Lost amidst the union-busting and efforts to destroy public schools in Arnold’s budget proposal is maybe the first serious, legitimate attempt to sensibly manage the prison crisis in decades, with a reform plan that would save the state $1 billion by boarding up the revolving door between jail and parole for nonviolent offenders.

Gov. Arnold Schwarzenegger’s latest budget proposal would reduce by tens of thousands the number of criminals behind bars and under community supervision.

Parole would be eliminated for all nonserious, nonviolent and non-sex offenders. The proposal would cut the parole population by about 65,000 by June 30, 2010, or more than half of the Christmas Eve count of 123,144.

At the same time, the corrections plan calls for increasing good-time credits for inmates who obey the rules and complete rehabilitation programs. Combined with the new parole policies that would result in fewer violators forced back into custody, the proposal would reduce the prison population by 15,000 by June 30, 2010. It stood at 171,542 on Dec. 24.

It is insane and wrong, particularly during this budget meltdown but really in general, that 2/3 of all prisoners entering the system in 2007 were parole violators.  These are minor, possibly technical offenses with little bearing on public safety that clog up the jails, creating constitutional crises.  California is the worst state in the union when it comes to parole policy, and these changes would simply bring the state in line with the rest of the country, all of which are able to manage without a perpetual crime wave.

Now, it may anger tough on crime advocates, as well as those who have a self-interested stake like the prison guards, but I have to say that they are the right people to anger.

The California Correctional Peace Officers Association, still at odds with Schwarzenegger over a new contract, blasted the plan.

“What it means is residual costs to all citizens of California and higher insurance rates and more crime,” said CCPOA spokesman Lance Corcoran, whose union represents about 30,000 correctional officers and parole agents. “These are individuals who do not take advantage of opportunities for change, and they are not going to change,” he said of the offenders who stand to benefit from the proposals.

More scaremongering isn’t going to work.  There is no reason for tough on crime policies to continue to rule the day.  Those days are over.

The proposals on rehabilitation and time credits for prisoners, which would accrue in county lockups and get advanced if detainees take drug, vocational and educational programs, are already in the work-around budget passed by the Legislature.  Arnold could go ahead and sign that, and put us on a more responsible criminal justice path immediately.  

We know that Arnold holds a grudge against unions, which he believes caused him that stinging defeat in 2005, and much of his goals on the budget lately have taken their aim at those unions.  In particular, Arnold is seeking to privatize major infrastructure projects, ostensibly for the sake of “efficiency” but as a practical matter to get the jobs out of union hands.  I thought that much of this was just a sop to Arnold’s friends on the Chamber of Commerce and just more of the conservative mantras of animosity toward unions and privatization equaling a universal good.  But there’s also a quid pro quo angle involved here in the form of David Crane, a top economic advisor to the Governor, who would stand to benefit financially from any public-private projects put forward by his current boss.

As Gov. Arnold Schwarzenegger demands that lawmakers allow private interests into California’s huge market for public works projects, a company with close personal and financial ties to the governor’s economic advisor is positioned to benefit.

The advisor, David Crane, has spent years promoting private-sector involvement in public construction projects — one of a few issues holding up a deal between Schwarzenegger and legislative Democrats to ease the state’s worsening fiscal crisis.

Babcock & Brown, the financial services firm where Crane worked for a quarter of a century, hired a Sacramento lobbyist last year to influence the governor’s office on so-called public-private partnerships, records show. Since joining the governor’s team in 2004, Crane has received hundreds of thousands of dollars of income from deals he made while at Babcock, a firm founded in San Francisco and based in Australia, according to financial disclosure reports.

Those deals included projects in areas such as telecommunications, in which he served as a financial advisor; personal investments in real estate from Babcock’s public-private partnership projects in England; and partnerships he formed with other Babcock executives to invest in oil wells and an Italian restaurant chain.

Crane is claiming that he cannot possibly benefit financially from any future deals, but one wonders whether, even if Crane is telling the truth, it really matters.  The network of friends and former business associates to which Crane’s advice could directly or indirectly steer business is vast.  This is how government-by-profit-taking typically works, rewarding friends and punishing enemies.  Whether or not Crane gets his profit now, as an economic adviser, or later, when he returns to Babcock & Brown or some other destination, is in many ways besides the point, just a clever way to avoid violating the letter of the law.

Jessica Levinson, the director of political reform at the nonprofit Center for Governmental Reform in Los Angeles, said Crane appears to be operating within the letter, though perhaps not the spirit, of the law.

“It starts to have the appearance of doing political favors for old friends, and that is not something that I think is illegal, but it still may not be fully ethical,” Levinson said. “I think it all comes down to, is he making this decision for public good or is he making it to help his old business friends?”

