There’s an incredible scandal brewing at the Orange County Fairgrounds and Attorney General Jerry Brown better get on top of this before it blows up in his face. The deal to sell the fairgrounds has stunk, and the Attorney General’s office is right in the middle of the muck.

The Fairgrounds is run by an obscure state agency, the 32nd Agricultural District, and their legal representation comes from the Attorney General’s office. Unfortunately, the current functionary has completely failed to protect the interests of the people of the State of California. The Fair Board, political appointeees of the Governator, have gone far beyond violating open meeting laws, and instead have used public funds in a conspiracy that approaches racketeering.

Here’s how the story unfolds.

The Board of Directors of the Orange County Fair Grounds are as arrogant and clueless a bunch of Yacht Party Republicans as you would find anywhere. Their appointments were political plums for big campaign contributors. Until public scrutiny ended the practice, each of them was receiving tens of thousands of dollars a year  in front-row concert tickets complete with catered meals at the Pacific Amphitheatre summer concert series.  

When their perks were taken away, they redoubled their efforts to free themselves from the restraining yoke of government for the “good of the Fair”. There’s a bizzarro feeling when you listen to political consultant Dave Ellis talk about how oppressive government is as he sits as Director of a government agency which is supposed to be acting in the public interest. But somehow, the idea that they receive no public subsidy, other than the 150 acres of land and over a century of history as a county fair, makes them some free enterprise and justifies their plans to chart their own destiny. No furloughs for their employees and no unions while you’re at it, thank you. No pesky open meeting laws. And bring back those free tickets.

As the state budget negotiations unfolded this year, Republicans dusted off Schwarzenegger’s failed plan to sell irreplaceable assets including the LA Coliseum, race track at Del Mar, and other valuable pieces of state-owned real estate.  Fair Board appointees saw this as an opportunity to achieve their long-held goal of removing their fiefdom from public scrutiny, hired Dick Ackerman to lobby for them. As detailed in the Daily Pilot,

The state Assembly voted to put the property up for sale in July thanks to lobbying done on the fair board’s behalf by former state Sen. Dick Ackerman.

“So, we sort of took a different tack and said ‘Why fight the government on this, and let’s see if we can turn it into a positive,'” Dodge said.

Ackerman, who works in Irvine as a partner with the law firm Nossaman LLP, said he was hired to do some of the initial work in Sacramento.

“In order for the fair to be sold, it would require budget language to authorize the state to sell it,” he said. “I did some preliminary work to get the language in the budget.”

Asked why the fairgrounds was the only property successfully inserted into the budget, Ackerman said “nobody else stepped up and said they were interested. Del Mar Fairgrounds thought about it, but they didn’t have the consensus.”

Ackerman would not disclose how much money he made representing the fair’s board, citing attorney-client privileges.

There are some huge problems with the legislation that was thrown together in secret with no public hearings, and pushed through in all-night sessions. One is the estimated value of the property in the budget negotiations. It’s nowhere close to the absurd amount used in the legislation if it can only be used as a fairgrounds, which is what Costa Mesa zoning dictates. Another is the obvious way that the directors have conspired to act secretly. The latest episode has to do with the formation of their non-profit foundation, where six of the eight members of the board have somehow formed a corporation to buy the Fairgrounds without ever discussing anything that has to do with public business.

Let’s recap. The directors of a public agency conspire in secret to sell public assets to themselves in a sweetheart deal in complete violation of the state open meetings law. The Governator and Assemblyman Van Tran are apparently in on the deal. Costa Mesa Mayor Allan Mansoor, heir apparent to Van Tran’s Assembly seat, is either part of the deal or clueless; with Allan it’s always hard to tell. And the Assistant Attorney General who is supposed to be protecting the public interest is where, exactly?

Aside from the ethics of the people who are doing this, and the blatant conspiracy to violate the Bagley-Keene act, you might wonder what’s wrong with a benevolent non-profit running this operation. It’s pretty simple. The purchase price will need to be financed somehow, and it’s pretty obvious that the money will come from disposing of non-performing assets, which include all of the low-key, low-intensity uses like the equestrian center and the farm. Meanwhile existing uses will need to be squeezed for more revenue.

If Brown wants to get out from under this emerging cloud of scandal, he should immediately call in the FBI and bring in the most dogged prosecutor in his office to help, while putting a few AG’s on disciplinary leave.

And Democrats in the legislature need to stand up and hold hearings on this deal, exposing this to the sunlight that it needed all along, then carry a bill to reverse the sale, while setting up a much better governance system for these special districts.

Are you listening, General Brown? There is a groundswell of public opinion in Orange County, including 10,000 people who have signed a petition to save the Equestrian Center, and a coalition of Fairground vendors, patrons, employees, and Costa Mesa residents who aren’t going away.

Don’t tell us you can fix a broken state if you can’t fix the broken ethics of your own Attorney General’s office.

Absolutely fantastic work by an incredibly talented and passionate team.

