A few months late and several billion dollars short, Arnold has finally gotten around to making a serious revenue proposal – a 1 cent increase in the sales tax for a duration of three years. The SacBee reports this is expected to raise around $4 to $5 billion.

Not one to offer a solution without strings, Arnold insists that this would only happen in exchange for “long-term budget fixes” such as a rainy-day fund. A rainy day fund is a good idea but that needs to come AFTER we fix the structural  revenue shortfall.

The problem with Arnold’s proposal is that as most people recognize, sales taxes are a very regressive form of taxation. The Democrats’ tax plan would have relied on income and corporate taxes and would have generated nearly $10 billion in revenue, greatly easing the current crisis.

Instead Arnold, in typical fashion, thinks the poor and working Californians should suffer for the budget to be fixed. A smaller sales tax increase might not be a bad idea, but income and corporate taxes are the better solution, as those kind of tax increases promote more economic growth and provide more stability for state revenues. Another solution would be sales tax modernization, where goods and services currently exempt would be included to reflect a 21st century economy. That would provide more stable revenues while also spreading the burden out more fairly.

Democrats are in a stronger position than they realize on this. The public wants smart, effective solutions on the budget, and they want their services to be protected. Let’s hope they stick to those values.

PS: John Chiang tears yet another hole in Arnold’s ridiculous wage and jobs cut: the state does NOT actually face a cash crisis, Chiang told a Senate committee. Chiang is emerging as a hero on this, and Arnold’s attack on the workers is being revealed for the shock doctrine-style assault on wages and jobs that many of us always suspected it to be.

[UPDATE] by Robert The LA Times has more details:

The increase of one cent per dollar would take effect soon after a budget is signed and last three to four years; after that, the tax rate would gradually drop. It would ultimately settle at a level lower than the current statewide rate of 7.25%.

That last part is troubling. I’d love to see a more progressive tax structure in California, and more reliance on income, corporate, and property taxes as opposed to the sales tax. But to turn this into yet another tax cut, outside of an overall and comprehensive revenue solution, is only going to make matters worse.

The Times also has more on the budget reforms Arnold is demanding:

The proposal, floated in meetings with the Legislature’s leaders and their staff, hinges on lawmakers agreeing to automatic spending restraints and new powers for governors to cut programs whenever the state falls into the red.

I wonder if those new powers would even be constitutional. In any case they’re very unwise. Separation of powers seems unfashionable these days, but it matters. The Legislature, as the most direct representatives of the people, must never cede this power to the executive branch. A line-item veto is bad enough. No governor should have unilateral power to make cuts.

Ultimately all of this shows that Arnold isn’t really interested in budget solutions, but instead wants to use the crisis to ram through far-right solutions that would otherwise never be accepted. Arnold is a textbook example of the shock doctrine that Naomi Klein so ably described in her recent book. Perhaps every Democrat in the Capitol needs a copy?

Well, I’m back. The wedding was by all accounts an excellent party. Married life is great (and of course the first week is surely an indication of the many years to come…). Seattle was lovely as always, the Oregon Coast was spectacular, Humboldt County is still suffering under the US occupation, and Mendocino is doing well now that the air is clear and the fires contained.

One thing that stood out to me on my travels in Washington and Oregon is how well governed those states are. Roads, schools, parks, even health services – they all work well. Each could be improved in their own way, but the contrast with California was striking. After 30 years of conservative-dominated politics we have grown too used to a state government that has to make do with too few resources and often fails at its primary mission. WA and OR face many of the same problems we do, including a strong anti-tax mentality and conservatives who want to break government. But their experience shows that they don’t have to succeed, and that we can and must insist that our government services are properly funded and administered.

Plus it was nice to be in states where the governor isn’t carrying out a pogrom against public workers.