By the way, Crane is a Democrat, or at least that’s what it says on his voter registration card.  The issues are the same.  He’s a free market fundamentalist who probably thinks he’s advocating on behalf of a good solution for California.  After a while, the theft becomes so commonplace that the thieves don’t even see it as stealing anymore.

Here are your last links of 2008:

• An interesting piece from earlier in the week on Jerry Brown’s legal challenge to Prop. 8, strictly speaking the first time a state Attorney General has sought to invalidate a popularly passed ballot measure since 1964.

• In other Brown news, he’s suing the Bush Administration to block one of their “midnight regulations”- this one would reduce the input of federal scientists on mining and logging projects that may threaten endangered species.

• John Garamendi is, er, a little worried about the trajectory of the state’s financial prospects.

• Again, you can check out Arnold’s plan to cover the $41.8 billion dollar budget hole here.

• And a Happy New Year to everyone, with hopes for a great 2009!  Oh, and if you want to sue for divorce, stay at a parking meter beyond the proscribed time, or not wear a seat belt, better get it in before the end of the year – state fees go up after midnight.

The Schwarzenegger Administration unveiled a new budget plan today, calling for more tax hikes and increased borrowing.  One notable omission from the plan was Arnold Schwarzenegger himself.

“We are facing a major crisis, probably the most challenging budget situation the state has ever faced,” said Mike Genest, Schwarzenegger’s finance director. “The governor believes in acting immediately.”

Schwarzenegger is out of state and vacationing at the family residence in Sun Valley, Idaho.

That’s some amusing juxtaposition from the Sacramento Bee.

On to the proposal, which is little more than just a warmed-over recapitulation of earlier proposals the Governor has made, with some new elements from right out of fantasyland.

That plan called for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees. It also called for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.

The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children’s health services; changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.

If there’s one thing the private sector is desperate to do right now, that’s take it’s carefully guarded cash and give it to the state with the worst bond rating in the country.  They’re really dying to get that done.

The real patterns we see here are familiar to all of Arnold’s budget – a deep lack of concern for the most marginalized elements of society, and a hearty desire to break unions.  Schwarzenegger’s lowest point as a politician as maybe as a person was getting blown out in the 2005 special election.  He still believes the ideas he put forward in that election were sound, and blames unions for his defeat.  Thus you see Arnold going after union members’ livelihoods, insisting on state employee furloughs and generally trying to roll back labor protections that this state has held for decades.

In addition, there’s a recognition that this budget hole is impossible to fill without a magic angel.  The proposal names that angel “private borrowing,” but that’s just not going to happen.  The angel is going to have to be federal relief from a stimulus package.  California reducing its public spending by $10-15 billion at a time when no other entity can pump money into the economy is counter-productive and deeply dangerous to any recovery.  The feds are going to have to make up the gap.

Finally, a new proposal looking at the entire $40 billion dollar deficit suggests that the Governor isn’t interested in going forward with the $18 billion dollar work-around budget which he has been negotiating with Democratic leaders.  That would be a mistake, because of the exponential effect of continuing to do nothing in the immediate term.  Then again, if he were interested in action, the Last Action Hero wouldn’t be in Idaho right about now.

…if you want to go through it yourself, the budget plan is here.

…statements from legislative leaders on the flip.

Steinberg:

If the administration’s point today in putting forward a $41 billion solution is to try to impress upon us the urgency of the situation, it’s not necessary. We feel the urgency of the situation, and that’s why Speaker Bass and I and our staffs have been working diligently throughout the holidays to try to meet the administration halfway or more on their economic stimulus proposals. The fundamental problem, of course, with what the administration laid out today is that they don’t bring a single Republican vote to pass the revenue elements of their proposal.

Bass:

The governor’s proposal released today has one positive message: he may finally be coming around and realizing he needs to approve the responsible package of budget solutions the legislature passed December 18.

That package includes $18 billion in real cuts and new revenues to head off the cash crisis and take a big swipe at the deficit. It includes $3 billion in new funds for transportation projects and $3 billion in expedited projects voters have already approved. That means we’d be creating 367,000 new jobs at a time California needs all the new jobs we can get.

So far, legislative leaders have compromised, but the governor has been holding up these budget solutions and these new jobs. We’ve compromised by easing environmental restrictions for transportation projects. We’ve compromised by expanding public private partnerships. We’ve compromised by putting half a billion dollars in state employee compensation on the table.

The governor’s latest proposal assumes the cuts and revenues from the legislative budget solution package. That’s progress. So let’s get agreement on that package, keep California from going over the financial cliff, and then tackle the next round of hard challenges to find solutions to the rest of the deficit.

