Shorter Yacht Party: We’ll Raise Taxes If You Stop Funding Schools

Jim Sanders reports that tax increases are on the table for the Yacht Party, but only with additional long-sought concessions.  This actually is a shift because taxes weren’t even on the table before, but not much of one.

The GOP caucus realizes a tax hike will be part of any budget pact but could support it only if agreement were reached on permanent program cuts, a hard spending cap and other issues, lawmakers said.

“The reforms have to be there,” said Assemblyman Anthony Adams, R-Hesperia.

“(We must be able) to tell constituents, ‘Look, we had to raise taxes, we had to go forward, but we’ve fundamentally altered the way in which Sacramento is going to be budgeted – and we will not have these problems again because of it,'” Adams said.

Obviously the wavering from business groups who are frightened by the prospect of the state’s looming insolvency is driving this.  But let’s take a look at what the Yacht Party wants as an exchange for their support on taxes, which would probably be regressive ones like sales tax hikes instead of the progressive tax solutions needed like eliminating loopholes for businesses and upping the top marginal rates on the wealthy.

They want a spending cap.  They’ve wanted it for some time.  In fact, it already EXISTS, and it has for 30 years.  But the Yacht Party wants tighter restrictions.  The CBP blog has provided a chart showing what they really want.

The chart shows how much state spending would have had to been cut in the past decade to comply with the kind of cap that Republicans have offered in the past.

Our analyses found that such a cap would have limited total state spending in 2008-09 to $39.7 billion below actual budgeted levels. The General Fund’s share of the necessary reductions would be $31.2 billion. What would it take to cut $31.2 billion out of the General Fund budget? Eliminating all General Fund support for higher education; the judiciary; child support services; health care services; resources – including fire protection; and environmental protection. Maybe that’s why the campaign to modify California’s original cap was led by then-Governor George Deukmejian, then California Chamber of Commerce president Kirk West, and then-California Taxpayers Association president Larry McCarthy.

So the price exacted for revenue increases is an end to basically every service California provides.  At that point, who needs the revenue increases?

Of course, the Yacht Party would have to get voter approval for a spending cap, so it’s a gamble for them.  But this movement should not be confused with a serious desire to actually serve the needs of a struggling citizenry.

California Needs A New Financial Path – Not More Howard Jarvis Nonsense

I will be on KRXA 540 AM at 8 to discuss this and other issues in California politics

As the economic crisis deepens, Moody’s has issued a warning that California’s credit rating is about to be cut:

Moody’s on Wednesday placed the state’s ratings for various bonds on its watch list, warning the state that it could suffer a downgrade if it does not enact real solutions for its budget problem. Such a move would increase borrowing costs for California.

The credit ratings service said it will be “acutely focused on liquidity” in the next few weeks as the Legislature attempts to find a solution before the state runs out of cash. Moody’s said in a release that it anticipates its review of California’s bond rating to finish by the middle of April…

“Although the legislative and executive branch continue to debate fiscal and cash measures, and the Legislature is required to come up with solutions by February 3, we do not yet know whether solutions will actually be passed, or whether they will be workable, reasonable, and of a sufficient magnitude to achieve a degree of credit stabilization consistent with the current rating level,” Moody’s said in its release.

As the LA Times notes California’s bond rating has always been low. However, that was masked by the easy credit and generally lax attitude toward risk of the last 30 years. No longer. In a tight credit market risk managers are now paying very close attention to things like bond ratings, and many money managers are avoiding California issuances altogether.

Which is all the more reason why a new PPIC study is so well-timed. Pointing out that the need for infrastructure investment “far exceeds” our ability to pay for it with debt, and that we must innovate 21st century methods – from eliminating the 2/3 rule (this is becoming a common theme!) to raising the gas tax to greater use of public-private partnerships. While I’m skeptical on the value of the latter point, their first two recommendations are spot on.

This isn’t to say bond debt is bad – but we cannot rely on it alone to meet our infrastructure and stimulus needs. New taxes are necessary to make up the difference.

Meanwhile, Jon Coupal of the Howard Jarvis Association makes the absurd claim “there is no budget crisis”, that it’s just being conjured up by a bunch of big bad Sacramento politicians who are trying to scare Californians into paying more taxes. Coupal assumes that most Californians will do just fine if the government goes broke – that massive public worker layoffs and reduction of pensions will balance the budget with no cost to the state economy.

But such layoffs and impoverishment of the elderly – which is what pension cuts are, there’s no way around it – will actually reduce economic activity in California, which reduces tax income, which creates another budget crisis. It is likely Moody’s considered that in their warning, even if Coupal did not.

Of course, we should ask why anyone would listen to Coupal. His organization has had the run of the state for the last 30 years. They won the Prop 13 battle and have won numerous subsequent battles to cut taxes and spending. We got the California they wanted. And it’s broke. If it’s Coupal’s ideas that are merely bankrupt, so be it, but he should not drag the state down with him.