Some items for a lazy Sunday afternoon:

• Nancy Pelosi is pushing Rep. Chet Edwards (TX-17) to be Obama’s running mate. I don’t know much about Edwards but someone who voted for the Iraq War, for drilling in ANWR, and for CAFTA isn’t quite the direction I want Obama to be going with this. It’s depressing that the conventional wisdom and even many bloggers are accepting that he needs to pick a moderate Blue Dog type as the veep.
• Library patronage is soaring in CA and the US but libraries also face ongoing budgetary problems. Libraries are often an easy target for local politicians seeking cuts, despite the myriad of basic services they provide to residents. Still, it’s good to see libraries getting a shout-out from the Gannett papers.
• The SacBee’s Marcos Bréton has some depressing personal stories of workers whose lives have been upended by Arnold’s despicable mass firings. 24-year old Josh Patterson, who was laid off from a job at the state printing office, explained:
  

  “I had just gotten my health care through the state and now that’s gone,” Patterson said Friday. “I’m out of my pocket now. I’ve cut out my cable, Internet, cell phone. But I can’t cut back on health care for my family.”

  Bréton concludes “There must be a special place in purgatory for politicians who inspire such questions among people who want to work.” Amen to that. Fuck you, Arnold.

• Dan Walters says it’s time to end the 2/3 rule and shows that Republicans have little to fear – if Dems “spend the windfall” then they would still be held accountable at the ballot box. It’s good to see more of the state media accepting the need to get rid of the 2/3 rule – is is the #1 problem with our state’s budget process and even our state’s entire system of governance. Too bad that Common Cause and others aren’t focusing their efforts on this than on yet another flawed redistricting measure.

Feel free to add to this or to expand on any of these in a separate post  – Walters’ column in particular deserves more attention than I can give it today.

And pictures over the flip:

The wedding ceremony in Seattle.

The toast!

Goonies!

Who knew that Crescent City could be a perfect honeymoon stop?!

Crossposted from the California High Speed Rail Blog

It wasn’t the article I was hoping to read upon my return from my honeymoon, but it’s not that surprising to read in the Fresno Bee that the Sierra Club and the Planning and Conservation League are hesitating on backing Prop 1 and even considering a lawsuit – and for the nonsensical reason that the choice of the Pacheco route might “induce sprawl.” That objection is bad enough, for reasons I’ll discuss in a moment.

But what’s really disturbing about this move is that it suggests the Sierra Club and the PCL have lost their focus – instead of looking at the big picture of high speed rail and emphasizing the game-changing environmental benefits it brings, they’re focusing on a small non-issue instead. They’ve lost sight of the forest for the trees and instead of providing leadership on this issue they may instead cast their lot with the far right and leave Californians with no viable alternative to soaring fuel prices and a transportation system that is making our environmental problems far worse.

First, their criticisms as reported by E.J. Schulz:

But the environmentalists are still seething over the selection of relatively undeveloped Pacheco Pass as the route to connect the Central Valley to the Bay Area. They favor the more urban Altamont Pass to the north because they say it would induce less sprawl….

Environmentalists would rather see trains run farther north in the Valley before heading west so that more populated cities are served. They like the Altamont route because it would bring trains closer to Modesto, Dublin, Pleasanton and Livermore in the first phase.

By contrast, the Pacheco route — roughly following Highway 152 — is in a less populated area. Environmentalists worry that a planned station in Gilroy would induce sprawl in surrounding rural areas.

These worries are baseless. Gilroy and much of southern Santa Clara County have strict urban growth boundaries. If those places were going to sprawl they would have already done so given their proximity to the job center and hot housing market of Silicon Valley. HSR doesn’t change that dynamic.

More below…

Nor does it change the fact that sprawl is facing hard times. Sprawl is bad, but it isn’t a force of nature. It is instead a product of three major factors: cheap oil, cheap credit, and favorable land use laws. The first is disappearing for good, thanks to peak oil. The second doesn’t exist now, and may never return. Certainly land use policies need to change to limit sprawl, but those changes have long ago been made in southern Santa Clara County. Why should HSR alone carry that burden? AB 32 carbon reduction goals should be applied to new housing developments, and ultimately, localities will have to change their ways.

The loss of cheap oil and the shortage of cheap credit together will lessen sprawl dramatically in the coming decades. I fully support land use changes to further kill off sprawl, but it’s not worth holding HSR hostage to produce the changes that need to happen anyway at the state and local level.

