This was the frequent mantra of Arnold Schwarzenegger during the budget crisis, as he set out to fill the shortfall with a combination of taxes and cuts so that everyone has to sacrifice.  We’ve already seen how the tax increases were tilted toward the poor and the middle class, with more of the burden falling on them.  Now Michael Rothfield at the LA Times has discovered that the sacrifice has not extended to Arnold’s cabinet officials:

John Cruz, the appointments secretary for Gov. Arnold Schwarzenegger, lives hundreds of miles from the state Capitol, where his staff scrutinizes candidates for California’s many boards and commissions.

When Cruz works there, he goes by plane. He has charged taxpayers for his flights and for hotel bills of up to $382 a night on regular trips between his Orange County home and Sacramento, records show.

Carrie Lopez, director of the Department of Consumer Affairs, charged taxpayers to fly from Sacramento, where she works, to Los Angeles, where she lives, to attend a Justin Timberlake concert with her daughter. She listed the trip on her expense report as a meeting with the energy company that paid for the concert tickets. Lopez also billed the state for meals on days she received those meals for free from corporations, according to state records.

Rosario Marin, head of the State and Consumer Services Agency, blamed a miscommunication for her failure to repay $582 the state spent to fly her to Washington in July to speak at the Woodrow Wilson International Center for Scholars, an appearance for which she received $1,000. She reimbursed the state for the airfare after The Times inquired about the trip last month.

Over the last two years, as California has slashed services and scrambled to pay bills, top administration officials have made free use of government expense accounts with little oversight and, in some cases, no documentation, The Times has found.

Together, they have spent tens of thousands of dollars on state-funded trips between Sacramento and the areas where they live, justifying the travel as necessary for state business. Some built weekend trips around one short meeting, and some charged the state to attend events with no apparent connection to their jobs.

This is the kind of expense-report diving that local news outlets often use as a stand-in for real accountability while right-wing frames on substantive issues are preserved.  However, it remains laughable for the Governor to try and act as an independent voice railing against corruption in Sacramento when his staff is so enmeshed in it.  In one example in the article, Carrie Lopez, who mind you is the director of the department of Consumer Affairs, listed a $51 lunch from Bank of America as a gift on the same day she collected a per diem for lunch.

The double dipping and runaway expense accounts point to a lack of oversight more than anything, and on this point I’d say the fish rots from the head down.  Anyone who has lived in Brentwood or anywhere on the Westside knows that Arnold Schwarzenegger has a sense of entitlement to the point that he expects free services as a result of his exalted status.  Ask any merchant who has interacted with him.  And yet this is the guy who thinks he can have an ounce of credibility criticizing the salary or benefits of any legislator in Sacramento, or any state employee for that matter.  How much of this money could have gone into avoiding furloughs?

It’s a scandal, but not a surprising one.  Arnold and his staff feel they deserve the best.  They must feel that the people of California deserve something less.

With the unemployment rate soaring to double digits and less revenue flowing to the state, it was clear that some taxes would have to be raised in the last budget.  To the extent I have criticized those taxes, it’s because they are flat or regressive, increasing burdens on those with the least ability to pay.  Via California Budget Bites, it turns out that it’s even worse than I thought:

One of the last-minute changes to the budget agreement substituted a 0.25 percentage point increase in each of the state’s basic income tax rates in place of a 5.0 percent income tax surtax. The enacted change would increase each of the tax rates for two or four years, depending on whether the spending cap that will appear on the May special election ballot is approved by the voters. For example, the 4 percent tax rate would be 4.25 percent under the new law and the 9.3 percent rate would go to 9.55 percent. As discussed in yesterday’s blog post, the increase would be cut in half – to 0.125 percentage points – if the Treasurer and Director of Finance certify that the state will receive at least $10.0 billion in “flexible” funds from the federal economic recovery bill. In contrast, the proposal under consideration until the final night of budget negotiations would have required all personal income taxpayers to add an amount equal to 5.0 percent of their tax liability for the two- or four-year period.