There are significant questions about what revenue the lottery can really bring in…there are concerns about whether California can manage the additional borrowing the governor is proposing … and there are problems with cuts that seriously harm the students in our schools.

All those issues can be addressed as we move through the rest of the budget process. Right now the most important step is for the governor to recognize that all his demands aren’t nearly important as the jobs we want created.

I appreciate the governor acknowledging today the necessity of the cuts and revenues the legislature approved and I hope the governor’s first act of the new year will be to sign the responsible package we are putting before him.

Villines:

Republicans believe the Governor took important steps to address California’s growing budget crisis by including budget reform and proposals to streamline government in his latest budget plan. We also join with him in making economic incentives and job creation a top budget priority.

We are also pleased to see the Governor has adopted the Republican’s proposal to let voters choose to redirect billions in existing tax dollars to protect the priorities of working families in these tough budget times. However, Republicans cannot support the Governor’s proposal to impose $14 billion in higher taxes on Californians. We believe this will devastate an economy already in turmoil and will hurt people who are struggling to make ends meet. Before we should even consider raising taxes on people, we need to take action to reduce government overspending starting with the elimination of all automatic increases, and enact an economic recovery plan to grow our economy and create jobs.

We cannot wait until the summer to enact responsible budget solutions for California. When the Legislature comes on Monday, we should vote immediately to pass the over $6 billion in common solutions that were in the special session budget plans put forth by Democrats, Republicans and the Governor. Taking urgent action to pass these reductions can get us through our immediate cash flow crisis. If we also take action now to get Californians back to work and to help stimulate our economy, we will be in a better position to address our state’s budget problem for next year and the years ahead.

(that’s cagey.  “We all agree on $6 billion in cuts, just do them now!”)

Cogdill:

I applaud the Governor for including elements of the Republican budget plan into the proposal released today. During these tough economic times, it makes sense to go back to the voters and ask them to redirect money for their intended purposes, such as children’s health and mental health programs, instead of sitting idly in the bank.

While Republicans have serious concerns about raising taxes during a recession, we appreciate that the Governor’s proposal includes difficult, but necessary reductions to bring state spending closer in line with revenues.

Instead of simply asking taxpayers to send more of their hard-earned money to Sacramento we should focus on economic stimulus. Growing and protecting jobs in California has a direct relationship to a robust state treasury. Stimulating our economy should be the Legislature’s top priority and it is unfortunate that the majority party has blocked these common-sense reforms to get more Californians back to work.

In addition, we need to ensure the state never again faces a deficit of this size by enacting long term structural reforms such as a spending cap and rainy day fund.

Republicans continue to stand ready to be a part of a responsible budget solution. The Governor’s early release of his budget underscores the magnitude of the state’s budget problems and the need for urgent action in addressing this crisis.

This is a major, if tentative, victory for criminal justice reform advocates.

California’s three-strikes sentencing law suffered a blow Tuesday when a federal appeals court struck down as unconstitutional a 28-years-to-life sentence for a sex offender who failed to register with local police at the correct time of year.

The U.S. 9th Circuit Court of Appeals sent the case of Cecilio Gonzalez back to federal district court in Los Angeles for resentencing after finding his 2001 penalty constituted cruel and unusual punishment, which is prohibited by the 8th Amendment.

Gonzalez’s harsh sentence was grossly disproportionate to his “entirely passive, harmless and technical violation of the registration law,” the appeals court said.

This case represented the unintended consequence of three-strikes carried out to its most ridiculous extreme.  28 to life for registering, but not at the right time of year?  Nuts.  This isn’t a crime in 11 states, and the maximum sentence allowed by customary law in California is three years.

In case the “tough on crime” absolutists start shieking about “activist liberal judges” overturning the will of the people, consider who wrote this opinion: Jay Bybee.  Nominated by George W. Bush Jay Bybee.  Writer of the fucking torture memo Jay Bybee.  Even a guy who justified the torture of prisoners considers this cruel and unusual punishment.  There is no indication whether or not Jerry Brown would carry this to an appeal, but considering the opinion of this very conservative jurist, I would imagine the US Supreme Court would at least potentially rule the same way, although they struck down a similar challenge to three strikes in 2003 on a 5-4 vote.  Put it this way, I don’t see Bybee as more conservative than Anthony Kennedy.

This does not invalidate three strikes entirely, but it certainly gives a ray of hope to those locked up for a minor third crime to challenge their sentencing.  And it provides a framework to show how unjust and counter-productive these stringent mandatory sentences are.  Three strikes is more of a symptom than the entire problem – the legislature has approved over 1,000 higher sentences in the past 30 years.  But this is an important start, to end the tyranny of “tough on crime” absolutism that has contributed to busting the state budget and making this the worst state in the union when it comes to the corrections system.