If we didn’t have this resource, we wouldn’t be informed on state issues. The issues are complex, and the legacy media doesn’t have the resources or the desire to handle complex stories.

As policy wonks and issues-based progressives, most of the writers here tend to understand the implications of the decisions in this train wreck of a budget. The savings are phony, but the cuts are real, and it makes you want to scream when you realize that the budget is a vast tax on the future of California.

One dollar stolen from road maintenance easily turns into an eight dollar liability in the future when you need to tear a street down to the roadbed and replace it all, rather than continue with routine patching, overlays, and slurry seal.

Cuts in health services and social welfare are leveraged by losses of matching Federal funds, and the savings may prove illusory. Patients who lose in-home health services may prove to be a greater burden on the state as they are still eligible under Medical for nursing home care, at a cost five times greater than the in home services.

Cutting back on treatment programs, vocational programs in prisons, and community college programs are negative investments that will produce negative long-term returns.

The piratization reforms, particularly outsourcing eligibility and selling part of the State Compensation Insurance Fund, are projected to save money and generate revenue, but real world experience, both in California and in other states, shows that these are more likely to be costly failures that will increase costs while wrecking services.

I could keep this list going, but it isn’t the point of this rant.

Getting past all of the issues with the specifics, there’s a fundamental failure of our state leaders to understand the macro-economic problem at hand. Our most recent California bubble was built on extraordinary leverage and reckless borrowing.

When Mortgage Equity Withdrawal (People using their houses as ATM’s) peaked in Q4 2006, an amazing 9% of consumer income, nationally, was coming from mortgage equity withdrawal. In California, ground zero for mortgage fraud, with soaring housing prices, that number was much higher. A substantial part of our entire economy was based on borrowing against assets that have now tanked.

We have permanently lost 10% of our consumer economy, the part that was based on absolutely unsustainable leverage, and it’s not coming back. Our sales tax revenues aren’t coming back. Our property taxes will keep declining. Incomes will continue to sag for years as we’ve lost jobs that won’t return in finance, real estate, insurance, construction and affiliated fields. Every sector of real estate is overbuilt, including housing, commercial, hotels, and industrial, so we won’t have any upsurge in construction jobs, especially after the state raids the local funds for road maintenance and redevelopment.  And it’s all still overpriced and over-leveraged, with more failures and foreclosures coming for hotels, commercial real estate, and industrial properties. Agriculture is a disaster. Read John Chiang’s monthly reports on our plunging revenue, and follow the unemployment numbers, and you can see how these numbers are playing out.

State and local revenues will not miraculously return as they have in previous recessions, because this is not like previous recessions. Jobs won’t bounce back as retail continues to tank, and small businesses close their doors.

And our cuts in state spending amplify the problem, as furloughed and laid off government employees spend less, lose homes, pay less in taxes, and the people they buy from spend less, lose homes, and pay less in taxes. Twenty billion in government cuts will act push the economy into another downward leg, forcing unemployment up another two per cent, and translating into billions less in state and local government revenue.

When legislators pretend that they will somehow have money to pay back local government or education, they show that they have failed to grasp the reality of our de-leveraging economy. We won’t revert to our previous income levels any more than housing prices will return to their peak of the bubble prices. Se we won’t have more revenue to pay back this ridiculous scheme of borrowing that we are taking from local government, much less paying back education.

We need to start with the knowledge that the California economy is resetting, and that we need to restructure our government, implement national health care reform, and come up with a new basis for our tax system that is much fairer, and corrects some of the worst flaws we have written into our Constititution.

LA Times had an article describing potential savings to the prison system.

Reporting from Sacramento — The state budget deal negotiated by Gov. Arnold Schwarzenegger and legislative leaders would reduce the population of California prisons by nearly 27,000 inmates in the current fiscal year.

That would be done with a combination of new measures, including allowing some inmates to finish their sentences on home detention, creating new incentives for completion of rehabilitation programs and scaling back parole supervision for the least serious offenders.

Via Capitol Weekly, we see this glimpse behind the scenes as angry Republicans threaten to scuttle the budget over this.

Their “cut strategy” for prisons must have included the Governator’s original barbaric ideas to eliminate alcohol treatment and vocational training, rather than cuts in the prison population.

We start to see behind the curtain.

From: (Sam Blakeslee)

Date: July 21, 2009 3:21:24 PM PDT

To: (Assembly Republican Caucus)

Subject: Budget Double-Cross?

Throughout budget negotiations we insisted that Republican votes would never be provided for a budget deal that included early release of prisoners.



Our caucus and staff developed a cut strategy for corrections that provided the necessary savings to close the deficit without risking public safety.

We had a clear understanding with the democrats that NO corrections bill would be a part of the budget and that we would have an honest chance to contest the policy issues in the light of day in August.  

Just two hours ago I learned from staff that Senate democrats are concocting a radioactive corrections bill that includeds the worst of the worst _ sentencing commission and release of 27,000 prisoners, etc

When I spoke with Dennis he was as surprised and upset as I was regarding what appears to be a serious breach of the agreement in the Big 5.