Because of this seemingly minor change, lower-income households will experience a much larger tax increase than under the previously considered proposal. The tax liability of a married couple with a taxable income of $40,000 will rise by 12.9 percent under the enacted policy, as opposed to 5.0 percent under the proposal previously under consideration. In contrast, the tax liability of a married couple with a taxable income of $150,000 will rise by 4.0 percent under the final agreement, instead of 5.0 percent under the original surcharge proposal. High-income earners will experience the most significant change – their tax liability will only rise by 2.9 percent under the enacted policy.

It is somewhat likely that the stimulus trigger will be reached – we will know around April 1 when the Governor’s Finance Director and Treasurer Lockyer make the decision.  Still, this is an outrageous undermining of the public trust.  We are essentially reacting to a yawning budget gap with taxes that mostly hit the middle class and below.  That’s true of the penny increase in the sales tax (which will now reach close to 10% in LA County) and it’s true of this income tax increase.  This is the conservative veto in action, folks.  And it’s not going to change until it’s eliminated.

The latest poll numbers for the Governor and the legislature are pitiful, although clearly the electorate has hit Schwarzenegger more over the recent budget crisis.

Overall, just 33% of California adults give Schwarzenegger a positive job rating, barely above the record low of 32% that he hit in 2005 after pushing a package of failed ballot measures in a special election. As recently as January, Schwarzenegger’s favorable job rating was at 40%.

Faring worse is the state Legislature: Its 21% approval rating matches the record low it set in several previous polls.

There are a number of other questions in the poll regarding the right to choose and birth control, which you can see here (Short version: Californians still support the right to choose, though parental notification gets narrow support.  I would imagine that how the question is asked accounts for that, although this will probably give hope to the forces that have lost parental notification on the ballot three times in a row to try yet again).

What I want to focus on for the moment is those appalling numbers for our political leaders.  Given that, as well as the public tendency to vote down ballot initiatives, you’d think the last thing they’d want to do is put the public faces of lawmakers on the budget items in the May 19 special election.  You’d be wrong.

Gov. Arnold Schwarznegger, Senate President Pro Tem Darrell Steinberg and ex-Senate leader Dave Cogdill will join hands today for the first campaign event before the upcoming budget special election.

The trio — alongside other advocates for the package — will host a press conference this afternoon at a Sacramento-area child development center.

Now, maybe Darrell Steinberg has some grand design where the limits in the spending cap part of the package can be overcome.  Or maybe he’s perfectly content with ratcheting down spending and making it impossible to revive it no matter what the economic situation.  Whatever the reason, it seems like terrible strategy as well as bad policy.

On the flip side, SEIU editorializes against the spending cap in Capitol Weekly:

One of the most troubling aspects of the budget deal to us is the budget cap, which promises to make the cuts permanent by making it virtually impossible to restore them in better times. For SEIU members that translates into year after year of higher caseloads for social workers who help children endangered by neglect or abuse; ongoing cuts to healthcare for families struggling with unemployment or low-wage work; a future of shrinking support for families who have children with autism or cerebral palsy; ongoing cuts to hundreds of state services from parks to oversight of hospitals and nursing homes, and ongoing cuts to home care, higher education, K-12 schools, and other vital public services.

We know that we are not alone in our concerns. In fact, Californians do not support the inevitable result of a budget cap – each of these cuts is deeply unpopular; yet legislators have already voted for the cap without a single hearing on the cap’s effects, without explaining its effects to their constituents, and without asking for detailed analysis from the Controller, the Treasurer, or independent outside experts.

This is not the way such a serious measure should have been considered or passed. It reflects poorly on the Legislature as a deliberative and transparent body.

With the Governor trying to get in on the Constitutional convention, and offering a vision of reform that trades majority vote for the spending cap, essentially one horrible outcome for another, it’s beyond clear that, if the spending cap passes, it will be locked in for a very long time no matter what other reforms are undertaken, and with a baseline spending level “established during one of the, if not the, worst budget crisis in the state’s history,” as the author writes.  This would cripple the state in a fundamental way.

