Senator backs down from car tax discussion

by Brian Leubitz

If you ever wonder about the gaping hole in our budget that we’ve been trying to close for the last decade or so, there is one part of that larger pie that is bigger than the rest. That is the Vehicle License Fee. Back when Arnold Schwarzenegger was running in the recall election, it was dubbed simply the “car tax.”

And give him credit for this, when elected he did, in fact, slash the “car tax.”  We were able to backfill with a few years of budgetary “smoke and mirrors” but the hole was stubborn. And when 2007-8’s big recession hit, we were proverbial budgetary roadkill. The cuts just couldn’t come fast enough to match the speed of declining revenue, given that we had already made cuts to cover the loss of the VLF revenue.

And so here we stand, with a brand new legislative supermajority sure to eventually show up. So, given the damage the VLF cut brought us, surely it would be at least open for discussion, right? Sen. Lieu thinks so, or at least he thought so a few days ago when he told the LA Daily News just that

The constitutional amendment would restore the 2 percent vehicle license fee slashed by Gov. Arnold Schwarzenegger after he won office partly on that pledge.

The 1.35 percent transportation system user fee increase would generate an estimated $3.5 billion to $4 billion annually for roads and public transit in yet-to-be-decided proportions, Lieu said. … “It would be a test to see what the two-thirds (majority) Legislature means,” Lieu told the editorial board of the Los Angeles News Group. “The best way for us to lose the supermajority is to overreach.

“I’m not saying it would be an easy sell,” he added of the proposal. “I’m aware of the fact I may be attacked for it.” (LA Daily News)

Now, the interesting part here is that the suggested increase would still go to the voters, because, apparently we are all in on the government by plebiscite thing. All this would do is to save somebody a few million dollars of getting the measure on the ballot. To be honest, the amount of money spent getting it on the ballot would pale in comparison to the amount required to pass it. So, yes, Democrats have a supermajority, but no, they won’t be going so far as just passing additional revenues on their own.

Silly you, thinking we had a representative democracy, but even the vote was too much for some.

However, over the last few weeks California’s political landscape has changed.  I have listened carefully to those who have contacted my office or me.  Additionally, more stakeholders weighed in on this important issue.  As a result, I will not be introducing the proposal.  Instead, I will work with transportation stakeholders and the public next year on alternative ways to mitigate the transportation infrastructure problem.  This problem is not going to go away and will only worsen when the final installment of depleted Proposition 1B funds are allocated next year.  I am open to any suggestions and if you have any, please feel free to contact me or my office. – Sen. Ted Lieu

So the good senator got some pressure, and as Dan Walters points out they are loathe to be seen as “over-reaching.” The CW apparently comes down hard, and despite some solid advice from our very own Robert Cruickshank to move forward on progressive legislation, it looks like there is more work to be done here. Now, that being said, it looks like we may get some not inconsequential reform on the ballot in 2014, but the status quo is still quite strong.

Chris Norby concedes tightest Assembly race – photo credit: Chris Prevatt

by Brian Leubitz

With the concession of Chris Norby to Sharon Quirk-Silva, the Democratic supermajority in the Assembly was finalized. The Democrats will hold 54 of the 80 seats there. In the Senate, the situation is slightly more confusing. Senator Juan Vargas was elected to replace Rep. Bob Filner in Congress, so we’re looking at a special election in that Dem-leaning district.

That being said, what does the supermajority mean? Robert had a great take on the situation earlier this week. Tomorrow, I’ll discuss the supermajority on KALW’s Your Call radio. You can listen online here or tune in to 91.7 in San Francisco, or KUSP (88.9) in Santa Cruz.

Staying on to fight Boehner and build caucus

by Brian Leubitz

In the history of the Congress, there have been few leaders like Nancy Pelosi. Besides the obvious, her history-making role as the first female Speaker, she has been a powerhouse in many other ways. She leads a caucus with a wide range of opinions, yet she emerged from one of the most progressive districts in the country. Through sheer strength of will she was able to be the guiding force to pass health care reform.

