spending cap, with something for everyone to hate, is particularly vulnerable in the special election. Republicans have been calling for a hard cap for years, if not decades, but they've become so blinded by the Heads on a Stick faction of their party that they cannot look past the short-term of two years of tax increases and realize what they would be getting. But the Yacht Party infantry clearly doesn't care: heck, they're trying to recall Roy Ashburn, who's termed out in 2010 anyway. So their entire side, or at least everyone who wants to be elected in a primary, is lining up against 1A. Meg Whitman has come out against it.

Republican gubernatorial candidate Meg Whitman has already announced her opposition to Proposition 1A, and Whitman spokesman Mitch Zak did not rule out the possibility that Whitman would spend money against the measure.

“She’s been very outspoken in her opposition to 1A,” Zak said. “We’ve not made a decision how that opposition manifests at this point. We’re keeping our options open.”

The Flash Report is claiming that Steve Poizner will oppose the measure as well, and he is hinting at contributing funding.

They will be joined by at least some segment of Assembly Democrats.

After a long, closed-door meeting Tuesday, Assembly Democrats remain divided over the budget-balancing ballot measure at the heart of the May 19 special election, Proposition 1A, which would impose a cap and raise taxes.

“Our caucus had a very long discussion on this,” Assembly Speaker Karen Bass told Capitol Weekly. “There are a number of members who are supportive of 1A, there are several members who are opposed to 1A, and there are many others who are trying to decide. We are working through this and we will have another caucus next week,” she said Tuesday evening.

Looks like Bass will have a lot more colleagues to boot out of committee assignments. You'll remember that she punished the three Democrats who actually voted against the spending cap on the floor back in February. Now a good bit of the caucus is revolting.

The caucus did vote to support 1B through 1F, and that's probably because they know that there's going to be more cuts coming down the road, and voters opposing the revenue-enhancing items on the ballot will make their job harder.

But, she added, “I’m hearing that we are going to have a $4 billion dollar (revenue) hole, so if the ballot measures don’t pass, then it becomes $9 billion or $10 billion hole.”

As I said, the crisis continues.

So I'm seeing the anti-tax groups, progressive advocates, the big money in the GOP, half the Assembly Democratic caucus, all against 1A. On the pro side, Arnold, George Skelton, and Steve Westly, who says 1A will "instill much needed fiscal discipline". Yeah, poor people and the blind, get some fiscal discipline, you scumbags!

The wildcard remains the unions, who with even a little bit of financial backing could tip the scales on 1A. SEIU and AFSCME have delayed formal positions until later this month. But the Administration is trying to intimidate them into going along with it.

Here's why it matters to state workers: Last week, the Association of California State Supervisors asked administration officials if the governor would still lay off employees, or if he would abandon the plan since lawmakers have passed a budget.

(Remember, state workers' twice-monthly furlough is just part of how the governor wants to cut costs. Layoff warnings went to 20,000 of the state's least senior employees last month. Half could lose their jobs, officials have said.)

The administration's answer, from notes taken by an association representative: "We hope the five budget-related propositions pass ... . If the propositions do not pass, we will be in a worse situation, with more furloughs and layoffs."

This is despite the fact that 1A would have NO IMPACT whatsoever on the immediate bottom line; in fact, passing it would hurt the budget for state workers more than defeating it. "Vote like your job depends on it... because it does." That must be the working motto.

The question is, will the intimidation work? Obviously, the fact that the tax increase extensions in 1A are practically hidden on the ballot is going to arouse anger amongst the Heads on a Stick crowd. And progressive advocates are sticking to principle that an artificial spending cap has failed wherever it's been tried and is wrong for the state. In the mythical middle you have the vain Mr. Schwarzenegger, desperately trying to stay relevant. Ultimately, this is a referendum on him.

UPDATE: And here we go. The League of Women Voters just announced they're opposing 1A, along with 1C, 1D, and 1E (selling the lottery and moving money from voter-approved funds for children's programs and mental health). This is big if it's a harbinger of how other groups will line up.

Save The Spending Cap Three

Karen Bass has made a baffling, counter-productive move to punish Sandre Swanson, Warren Furutani, and Tony Mendoza, lawmakers who did the right thing for their districts and their state by opposing the spending cap part of the budget. The LA Times has a good story on this.

Like a military commander busting down insubordinate troops, Assembly Speaker Karen Bass (D-Los Angeles) has stripped committee chairmanships from a trio of wayward lawmakers after they refused to join fellow Democrats in support of a key budget provision.

The three assemblymen -- Sandre Swanson of Alameda, Warren Furutani of Gardena and Tony Mendoza of Artesia -- voted last month against a measure to cap state spending, which will appear on a special statewide ballot this spring [...]