Calitics in the Media – Archives

A Note to the Media: If you are interested in speaking to one of our editors, or booking one of us for a radio or TV appearance, you will find our contact information here.

Calitics

SF Chronicle 4/28/2007

Brian Leubitz

Your Call Radio on What We Can Cut in the Budget (6/17/09): Download MP3 here

Your Call Radio on State Budget (4/19/09): Download MP3 here

Your Call Radio Media Roundtable (5/22/09): Download MP3 here

David Dayen

KPFA 5/28/09 Listen here

Robert Cruickshank

KRXA 540 AM (Monterey) Every Thursday Morning at 8 Listen here

Which Way, L.A.? 2/20/08 Listen here

Big plans sinking

For years, one of the big projects for Mayor Newsom was the re-development of Treasure Island.  It was important enough, or excuse enough, to fire Tony Hall.  The choice of a project leader for that site has been one political nightmare after another. Now, it appears that the whole thing may have been a good idea in the wrong place.  

There is this little problem with the fact that the oceans and the atmosphere are both warming.  When water warms, it expands and the sea level rise is like a Mavericks wave about to hit. Now, they are talking about having to truck in more land fill do deal with a 3 ft rise in sea level forecast within 70 years.  Wonder what happens when that is not enough.

I guess that is what happens when developers and politicians get together.  They get swamped with reality. Or is this just another Newsom bad judgment?

Now, I want some one to tell me one more time why it is too expensive to solve global warming now.  The real costs of avoidance are beginning to hit and, like a wave approaching shore, they will only get higher.  

Wednesday “Ready On Day One” Open Thread

Just wanted to use the term “President Obama” at the beginning of this.  Has a ring to it.

• A few days old, but this is an important story.  We talk a lot about the Capitol news bureaus being thinned out, but if you think that’s bad, look at the almost non-existent pool of reporters covering county governments, in particular the country’s largest, LA County.  The budget is bigger than most states, and yet the Board of Supervisors has five members and only FOUR reporters.  There’s a direct line that can be drawn between media invisibility and the current crisis in California government.

• Gil Cedillo, running for Hilda Solis’ Congressional seat once it’s vacated, has a website.  Calitics hopes to talk with all the CA-32 candidates in the coming weeks.

• Here’s a story about the political tightrope being walked by newly-elected candidates Alyson Huber and Joan Buchanan.  Legislators like this are always given the bad advice to act like the more conservative elements of their districts even though they won election promising something wholly separate from that.  The bias is that the campaign consultants of their OPPONENTS set their governing strategy.  That’s bogus.  Make your case and the voters will respond.

• If you’re into the deathly important business of which gubernatorial candidate talked to which inaugural ball participant, this is the article for you.  I have to say that I cannot work up even a little bit of enthusiasm for the 2010 race, especially considering that “leader of a failed state” is about as praiseworthy an honor as “perpetrator of the smallest genocide.”  So you may be able to find 18-month-in-advance horse-race stories elsewhere.  Go get them.  Because the next Governor of this state is not likely to be a movement candidate and as such is probably destined for failure, and so any investment of my time seems foolhardy.

John Chiang Steps in Again, Stops the Furloughs

For the last week or so, all of the elected officials have declined to follow the Governor’s lead on the two day/month furlough program. One by one the legislative leaders and then all of the constitutional leaders said they would not be forcing their staff to take two unpaid days off.

Well, you can go ahead and mark this down as another hollow threat from Governor Hollow Threat.  Today Controller John Chiang called the governor on his furloughs:

“California law is clear that only the Legislature has ultimate authority over setting state employee salaries,” Chiang said. “While I agree with the Governor that State employees – like all Californians – must tighten their belts, it must be done so in a manner that is consistent with the rule of law.” (Sac Bee 1/21/09)

Of course, Arnold could go to court over this, and who knows maybe he will. But by the time any of this actually gets litigated, he’ll be off to his next gimmick.  Perhaps one of these days he’ll cut out the gimmicks and get to getting a Republican vote (or 5) for some revenue increases.

Feinstein Must Answer For The Logistical Nightmare In DC

Go read some of the comments from the Survivors of the Purple Tunnel of Doom, which now has nearly 2,000 members.  These were all people who had tickets to the inauguration denied entry to the event because of bad planning by the Joint Congressional Committee on Inaugural Ceremonies.  The event ended up peaceful and largely injury-free, but it really could have been a disaster, as the scale of the crowds just overwhelmed the planning.  That’s maybe to be expected in one sense, but one of the cardinal rules of politics is that you take care of the folks who take care of you.  Those who were denied access were the activists, staffers and volunteers who helped make President Obama’s election successful.  As Chris Bowers observes, making their lives miserable is just bad politics.