The death of sprawl has already made itself manifest in Gilroy. The Westfield shopping center developers had a plan to convert a significant amount of farmland acreage east of Gilroy along Highway 152 into a huge mall. The plan aroused the opposition of the community and it was dropped earlier this year. High fuel prices, the credit crunch, and public defense of urban growth boundaries all combined to kill that sprawl project. Those factors will do so again.

A Gilroy HSR station would produce strong incentives for transit-oriented dense development in Gilroy, the kind of development that California cities need to focus on instead of sprawl. Gilroy is already partway there, and an HSR station where the current Caltrain station is located at 8th and Monterey would actually discourage sprawl because there would be viable alternatives to building on new farmland. The combination of infill development and strict urban growth rules are what have made Portland’s anti-sprawl plans a success – you need both for the anti-sprawl measures to work. And high capacity mass transit is a necessary component.

Further, since the Authority has rejected plans for a Los Banos stop, and since as Mehdi Morshed explained in the Fresno Bee article that the communities along the Altamont route were not supportive of HSR, what on earth explains the ongoing refusal of the Sierra Club and the PCL to throw their support to Prop 1?

The only answer is a very depressing one, but an answer that is becoming more widely accepted among many environmental activists, sustainability activists, transportation activists, and folks on the left more broadly: the Sierra Club and the PCL have lost their way, and have lost sight of the big picture. In case folks haven’t been paying attention, this country faces a climate crisis and an energy crisis. It’s not like we have a whole lot of time to be fighting over objections that are not grounded in fact. At Netroots Nation two weekends ago Al Gore explained that we need to stop burning carbon and make a bold move to power our society with renewable energy. An electrically-powered high speed train system won’t achieve that 100% renewables goal itself, but it would provide significant environmental benefits:

-Reduce carbon dioxide emissions equivalent to removing 1.4 million cars from the road, and take the place of nearly 42 million annual city to city car trips

-Reduce CO2 emissions by up to 17.6 billion pounds/year

-Reduce California’s oil consumption by up to 22 million barrels/year (same as above)

According to the Final EIR 63% of intercity trips over 150 miles in California are taken by car (scroll to page 12). HSR would provide a huge dent in that figure.

High speed rail is one of those game changing proposals. How can the Sierra Club and the PCL overlook the cars taken off the road? How can they overlook the CO2 reductions? How can they overlook the reduction in pollution, especially in the Central Valley?

Four years ago Michael Schellenberger and Ted Nordhaus criticized the Sierra Club directly in their seminal essay The Death of Environmentalism. In their view the environmental movement, by focusing on small battles, has totally failed to address global warming, and that organizations like the Sierra Club “have little to show” for nearly 30 years of environmental activism after the big victories of the late ’60s and early ’70s. One of their specific criticisms is that the Sierra Club, for example, often eschews big policy changes for a niggling incrementalism that has done nothing to arrest the rate of warming. This has led them to refuse to articulate a bold vision for addressing the global warming crisis that of course hurts the natural environment, and it has led them to ignore the politics of producing change.

The Sierra Club’s failure on high speed rail proves each of Schellenberger and Nordhaus’ controversial charges. Instead of helping change the way Californians get around their state, shifting them away from oil-burning methods of travel to clean methods of travel that limit sprawl and generate urban densities, they are focusing on a small objection that doesn’t even hold up on close examination. They have endorsed the concept of high speed rail in the past but if they don’t endorse Prop 1, what other opportunity will they have to get it passed? If the HSR bonds don’t pass this year, they aren’t coming back anytime soon. It might take 10 years to revive the project – it’s taken 15 in Texas – and that means completion of the line wouldn’t happen until close to 2030.

By then it may be too late. Instead of refusing to support Prop 1 out of pique that they lost the Altamont vs. Pacheco argument, the Sierra Club and the PCL should follow Van Jones’ advice and move from opposition to proposition. We have a proposition – literally – before us. Instead of being on the constant defensive the Sierra Club and the PCL can help California take a bold step in the right direction with Proposition 1. If we pass these bonds in November it will then be a signal to other states and to Congress that HSR is a politically popular project and it will spur similar projects around the country – projects that we desperately need.