By removing the three lawmakers from their posts, Bass takes away key staff assistance, clout on policy issues and potential fundraising power.

She's hurting those lawmakers, but as the above sentence makes clear, she's hurting their constituents as well. All because they couldn't go along with a plan that will make it impossible to deliver basic services to Californians, even in good economic times. And the spokeswoman for Bass trying to sidestep the rationale for this is pathetic.

"Having now had a couple months to see this class in action," the speaker felt changes were needed "to ensure the Assembly can continue to do the best job for the people of California," said spokeswoman Shannon Murphy.

She declined to elaborate, calling the changes "an internal caucus matter."

You'll notice that Darrell Steinberg did not mete out this punishment to, for example, Loni Hancock, who voted against the spending cap in the Senate.

I understand the desire for leadership to have control of their caucus, but unless we're concluding that Karen Bass really really wanted to cap state spending, there is no good reason to enforce party discipline on a terrible vote. When the spending cap goes down because of the arrogant way that Bass and the legislature hid the true costs, both on the spending side and on the taxation side, these three members who were right all along will appear to be the only ones who suffer.

I think it's worth writing or calling the Speaker and asking her why she wants to punish progressives for voting to protect services for Californians. And you might ask her, politely, to reinstate the Spending Cap Three.

District Address
5750 Wilshire Boulevard
Suite 565
Los Angeles, CA 90036
Phone: (323) 937-4747
Fax: (323) 937-3466

Capitol Address
P.O. Box 942849
Room 219
Sacramento, CA 94249-0047
Phone: (916) 319-2047

Critical Mass On Budget Reform

The weekly Democratic radio address (which ought to be a YouTube address, come on guys) called for an end to the 2/3 requirement for budget and tax increases. This is the first time in my memory that so many lawmakers are openly talking about revising 2/3. It's not a new problem - 28 of the last 32 budgets have been late due to legislative squabbling, with the fights becoming more protracted than ever over the past decade. And every economic downturn, no matter how slight, sets off a crisis. Assemblyman John Perez made it clear:

The budget would not have taken so long and would have not included non-budget related issues like an open primary if California did not have the unusual requirement of a two thirds vote for budget approval.

Reforming this two-thirds requirement should be a priority for all Californians.

Perez did not reference whether the new requirement should be the arbitrary 55% number, which is what the current initiative being circulated states, or a simple democratic majority. We've learned where a number of Democrats stand this weekend:

• Darrell Steinberg decided not to mention 2/3 hardly at all in his op-ed in the Sacramento Bee. That's a lack of leadership. No elected official should be speaking in public and pass up the opportunity to advocate for majority vote. He instead opted for a Broderist call for working together and the awkward tag line "Smarter going forward."

In comments to David Greenwald, Steinberg did call for repeal, but failed to pick a side.

“The answer in my view is to take this two-thirds supermajority requirement. We are one of three states in the country that allows a small minority of members to hold up the progress.... It doesn't really work for California; it worked this time barely because of the magnitude of the crisis... We need to take the question this two-thirds supermajority to the ballot. I feel even stronger now than I did when I started on December 1.”

• Karen Bass is also talking about 2/3, but she is looking at the arbirtrary standard:

Assembly Speaker Karen Bass, D-Los Angeles, has proposed one that would allow lawmakers to approve budgets with 55 percent majorities if they do it by June 15. After that, it would take two-thirds votes.

It's not necessarily that this kind of measure would definitely not pass because all the thrust of majority democratic rule is lost, but that's certainly a factor.

• In that same article, Loni Hancock calls for a simple majority:

Hancock has introduced a constitutional amendment that would require only simple majorities to approve budgets.

"California needs to have a normal democracy like every other state in the nation except Rhode Island and Arkansas," she said.

That's a talking point. 55% is mush.

The point is that we have the Democratic leadership finally talking about the main impediment to the perpetual budget crisis. Without two-thirds, you can fix a tax system that is too closely tied to boom-and-bust economic cycles. Without two-thirds, you can end the virtual bribery of Yacht Party and moderate lawmakers. Without two-thirds, you can end the Big Five process that facilitates official secrecy and backroom deals and use a deliberative process involving the committee structure and relying on the input of the entire caucus. And without 2/3, you won't have to hear from high Broderist windbags tinkering on the margins with proposals that make them feel good but will do absolutely nothing to solve the problem. It's kind of hilarious that the LAST proposal in George "Can't We All Get Along" Skelton's long list in today's column is this:

* A simple majority vote for budget passage; 55% at most. Scrap the two-thirds vote requirement.

25 Things About The California Budget

Done for the Facebook reference: I may not get to 25.