I have called and personally told both Karen and Darrell that their will be no republican votes for any portion of the budget if they allow such a bill to be part of the package.

I will keep you posted.

Sam

Updated to include LA Times link and quote

The bleeding mess of California’s budget crisis begins with the state Constitution, last rewritten in 1879, and amended 512 times since then.

Jim Wunderman of the Bay Area Council wrote this op-ed, and inspired Repair California.

California’s government suffers from drastic dysfunction – our prisons overflow, our water system teeters on collapse, our once proud schools are criminally poor, our financing system is bankrupt, our democracy produces ideologically extreme legislators who can pass neither budget nor reforms, and we have no recourse in the system to right these wrongs. Drastic times call for drastic measures.

It is our duty to declare that our California government is not only broken, it has become destructive to our future. Therefore, are we not obligated to nullify our government and institute a new one?

Saturday I attended one townhall meeting to discuss process.

I encourage every thinking California to attend one of the six townhalls scheduled around the state including Orange County on August 24th by Repair California. It’s a fascinating group, started by a Northern California Business Council, but heavily influenced by some of the best progressive thinkers, including the Velasquez Institute, Common Cause, and a bevy of other good government organizations. The event I attended was hosted by the Courage Campaign, California’s 700,000 member progressive alliance.

Kicking off the session were endorsements of the idea of a Constitutional Convention by LA’s Mayor Antonio Villaraigosa, the City Controller Wendy Gruel, and the eloquent President of the City Council, Eric Garcetti. It’s not hard to recognize a problem when your state is the butt of jokes for late night talks, issuing IOU’s with an expat Austrian action hero attempting a radical shock doctrine final solution to the budget problems.

The well-intentioned progressive reforms to fix the problems of the last gilded age have been hijacked time and again until our Constitution is the roadkill of governing documents. Structurally, the requirements of a 2/3 vote in the legislature to approve either a budget or any revenue increase allow a minority to hold the state hostage. The initiative process, once envisioned as the citizen’s right to over-rule the government, has been cynically abused by the wealthiest special interests, including the apartment owners and business interests who hobbled the state with Proposition 13, which was sold to prevent seniors from being forced from their homes, but had dozens of pernicious consequences, including loss of local government control.

As Antonio Gonzalez of the Velasquez Institute noted, maybe the legislature will fix the problem. Maybe some combination of single-issue initiatives can get lucky. Maybe pigs will fly. I wouldn’t bet on any of these, so we might as well start doing the heavy lifting, figuring out the best way to call a Constitutional Convention, and how to choose delegates who will generate a new governance structure that will meet the approval of voters and allow our legislators to govern the state.

The Heart Of The Matter – Harnessing a Voter Revolt

These times are so uncertain

There’s a yearning undefined

And people filled with rage

At the heart of the matter, the essence of calling a convention, is the question of how to select the delegates.

It’s interesting to note that the 1879 California Con Con was inspired by a nativist revolt to deny rights to Chinese immigrants, and as one speaker at the townhall asked, “How do we trust Californians who passed Proposition 8 and Prop 187 and are now trying to take rights away from children born in this country whose parents aren’t citizens?”

And can we risk duplicating the gridlock in the legislature that is dominated by partisans whose true constituency is the 17% of the electorate who will allow them to win a party primary in a gerrymandered district?

Galloping to the rescue is the New America Foundation with a powerful, proven concept of a citizen assembly, randomly chosen with five delegates from each of California’s 80 assembly district, a 400 person sample large enough to be representative. The initiative that calls the convention can define an open process that adds webcasting, blogs, social networking, and hearings to build a consensus. Citizen delegates will earn a stipend so they can take a leave of absence from work, have a budget to hire the experts, and travel around the state in hearings and meetings in a reality show that will actually speak to our most profound realities.

But the truth is, average Californians are the only ones who can lead our state out of the quagmire of special interests and partisanship that currently is paralyzing it.  That’s because average Californians bring a special quality that too many incumbents and the political class in general do not have:  a pragmatic desire to solve the state’s problems, regardless of ideology, partisanship or career self-interest.

I spoke strongly in favor of this concept, with a deep, abiding faith in the wisdom of a cross-section of Californians working in common purpose. From a group this size, leaders will arise who will speak with eloquence and common sense. Most of all they’ll do what true leaders do best – listen to each other in an attempt to find common ground.

And as they return to their districts from an eight month process, they will be able to claim a legitimacy and trust that our legislature has lost, exactly what voters need to vote for change.

Another key concept that needs to be stressed is the fact that the Citizen’s Constitutional Convention will be limited to issues of governance, strictly enjoined by the initiative that calls the convention from wading into divisive social issues that are not involved in reforming the governance of the state.

And for those of you who clicked the links, here’s a bonus – the beautiful and gracious India Arie.