Why would the Sierra Club and the PCL oppose these things? They have let their opposition to the Pacheco alignment blind them to the bigger picture. That decision has been made and even though the Sierra Club and the PCL lost, they can still be big winners. Let’s hope they recognize the pressing environmental need for high speed rail before it’s too late.

Yesterday’s SacBee has a Q&A with Darrell Steinberg on the budget. His answers are brief but brilliant – along with Speaker Karen Bass it is clear we now have leadership in Sacramento that finally understands not just what is wrong with the budget but how to properly frame it:

Q: Why would the Democrats roll out a tax plan that they knew ahead of time the Republicans wouldn’t vote for?

A: There’s actually some consensus that has developed over the past several years. It’s clear from even the way the Republicans are acting in the budget negotiations, there is a common recognition that we cannot cut our way out of this problem. The Republicans aren’t putting $15 billion of cuts on the table, for good reason. … That would implicate the department of corrections and law enforcement, public education, transportation, a whole host of other policy areas that are not necessarily partisan in nature, so now the debate is framed very clearly.

This is very good framing. He’s pointing out that Republicans tacitly accept that spending cuts are not a realistic option – that even Republican programs like prisons would be crippled. California voters need to hear more of this – that spending cuts are just not possible.

Q: Are the Democrats concerned that the increase in taxes would have a negative effect on business retention in California?

A: I think the Democrats are approaching the tax question in an intelligent way. Look at the upper-income tax. This was a tax that (Pete) Wilson, a Republican governor, pushed through. I know the claim is made that wealthy earners would leave California, but that belies the facts. I did Proposition 63, the mental health initiative, which was just a surtax on earnings over $1 million, and there hasn’t been some great flight out of the state. … People choose to live in California for a lot of good reasons, and ensuring that we have the resources to properly invest in education and health care and an infrastructure, I think, is more important to the business community.

These are excellent evidence-based arguments and build off of what Speaker Bass and John Laird have been saying – that California has previously turned to taxing the wealthy without cost to our economy. The lie that taxing the wealthy hurts the overall economy has been the cornerstone of conservative anti-tax sentiment for decades, and it is long past time for Democrats to be rejecting it.

Further, Steinberg touches on a point that should be made more explicit. It’s not just the business community that finds more value in good government services over low taxes – it’s working Californians. Most of us understand that Californians get far more in value from affordable, quality schools; affordable, quality education; affordable, quality mass transit, etc – but that message hasn’t been truly embraced by Democrats ever since Jerry Brown’s notorious “born again tax cutter” emerged the day after Prop 13 passed in 1978.

California owes its current economic prosperity – such as it is – to the legacy of Pat Brown. We’ve been living off of earlier government spending. Even Ronald Reagan increased taxes when faced with a similar crisis (in 1967). If Democrats can make that argument loudly and as often as possible they will undermine the Republicans.

Q: Does the state of California have a revenue problem or a spending problem?

A: That’s a question that is always asked in the political context, and I believe we have a revenue problem. … The governor went through the stage of blowing up the boxes … he didn’t find a lot of the waste, fraud and abuse. We have a very complex state, with a growing population and with significant unmet need, and so I think we have both a revenue problem, and we have a major structural problem. … We’re misaligned, for example. Local government has significant responsibility to provide services and little authority over the revenue side of the equation.

This is pure gold. Steinberg points out that Arnold’s own performance review failed to find the “waste, fraud and abuse” that we were told we’d find in the budget. It no longer exists, if it ever did. You cannot cut something that isn’t in the budget. Plus it’s nice to see him using the structural revenue shortfall framing I’ve been using for months.

Q: Why is it that the state always seems each year to spend more money than it takes in?

A: The system of public finance that we have in California is not keeping up with the public demand for public education, for more and better quality transportation, for improved access to health care, and for first-rate local government public safety and other services.