1. One bit of schadenfreude in this is that Doug McIntyre of KABC and the comment section of the OC Register are flipping out over the heretics who broke with dogma and voted for tax increases. McIntyre was particularly incensed about a Sacramento Bee editorial lauding Dave Cogdill as a "hero." He's not a hero, he's an extortionist, but McIntyre was calling him a guy who "took money out of your pocket to give to someone else." Typical Yacht Party jihadism.

2. It's very clear to me that this got wrapped up today before the Yacht Party's meeting in Sacramento, just blocks from the Capitol, so the spectacle of the crazies on the lawn demanding that old people eat cat food and public schools use the weeds out back for lunches be averted.

3. Joan Buchanan voted for the budget and then voluntarily cut her pay 10% in the name of shared sacrifice. It's a stunt, but it will probably go down well back home.

4. One loser in all of this is Zed Hollingsworth. He got nothing in this budget for his newly-minted Minority Leadership, including no re-negotiation, and the next major talks may not be until summer 2010, at which point a repeal of 2/3 may be a fait accompli. Meanwhile he's already embarrassed himself by scheduling a $1,000-a-person fundraiser with fat cat lobbyists just HOURS after being made leader, one that generated such bad press he had to cancel it.

5. The big winner in all of this, perhaps the only one? Twitter. In a cavernous Capitol with a dearth of political reporting, the microblogging site was practically the only way to get quality information in real time. It cannot replace in-depth analysis for a mass audience, but it was great for opinion leaders.

6. Though I've knocked him in the past, kudos to John Burton for recognizing the real problem and seeking to boldly fix it. From an e-mail:

If the last 48 hours has proven nothing else, we can no longer allow Republicans to hold the people of California hostage and therefore dictate to the Democratic majority the terms under which the budget is passed.

California should join the 47 other states who don't require a supermajority to pass the budget.

If I am elected as the next Chair of the California Democratic Party, I will make majority vote budget a top priority.

7. The federal stimulus is really helping out to reduce the pain in this budget. It does appear that as much as $10 billion dollars will flow to California in this fiscal year, which would "trigger" some jiggering to the cuts (which would be reduced by $950 million) and the tax hikes (reduced by $1.8 billion). It's an open question whether or not all of them can be spent right away because of the cash crunch, but we'll have to see how the markets react.

8. This is a baseline overview of the deal. The cuts are going to be really, really bad: 10% across the board for education, huge cuts for public transit operations, health care, etc. The new revenues basically fill in the loss of revenue from massive unemployment. Essentially, this is the same level of spending as a decade ago, adjusted for inflation and COLA, despite greater need and higher population. Not pretty.

9. Capitol Weekly reports that the cuts could hit Republican-leaning areas harder:

But data from the Legislative Analyst’s Office (LAO) suggests that cuts under the budget plan approved Thursda morning could likely hit many Republican areas hardest—while the tax burden is already falling more heavily on Democratic leaning counties.

According to the data distributed by Assembly Budget Committee chairwoman Noreen Evans, D-Santa Rosa, the majority of the counties using the most in state services are generally represented by Republicans. When this data on 2007-2008 state spending is compared to registration data from the Secretary of State’s office, it shows that seven out of the top 10 counties receiving state expenditures, measured per capita, have Republican registration majorities. Of the top 10 counties that contributed the most per capita tax dollars in 2006, eight have Democratic registration majorities.

“I hate to put this in partisan terms, but it’s the wealthier counties who are paying that are represented by Democrats,” Evans said. “Everybody needs to take a step back and look at what the data actually says.”

Food for thought.

10. Wrapping the week up into a nice little bow, on the day the deal was secured, they found Lance Armstrong's bike.

11. There's a big TV/film production credit in here. While as a member of the industry I'm mindful of runaway production, I reject the "race to the bottom" that constant credits to get crews to shoot in California presume. It's corporate welfare, essentially.

12. The "single sales factor apportionment," which is the massive business tax cut, doesn't kick in until FY2011, predictably and conveniently after Gov. Schwarzenegger is out of office and it will be someone else's problem to make up the revenue! It's almost like somebody planned it that way!

13. Of the items on the May ballot, only privatizing the lottery would really kill this whole thing and send everybody back to the bargaining table. That would be $5 billion in lost projected revenue for this fiscal year. But it's a NET LOSS OVER TIME, which is what makes the provision so completely absurd. Also, I'm not convinced anyone wants to buy our lottery, as revenue has shriveled in the past year.

14. Arnold still has $600 million in line-item vetoes to make to bring this into balance. Hands up if you think they will impact the poor, the elderly, the blind, and others with almost no voice in Sacramento!

15. Karen Bass is vowing "additional Legislative actions before the start of the new fiscal year on July 1." So get ready for more fun!

There is no 16-25.