At the inauguration, thousands of activists and staffers with tickets were unable to get inside the event, and they are not very happy about it. Check out the comments on the Purple Tunnel Of Doom Facebook group for a few couple hundred examples. The problem continued last night, when several thousand more staffers and activists, all with tickets, were unable to attend inaugural balls. This is an epic fail of glue politics, and it could have not inconsequential repercussions.

Even as one of the purple ticket holders who was unable to attend to I don’t want to dwell on what happened yesterday. Further, I doubt that this is an aspect of politics that many blogosphere denizens will view as valid, as it hints of patronage politics. However, the simple fact is that if this keeps occurring, it will cause the Obama administration problems in passing legislation, and during his re-election campaign. Simply put, they have to fix their problems in this area. Right now, the excitement over the trifecta is keeping a spirit of forgiveness afloat, but that won’t last forever.

When people work their ass for you and your cause, they need to be made to feel welcome. As such, problems like this can be very damaging.

The Obama team put the responsibility for this area of logistics to the JCCIC.  And they have put a letter on their website apologizing for the many problems.  Dianne Feinstein was the head of that committee, and ultimately answerable to this constituency.  It would be very concerning if the anger over bad treatment, because of the JCCIC’s inability to recognize the historic nature of the event and the huge crowds exepcted, would have an impact on future legislative and electoral gains.  I think people are willing to forgive but are looking for some answers.  Feinstein is the one to offer them.

John Aravosis has more.

UPDATE: Feinstein has a new statement out:

“I have just spoken with Mark Sullivan, Director of the Secret Service, and I have asked him to convene all law enforcement and other parties involved in planning for this Inaugural to conduct a prompt investigation into two serious incidents that have been reported.   These reports have prompted great concern by members of the Inaugural Committee, including Senator Bob Bennett,  and by Congress in general.

The specific incidents include the report that a decision was made to cut off access to Purple and Blue standing areas, which meant that a large number of ticketholders could not reach their designated areas.

I am also aware of the incident involving the 3rd Street Tunnel, where thousands of people were stuck for several hours and apparently without any law enforcement presence.

There may have also been other irregularities, but I have heard enough to know that something went wrong and we need to find out what happened.  Mr. Sullivan has indicated that he will provide a full report.

I would encourage people who have direct information about these incidents to contact the Secret Service, in addition to contacting the Joint Congressional Committee for Inaugural Ceremonies at feedback-at-jccic-dot-senate-dot-gov.”

That’s a good start.

OC to DC

California State Assemblywoman Fiona Ma (D-SF) made the trip to DC to attend the inauguration. Below are her thoughts on what she's experienced over the past few days:

Excitement for this trip had been slowly building since Election Day last November, and now it was finally here.  My trip started last Friday night when Governor Schweitzer of Montana enlightened the packed house at the Orange County Democratic Dinner. He recounted the journey of his own family and his grandmother, who immigrated by herself, starving and penniless from Ireland, and went to Montana because she was offered free train tickets to homestead the frontier.  He also shared real-life stories about how progressive Montana has been under his leadership, especially in education where they're working towards the goal of mandatory daylong kindergarten and free preschool. 

The next day, I left sunny California bound for the complete opposite side of the US, where temperatures hit a chilling 19 degrees.  (I definitely felt safe as Leon Panetta, our CIA Director nominee, and his wife boarded the plane before me.) From the moment I landed, there was definitely a thrill of excitement in the air.  The streets were filled with vendors selling all sorts of Obama paraphernalia, and a buzz was about as nearly everyone was proudly wearing their Obama pins, hats, and scarves.

The same excitement charged the air Inauguration morning.  The sun was out, and the air was crisp and cold. The Metro train and Union Station were packed. Reverend Jesse Jackson and his entourage passed us on the streets as millions of people maneuvered to get to their gates, stand in line, and become part of history.  People cheered “O-ba-ma, O-ba-ma, O-ba-ma” and waved American flags on the Capitol Mall.  It was great to hear the familiar voice of our own Senator Dianne Feinstein officiate the proceedings and the music of my “cousin” Yo-Yo Ma's performance. (A part of me wondered if his fingers were cold).

As we waited for the Man of the Hour, I felt grateful for all the freedoms that we have, including the right to choose our leaders. I definitely feel a strong sense of pride in being American because Barack Hussein Obama represents the realization of an American Dream where one can work hard, dare to dream big, and succeed.  For my own father, Obama's election represents a major step closer to a colorblind society.  As a daughter of immigrants, I remind others that democracy is not only a right, but a privilege that needs to be cherished, honored, and protected. 

In the words of our 44th President, “All are equal, all are free, and all deserve a chance to pursue their full measure of happiness.” God bless our new Commander-in-Chief! 

And don't forget, January 21st is National Hugging Day so go out and hug a few people today!

Click here to watch a short video at FionaMa.com that Fiona recorded while in DC this week.