Steinberg refuses to be baited by the Bee’s leading question here, and insists that the problem is a government that cannot play the central role it needs to play in guaranteeing economic stability to all Californians.

Overall Steinberg is pushing out some great frames that attack the heart of the Republican nonsense that we can cut wasteful spending that does not actually exist. The Republicans are left to propose massive cuts to core services which they are of course unwilling to make. All they have left is a dogmatic stance that everyone now sees right through. If Niello is an emperor then he’s clearly got no clothes.

Yesterday’s news that Democrats were considering borrowing to balance the budget, specifically the plan to raid transportation and local government funds, brought a  vigorous response from Democratic leaders in the legislature. Don Perata, Karen Bass, and John Laird all issued statements claiming to not support budget borrowing, although the parsing of the words matters.

Perata’s statement:

Today’s Los Angeles Times story about state budget negotiations is inaccurate and misleading. Democrats have never entertained massive borrowing as a solution to this year’s budget problem. In particular, Democrats have never advocated nor believed in taking money from Propositions 1A, 42 and 10.”…

“Doing another get-out-of-town-alive budget would do nothing to help this state but rather would endanger Californians’ standard of living and economic future.”

Denise Ducheny chimed in with her own statement along these lines, and later in the day Bass and Laird added their stance. Karen Bass:

“Major borrowing is not part of the Democratic budget plan, and we don’t believe it should be part of the final solution. Our proposal balances the budget with a mix of billions of dollars in difficult spending cuts and new revenues, similar to those proposed by a previous Republican governor. It’s gimmick-free and honest. It closes our budget gap in a straight-forward manner, and eliminates out-year deficits.”

John Laird:

Any proposal to borrow from voter-approved propositions is not coming from those of us who want to balance the budget without borrowing or gimmicks.

Strong words – but nowhere in them did anyone explicitly rule out borrowing from the transportation and local government funds. It’s comforting to know that Democrats did not propose these plans and that they do not wish to use budget gimmicks – but a firm rejection of the plans is what we really needed to hear.

Sure, some might say we should not be negotiating in public. But if Republicans get to say “no new taxes” then surely Democrats are able to say “no new raids.” As I argued yesterday raiding these funds would not only cause the state serious economic harm, but it would severely weaken the Democrats’ political fortunes in the process.

Californians’ opinion of the Legislature is low, and many don’t trust their politicians. That gives the right wing a major opening to push through damaging things in the guise of populism. Democrats need to stand up to Republicans and protect working Californians. Refusing to even consider raiding the Prop 1A, 10, and 42 funds is a small but necessary place to start.

I work for Courage Campaign

Thanks to Bob Brigham, who brought these to us in Austin, we have a number of buttons that read “iCensure DiFi” – you see mine at right:

(also pictured are buttons for the heroic Darcy Burner)

We’ve passed out several dozen already to Californians and others who support holding our Senator accountable for her repeated failures on the Constitution and on protecting the rule of law. Interestingly we’re distributing them while Harold Ford is speaking.

Support for iCensure here in Austin mirrors the support we’ve found for relaunching the censure resolution of DiFi – 95% of the 12,000 votes cast supported a new censure resolution.

If you’re here in Austin and want some iCensure schwag for yourself, come find me or Eden James or Julia Rosen and we’ll happily hook you up.

After having made an excellent tax revenue proposal to solve the budget, are Democrats setting themselves up for an epic FAIL on the budget? Unfortunately it seems that way as they seriously considering raiding transportation and local government funds to balance the budget:

Legislative leaders are drafting a complicated scheme to help close the state’s massive deficit by raiding funds voters have set aside for transportation and local government services, Gov. Arnold Schwarzenegger said Thursday, adding that it probably would force a state sales tax hike….

The legislative plan would balance the state budget with the help of $1.1 billion voters set aside for transportation projects and at least $1.4 billion earmarked for local governments under Proposition 1A, which was approved in 2004, Schwarzenegger said. State law requires that the money be paid back — at a steep interest rate — in three years.