Arnold Convinced He Can Turn A Donkey Into A Unicorn

He'd have a better shot at that than convincing the Yacht Party of anything.

Gov. Arnold Schwarzenegger gave Democrats the cold shoulder as he grew convinced he can somehow win Republican support for a midyear budget deal that includes tax hikes, Senate President Pro Tem Darrell Steinberg said Wednesday [...]

"He believes that he can convince the Republicans to vote for revenue increases given that we're now pretty much at the brink," Steinberg told The Bee's Capitol Bureau. "And if that's the case, great. Then we'll resume a different kind of negotiation. If it's not true, then I expect we'll be right back to our $17 billion-plus proposal and try to close that out."

Steinberg said he thinks lawmakers can still avert a cash shortage if they pass midyear changes by February. While the changes alone may not be swift enough to provide California with enough cash to pay its bills, he suggested that passage of a credible budget solution would enable the state to take out sufficient loans.

It's important to remember how stunningly ineffective Schwarzenegger has been at governing for five years. He hasn't brought one Republican along on ANYTHING he has sought. All of the policies he'll be talking about as part of his "legacy" were passed without any Republican votes. He has no chance whatsoever to attract anyone from his own party, and he never has. That is the epitome of failure as a leader.

Of course, you have to question whether he really wants to solve the problem at this point. It's probably more about political posturing at this point. Democrats wouldn't privatize the state, so Arnold will fall back on the same tired tactic of demonization while California goes up in flames.

"We all know how this movie goes," Steinberg said. "The governor will be out again in some community in California attacking the Legislature and elected representatives for failing to act. It's frankly a tired, old movie."

In the end, the Democrats couldn't -- or wouldn't -- meet Schwarzenegger's demands (more cuts, additional public-private partnerships and easing of environmental regulations for at least 10 projects) for him to sign the budget.

"The Legislature has been more than willing to meet the Governor halfway on his proposals, but we cannot in good conscience back an 'anything goes' approach to California's environment and a privatization scheme that would make George W. Bush blush," the Democratic leaders write in an op-ed in today's Bee.

Arnold was never interested in "creating jobs," he was interested in breaking his old nemesis, the unions. And when it didn't happen, he used the ridiculous excuse that now, when the Republican project to bankrupt government is almost realized, NOW they'll see the light. And in the end, even his "comprehensive" budget solution would only solve the problem until he could leave office, sticking his successor with another crisis.

Fail, fail, FAIL.

Very Close

Dan Smith reports that we're nearing a deal on the work-around budget which would cover half of the state's projected deficit between now and mid-2010.

"The areas of negotiations have significantly narrowed, and on those issues we're very close," said Senate President Pro Tem Darrell Steinberg, D-Sacramento.

Steinberg and Assembly Speaker Karen Bass, D-Los Angeles, talked via videophone to Schwarzenegger, who is vacationing in Idaho. Talks will continue over the weekend, with leaders hoping lawmakers can be called back to Sacramento by the end of next week to approve a final deal.

Schwarzenegger spokesman Aaron McLear said Democrats are "moving closer" to the governor's demands for deeper spending cuts and an economic stimulus package. "But we don't have any agreements," McLear said.

We know that the main sticking point issues were: 1) eliminating CEQA for certain infrastructure projects, 2) privatizing a lot of those public works contracts and 3) cutting state worker holidays and overtime. So the fact that Democrats are "moving closer" to those positions isn't exactly heartening, although it's contradicted somewhat later in the piece.

Bass said Democrats are trying to meet the governor's desire to stimulate private investment in public projects without hurting public employees by shifting their jobs to contractors.

The Democrats believe changes to state employee pay must be hashed out at the bargaining table between unions and the administration. "There's no question that state workers know that they're going to be part of the solution as well, but we also think it's very important to respect their ability to have a say in how that is done," Steinberg said.

Privatization is simply not the answer, it has no relevance on budget savings (cost overruns exist in the private world, too) and is just a way for Arnold to reward his Chamber of Commerce pals.

But what's notable here is that these are meetings between the Governor and the Democratic leadership, and the Republicans have been completely frozen out due to their inability to play nice with others. The byzantine plan for a majority vote on fee increases and tax shifts is still operative, and if it survives the subsequent legal challenge, suddenly the Yacht Party would be powerless. The Very Serious pundits have already turned against Yacht Party rhetoric on spending as the source of the problem, and even the most casual observer understands that the 2/3 rule is destroying the state. There ought to be a formal voting down of 2/3 (even this work-around will be insufficient to approve a new budget in June, which requires a 2/3 vote) but this is a creative solution to a crisis largely created by the rulemaking structure of the body and Republican intransigence (not to mention Arnold's vehicle license fee slash, the dumbest first act by a Governor in many a year).