And yet here we are, democrats are wondering if she’ll step aside because she wasn’t able to retake the gavel. The answer? A firm NO:

“Being active in politics at this level is really insatiable,” Pelosi, 72, said, recounting a conversation she had with her brother explaining why she wants to stay on. “What I said to him was, ‘There’s not enough hours in the day for me. There’s so much more I want to do.’ ”

“The message is clear from the American people. They want us to work together to get things done. And that’s what these folks are here to do. Just like all of you,” Pelosi said during the caucus meeting, according to the notes taken a Democrat in the room. “We may not have the gavel, but as I can see in this room, we have the unity.” (WaPo)

Perhaps she is a lightning rod for the Right, but she is also a prodigious fundraiser and an absolutely dedicated campaigner. She faced enormous headwinds in 2010, and this year she dealt with Republican gerrymandering of districts. Seeing the positive results in California, it is certainly time to start exporting our system of reapportionment to other states. But Pelosi still has a lot of work to do, and is still more than capable of doing it.

At least she’s capable of taking care of stupid questions from Luke Russert. Check the flip for the video of that particular exchange.

UC System has some highly questionable investments

by Brian Leubitz

During the bubble, many large institutions got a little greedy with their investments. They wanted lots of return, but no risk. And that’s what Wall Street was selling in some of their shadier business “growth areas.” One such shady areas of Wall Street was the interest rate swap market.  And the University of California system got sucked in:

Over the last decade, the UC Board of Regents has engaged in risky deals with Wall Street banks called interest rate swaps. Banks sold swaps to the university and other public institutions as insurance against rising interest rates on variable rate bonds. Under a swap agreement, borrowers such as the university paid a fixed rate to the bank in exchange for the bank paying the university a variable rate based on the markets’ interest rates for borrowing.

Now these swaps have turned out to be losing bets. UC is taking huge losses because interest rates plummeted following the financial crisis of 2008 – allegedly in part because of illegal manipulation by the same banks that sold the swaps – and have stayed at record lows. Swap deals already have cost UC nearly $57 million, with $200 million more in losses anticipated. Of the $250 million UC expects to receive from Prop. 30, some $10 million a year will go to swaps payments unless the deals are ended. (SF Chronicle Open Forum)

And some of the shadiness doesn’t even come from Wall Street on this deal. UC Leadership, including the regents and upper management, are riddled with Wall Street connections. And to this day, this is true. For example, Peter Taylor, UC’s CFO, was at Lehman and helped arrange some of the swaps.

Californians have entrusted UC leadership with both money and the education of California’s future leaders. It is about time they opened up to California about what is really going on in the books.

Reform would also require voter approval

by Brian Leubitz

Fresh off Robert’s call for action, the Democratic Supermajority is now looking at one of the bizarre aspects of our election law. Specifically, our system of differing thresholds for taxes, bonds, and other ballot measures.

As it stands right now, most targeted tax increases require a 2/3 vote of the people. Many general tax increases only require a simple majority. Why is is that we require a higher vote total for a more planned out increase? And of course, bonds require the seemingly random 55%. Why 55% you ask? Well, it’s more than 50% of course.

But that may change with the Democratic supermajority taking a look. Dan Walters has it as one of Sen. Steinberg’s top priorities.

Among other things, it means that Democrats are empowered to place constitutional amendments on the statewide ballot without any Republican support and legislative leaders – Senate President Pro Tem Darrell Steinberg, particularly – want to reduce the vote requirements for local government and school district taxes, particularly those parcel taxes.

If schools could raise more money locally through parcel taxes, it would reduce the state budget’s school finance burden.

Twenty-five school parcel tax measures were on the ballot last week and 15 of them passed, including three in the $200-per-parcel neighborhood. And all but one of those that failed achieved more than 50 percent approval, indicating that were the vote requirement to be reduced, parcel taxes could generate a substantial flow of revenue. (SacBee)

Walters, and the Sacramento CW, see this as a moderate first step. And moderate it is. After all, only a bare majority is required at the ballot (after the 2/3 approval of the legislature) to change this system. And if we can change the constitution by a bare majority, shouldn’t we be at least able to raise our taxes?

This isn’t going to overhaul Sacramento, but if it happens, it is one solid baby step.