When I lived in San Francisco, though I was out in the Richmond I spent a couple years without a car using public transit without much of a problem.  Between BART, Muni, rideshare on the Bay Bridge and the ferries there are plenty of opportunities to get around throughout the city.  It can be a bit of an ordeal but it is well within the realm of possibility.  That hasn’t stopped Bay Area commuters from expressing anger about a proposed congestion pricing scheme.

America’s second most congested city could become the first to institute so-called congestion pricing to try to reduce downtown traffic, improve the environment and raise money for further transit fixes. A similar effort failed earlier this year in New York City […]

The online reaction was fast and furious.

“Why should I have to pay to drive on public streets?” asked one reader. “Driving has gone the way of smoking,” wrote another, adding that “it is easy and right to pick on drivers.”

Congestion pricing, said a third, “would be a regressive tax on those who don’t have good public transit options…”

People pay lip service to wanting to reduce their carbon footprint, and then bristle at tangible steps toward it.  I hate to quote Tom Friedman here, but he’s right – re-engineering America into a post-carbon future without a specific price signal like congestion pricing or a carbon tax is going to be impossible.  There are plenty of different ways to go about this.  California is experimenting with raising the gas tax as part of the work-around budget.  Oregon Governor Ted Kulongoski is mulling over a mileage tax.  Congestion pricing has worked in London, and toll roads as a quicker option are present across the country.  The point is, as Friedman says:

The two most important rules about energy innovation are: 1) Price matters – when prices go up people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit – and demand that the auto companies use this cash to make more fuel-efficient cars – and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.

There has to be a system that permanently changes consumer demand, which would permanently change what Detroit makes, which would attract more investment in battery technology to make electric cars, which would hugely help the expansion of the wind and solar industries – where the biggest drawback is the lack of batteries to store electrons when the wind isn’t blowing or the sun isn’t shining. A higher gas tax would drive all these systemic benefits.

The congestion pricing proposal in San Francisco has another appeal – reducing traffic and allowing people to increase their productivity simply by getting to where they need to go faster.  That includes the street-based public transit options as well.  Ultimately, if the congestion pricing money is used smartly, to enhance mass transit options, it makes complete sense to try it.

Paul Krugman has a good column today about how state balanced budget needs lead to perverse outcomes during an economic crisis that demands fiscal stimulus.

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers – state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

These state-level cutbacks range from small acts of cruelty to giant acts of panic – from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.

As Krugman notes, it’s crazy to cut public spending at the same time that private spending is drying up.  It’s a recipe for a Hoover-esque depression with no investment or economic activity, and no way to increase consumer spending or create jobs.

Krugman acknowledges that balanced-budget rules are only a part of this problem in the states.

The answer, of course, is that state and local government revenues are plunging along with the economy – and unlike the federal government, lower-level governments can’t borrow their way through the crisis. Partly that’s because these governments, unlike the feds, are subject to balanced-budget rules. But even if they weren’t, running temporary deficits would be difficult. Investors, driven by fear, are refusing to buy anything except federal debt, and those states that can borrow at all are being forced to pay punitive interest rates.

Are governors responsible for their own predicament? To some extent. Arnold Schwarzenegger, in particular, deserves some jeers. He became governor in the first place because voters were outraged over his predecessor’s budget problems, but he did nothing to secure the state’s fiscal future – and he now faces a projected budget deficit bigger than the one that did in Gray Davis.

That’s absolutely true.  And the suffocating 2/3 requirement is most of the problem here.  But once we get out of this crisis, hopefully with some assistance from the federal government for Medicaid and public works, we need to think a little more creatively about how to reduce the risk of a state’s fiscal trap on the greater economy.  One idea is allowing state governments the ability to deficit spend, perhaps through the creation of some federal Stimulus fund that states facing certain deficits can tap.  This is the framework behind the National Infrastructure Bank proposed by Sens. Dodd and Hagel last year, but I would broaden it out.  There’s also the option of federal guarantees for state bond markets to increase investor confidence, or allowing states in a fiscal emergency to borrow at lower federal rates in the short term.  These are steps similar to those being used to bail out banks, with the Fed intervening in the commercial paper market, and they should be tools for the states as well.

With structures like this in place, just maybe we can phase out the balanced budget amendments that force these bad choices on the states.  Ultimately, California can’t ask for help until they help themselves.  The bond market will simply not improve until investors are assured that the state can manage its own affairs.  But after the failed Schwarzenegger Administration, the next governor should think seriously about giving the state flexibility in an economic downturn, rather than going along with the necessary steps to making things measurably worse.

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).