To say this would be a bad idea is an understatement, and not only because it relies on a very bad form of borrowing to balance the budget. No, it is flawed because it would make the state’s economy much worse. This plan is being floated to stave off a cash crisis in August, but is that crisis worse than cutting buses and trains from mass transit? At a time when Californians are flocking to transit to avoid gas prices we need to be increasing service, not cutting it and thereby turning away from a crucial opportunity to shift our state in a more sustainable direction. And of course public transit cuts will worsen the strain on working families.

The impact on local government is even more damaging. By raiding their funds there will be mass layoffs in cities across the state – libraries, street maintenance, permit approvals. Firefighting would also be hit, as during the last budget crisis when many cities balanced their budgets by cutting back on fire department staffing. Surely the fires in our state right now would suggest the risk of this approach.

Dems might respond that they have little choice because of Republican obstinacy on taxes. But that is absurd. Democrats have done almost nothing to sell their budget plan, which was agreed to rather late in the process. They haven’t done the public work to explain why the budget cannot be closed via cuts. And make no mistake – raiding transit and local governments IS a budget that emphasizes cuts. It gives Republicans everything they want with little in return.

Republicans claim they don’t negotiate in public but we all know that’s untrue. Californians perfectly well understand what their stand is – no new taxes. What have Democrats responded with?

Democrats should not embrace this plan. All it will accomplish is increased distrust of the Legislature – if possible – and sour voters on Democrats due to their leadership failure. Dems will have difficulty generating the public support necessary for long-term fixes if they agree to a plan which will cause confidence in government to plummet. This will only hurt Democrats over the long-term and they would be smart to take a step back and consider what they’re doing.

[Update] I wrote this in a panel here at Netroots Nation on building progressive activism to help the “middle class” that includes our own Juls Rosen and David Sirota. The panelists are making brilliant points about how tax reform is the key to addressing the collapsing middle class – and how the right has effectively used taxes to pass themselves off as populist. People want tax fairness. Democrats need to be forced to take a stand on taxes. California Dems are once again looking to punt and are going to hurt working Californians in the process.

Wouldn’t that make an excellent headline? Instead the SacBee offers Schwarzenegger criticizes lawmakers for not reaching budget deal – Arnold kicks it in his smoking tent, or idly speculating about a post in the Obama administration on national TV while the Legislature remains divided on the budget. Here are the damning grafs from the article:

Schwarzenegger ramped up criticism of lawmakers this week, but he so far has refrained from using harsh tactics such as visiting lawmakers’ districts and cajoling them, as he did during a late budget in 2004.

The Republican governor has been meeting with leaders individually, though he said he “didn’t really want to interfere with their process.” The parties remain divided over whether the state should use tax increases to bridge the gap, as majority Democrats have proposed.

In other words, Arnold is reluctant to himself exercise the leadership that he claims is lacking in the Legislature.

His statements on specific proposals have been vague to the point of uselessness:

The governor attacked tax proposals in previous years, but he did not do so Wednesday. “I think this is their way of looking at it, and I’m sure they have their reasons,” he said of Democratic tax proposals. “And I think this is what makes the world go around. People have different ideas for how to solve a problem.”

The contrast with previous governors is stark. In 1991-92 Pete Wilson proposed tax increases and budget cuts himself and took a very active role in getting legislators on board with a plan to close the deficit without destroying state government. Whatever we think of Wilson’s governorship overall, he did not hesitate from exercising leadership to solve a much worse budget crisis.

Instead Arnold continues the trend that has defined his failed terms as our governor: playing to the media while ignoring the basic work of government.

But to leave it there would be letting him off lightly. We must not forget that much of this budget deficit is Arnold’s own fault. He came to power in the 2003 recall by promising a long-term budget solution. Instead he made matters worse by cutting $6 billion in revenue from the vehicle license fee, which is actually a $12 billion swing since the state spends $6 billion a year to pay local governments what they would have received with a restored VLF. He then insisted on borrowing to close the last big budget gap, causing ongoing budget costs of $3-$4 billion a year.

It seems more and more likely that when we historians assess the seven years Arnold was our governor, the ultimate conclusion will be that he made the rest of the state cover up for his failures so he could play a governor on TV.