Editorial shows complete lack of understanding of past few years in Sacramento

by Brian Leubitz

The editors at the once illustrious Wall Street Journal, now having moved into new diggs next to Megyn Kelly and Bill O’Reilly, has decided that whining worked well for Karl Rove.  Apparently so well that they thought they would give it a try:

For Republicans unhappy with Tuesday’s election, we have good news-at least most of you don’t live in California. Not only did Democrats there win voter approval to raise the top tax rate to 13.3%, but they also received a huge surprise-a legislative supermajority. Look out below.

The main check on Sacramento excess has been a constitutional amendment requiring a two-thirds majority of both houses to raise taxes. Although Republicans have been in the minority for four decades, they could impose a modicum of spending restraint by blocking tax increases. If Democratic leads stick in two races where ballots are still being counted, liberals will pick up enough seats to secure a supermajority. Governor Jerry Brown then will be the only chaperone for the Liberals Gone Wild video that is Sacramento. (WSJ)

First, I would like to thank the SF Chronicle’s Marisa Lagos for an excellent tweet on this piece:

WSJ seems a bit like a screaming toddler in this editorial about 2/3 Dem majority in Sacto. online.wsj.com/article/SB1000…

— mlagos (@mlagos) November 9, 2012

Now, I could spend hours debunking this on tax grounds. I could point out that the legislature, having just seen Prop 30 pass, will go nowhere near income tax rates. Or I could just merely direct them to the litany of issues where progressives are marginalized. Are you a progressive legislator? Well, hope you didn’t plan on getting anywhere near the banking committee.

California was Citizens United before Citizens United was cool. It is a state controlled by independent expenditures and campaign cash. The power of these IEs now is such that neither Democrats nor Republicans really dare to break the status quo for risk of offending them.

For example, you would think in such “liberals gone wild” situation, you would have seen some sort of fracking legislation. Something, even a bit of disclosure, but no. Despite only requiring a bare majority for much of it, progressive legislation has a way of finding its way into the suspense file.

But the WSJ isn’t concerned with such details. In a world where their heroes have been vanquished, they search about for talking points. And in California they think they have one.  However, they miss the facts. They miss the incredibly important point that most of the debt was run up under Republican governors. The GOP here clung to their tax cut portion of the “Two Santas” and an unrational fealty to Grover Norquist. They miss the fact that the Republicans weren’t a victim of some sinister plot, they were simply a political suicide.

From the author of the California Target Book, Tony Quinn:

The good news for Republicans is that they are no longer a dying party.  The bad news is that they are dead, and the final dagger into the corpse was the huge turnout of young voters on Tuesday – the exit polls show that 18 to 29 years olds made up 28 percent of the 2012 electorate.  …

it is time to let Howard Jarvis rest in peace and stop pretending we are still in the world of Proposition 13.  On Tuesday 85 of 106 school bond measures passed, according to the League of California Cities.  Californians clearly want more public resources; the question now is whether that money is spent wisely.  That is where the Republican and business focus should be.(Fox & Hounds, Tony Quinn)

The California GOP, like the greater national party, has lost young voters. If it hopes to return to a semblance of a statewide party, it will need to moderate itself back into a party that accurately represents some portion of California’s electorate. Otherwise, I guess they can enjoy their lunches at Chops, but that is about as close to actual governance as they’ll get.

This is it! Today is the day! Now is the time! And every other cliche

by Brian Leubitz

A quick reminder to be sure to vote if you have not yet done so. Some of these propositions could end up being quite close. And if you haven’t seen it, this is how I voted on the props:

30 – YES!

31 – No

32 – Hells NO!!!

33 – No

34 – YES

35 – No

36 – Yes

37 – Yes

38 – No

39 – Yes

40 – Yes

Anybody see any long lines to vote? Everything running smoothly?

Note: I work for the No on 32 campaign

A friendly reminder

by Brian Leubitz

It is that time of the year, GOTV weekend. With some very important ballot measures and local candidate races on the ballot, we have to make sure that the Republicans don’t win a few just because our voters didn’t show up. That means getting everybody to vote by Tuesday.

The California Democratic Party has a great Battleground California tool that will help you find your closest volunteer location or let you make calls from home. The No on 32 also has a No on 32 Volunteer page with listings for lots of events.

Let’s bring this home! We have to make sure California votes YES on 30 and NO on 32!Note: Brian Leubitz, the editor of this blog, works for the No on 32 campaign. Please like the campaign on facebook or follow on twitter. Statements are his own.