Anthony Wright of Health Access has a good piece musing about whether or not we’ll still need additional spending cuts or revenue increases before the next fiscal year budget in June 2010.  It basically hinges on two things: the May 19 special election, where close to $6 billion in budget money is on the line, and the federal stimulus, which if it provides enough money to the state could trigger some reductions in cuts and taxes.  First, the trigger:

Although the budget contains a number of spending cuts, it also contains a mechanism to restore some of those cuts using federal funds authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) signed by President Obama on February 17, 2009. The mechanism requires that in order to restore cuts, the state must receive at least $10 billion in federal funds to offset General Fund costs. In other words, $10 billion of federal funds are needed to “trigger off” some of the cuts.

The precise amount of federal stimulus funds for California is still being determined, however, the Director of Finance and the Treasurer must determine by April 1, 2009 whether federal funds meet the $10 billion threshold to trigger off the spending cuts. Specifically with respect to health care cuts discussed above, if there is sufficient federal funding, Medi-Cal benefits would not be eliminated and public hospital payments would not be reduced. If there is insufficient federal funding, those cuts and others–including steep cuts in SSI/SSP, IHSS, and CalWORKS would be implemented July 1, 2009.

Hopefully, these funds will make it to California’s shores to stave off the worst cuts.  Ultimately the federal government should seek a goal of stopping all cuts in public services and layoffs of staff, and should fill the gap in revenue in the short term.  The states are being punished through little fault of their own, and counter-cyclical cuts threaten the success of recovery.

The next element is the May 19th special election.  We’ll be covering that in the weeks to come, but Wright lays out the most important initiatives that relate to the budget.

* Proposition 1D would amend Proposition 10, which was passed in 1998 and increased the tobacco tax to be used exclusive for services for children up to five years old. This budget, subject to voter approval, would redirect Proposition 10 funds of up to $340 million in the first year and $268 annually for the following five years to be appropriated by the Legislature. As a result, local First Five Commissions would have to cut the programs they fund, such as county “Healthy Kids” coverage initiatives.

* Proposition 1E would amend Proposition 63, which in 2004 raised the income tax for the upper-tax bracket to earmark funding specifically for mental health services. This budget, subject to voter approval, would redirect Proposition 63 funds of up to $226.7 million in the first year and $234 annually for the following year from Proposition 63 mental health services to backfill the existing Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program.

* Proposition 1A would pass a Constitutional amendment to institute a spending cap, to limit the amount of revenue that can be appropriated for the General Fund. It also would extend the temporary taxes to last from two to five years. Under the spending cap, any revenues above a forecasted amount must be put in a “Budget Stabilization Fund,” and can only be accessed under certain circumstances. In other words, the spending cap locks up money making the state less able to fund education, health care, and other core state services.

Wright doesn’t mention Prop. 1C, which would sell the state lottery to fill a $5 billion dollar hole in the short term, but cost the state money in the aggregate in the long-term from the loss in consistent revenue.  I’ve always thought it was a stupid and shortsighted idea and would be unlikely to support it in May.

But clearly, Prop. 1A is the most dangerous measure in the long-term, locking the state into deep cuts into the distant future, which would ratchet down services regardless of demand or growth.  This is the long-sought effort by the far right to drown government in the bathtub.  And yet to this point, no opposition has been found to this measure.

The last time Gov. Arnold Schwarzenegger asked California’s voters to permanently cap state spending, organized labor dumped millions of dollars into a successful campaign to defeat his proposals.

Four years later, Schwarzenegger and other proponents are hoping the unions will sit out the May 19 special election in which the governor is again asking voters to enact a spending cap. That measure was placed on the ballot by the Legislature as part of last week’s deal to resolve the state’s cash crisis.

The official ballot arguments have been submitted, and in what administration officials hope is an encouraging sign, the best-funded labor groups opted not to weigh in against the measure. At least not yet.

In addition, the state’s major antitax groups have split over the measure, with at least two supporting it even though it would prolong the tax increase that the Legislature passed last week. The California Taxpayers’ Assn. signed the ballot measure backing the spending cap, and Lew Uhler of the National Tax-Limitation Committee said he also favors the measure, called Proposition 1A.

The above-mentioned provision that extends the taxes passed by the Legislature makes for approximately the easiest demagoguery in the history of California initiatives.  Jon Coupal at the Howard Jarvis Taxpayers Association says his group will try to defeat the measure.  The fact that the ballot arguments had to come in so quickly may be driving this perceived silence on the part of slower-moving unions, but they need to make themselves clear.  Do they support a spending cap that will unquestionably take the state backwards in the future, or will they oppose it – and back up that talk with action?  We shall see.

I don’t actually support Eric Bradley for a second term as CDP Controller.  I think Hillary Crosby would be a fresh face and give the large Progressive Caucus coalition a grassroots voice in the leadership.  But I have to applaud Bradley, an occasional commenter here, supporting a majority vote to restore democracy to the state.

I look forward to working with all of you in building a stronger California Democratic Party-one that is ready for the challenges ahead, filled with energy and enthusiasm to elect a Democrat as Governor in 2010, to pass an initiative that reduces the threshold for the state budget to a simple majority, to defeat the destructive Louisiana Style Open Primary initiative proposed by Arnold Schwarzenegger and to maintain our majorities in the State Legislature.

This is a Party Controller candidate.  If he can advocate for majority vote, anybody can.  That’s why it’s truly disappointing to see Jerry Brown mute on this issue, letting everyone else in the state lead while the issue is in the forefront while he calibrates his position.  It’s a cowardly stance, and nobody running for Governor should be silent on the only issue that will allow them to actually govern.  Some have said that it is better to say nothing than to be counter-productive in calling for something arbitrary like a 55% standard.  There’s a slogan for you: “Brown ’10 – Not Being Counter-Productive.”  Inspiring!

One thing that Bradley and many other Democrats leave aside is an explanation that we have not one 2/3 requirement, but two.  There is the 2/3 vote needed to pass a budget, and the 2/3 vote needed to raise taxes.  Bill Cavala, who ably represents warmed-over consultocracy CW in Sacramento, argues that Democrats should only attempt to change the budget requirement due to political expediency:

Here’s the good news: voters do agree that a budget should be passed by majority vote. They would, albeit somewhat narrowly, support such a ballot measure.

Now here’s the bad news: they will not support changing the requirement that demands a two-thirds vote to raise taxes. Combine the two measures, and both would be defeated.

Convinced by media coverage of government that yearly exposes a few million dollars in obvious waste or egregious prerequisites for politicians, voters believe in most circumstances new taxes are not needed. Cut the ‘waste’ instead. But even voters got the word that lopping the pay raises of the 20% of the Legislature’s staff that received them wouldn’t cover a $42,000,000,000 revenue shortfall […]

While it would be nice to exclude Republicans from tax decisions, we are unlikely to be able to do so anytime soon. By combining the 2/3 tax hike requirement with the 2/3 budget requirement we risk losing both – as labor found out when they put this package on the ballot a few years ago, spent millions, and lost big.

By taking the half a loaf we can get – the reduction of votes needed to pass a budget to a majority – we still gain a great deal. Republican lawmakers are certainly now aware that Democrats will pay a high price to keep the State solvent. The sidebar deals needed to raise taxes get some progressive praise now – but what sidebars will be demanded to pass a spending plan (without new taxes) in the future? And what makes anyone think the Democrats in the Legislature wouldn’t pony up?

This is the stupidest argument I’ve ever heard.  Changing the budget but not taxes is TOM MCCLINTOCK’S view of things.  It makes Democrats own a budget that can only be modified with expenditure cuts.  In the event of a deficit, Democrats would have to either cave and cut services or hold out with the exact same dynamic that we saw this year.  And it will not allow the legislature to tackle the structural revenue gap that comes from a tax system too closely tied to boom-and-bust budget cycles.  This is perverse consultant-class thinking that is dangerously outdated, constantly compromising, and believes in political reality as static rather than lifting a finger to change that reality.  Thinking that March 2004 and June 2010 are the same is just ridiculous, and thinking that no argument can be made to the public, after the longest and most self-evidently absurd budget process in decades, that the system is fundamentally broken and has to be changed to allow the majority to do their job, is in many ways why we’re in this position to begin with.

So not only do we have to watch Democratic leaders to see whether or not they support repealing 2/3 with a majority vote rather than some arbitrary number, we have to watch them to see if they want to split the baby or not, either repealing both 2/3 requirements, or just dealing with the budget without taxes, which would actually put Democrats in a demonstrably worse situation.