All posts by Brian Leubitz

The Numbers Giveth and the Numbers Taketh Away

Tax revenues fall short of projection

by Brian Leubitz

Yesterday I mentioned some positive economic signs, and today we get some negative numbers:

California revenues missed the mark in February by 3.2 percent, or $146.3 million, state Controller John Chiang said Monday.

Chiang, who manages the state’s cash, said the shortfall was likely due to a spike in tax refunds going out earlier than expected in February. Income tax receipts were 5.7 percent, or $99.9 million, below the Department of Finance’s projection.

Gov. Jerry Brown and state lawmakers are anxiously awaiting tax receipts from March and April, two significant revenue months as taxpayers file their returns. The Democratic governor has proposed a budget to close a $9.2 billion deficit, but the nonpartisan Legislative Analyst’s Office has suggested that Brown’s estimates are overly optimistic and that the deficit is likely higher than that figure.(SacBee)

As mentioned, the big tax figures are going to be the March and April figures, so no need to panic just yet. However, with everybody on pins and needles for the smallest bit of data, this made a ripple in Sacramento. Don’t expect anybody to let the panic button escape their direct line of vision anytime soon.

Economy Slowly Improving

Sales tax receipts climb in Q4 2011

by Brian Leubitz

The Board of Equalization has access to a veritable smorgasboard of data that any geek would salivate over. Unfortunately you normally have to do a bunch of digging to find the stuff that might be of interest outside your traditional nerd circles.  However, the following two sentences might interest a few folks:

The Board of Equalization on Friday estimated that taxable sales in California rose 7 percent in the fourth quarter of 2011 from the same period of 2010.

The estimate was based on early calculations of cash receipts. It provides fresh evidence that the state’s economy is strengthening.(SacBee)

Also of note, the 2010 Q4 sales tax data was up from 2009 about 7%.  While these numbers are good, 2007-2009 were so bad that we can’t paint over them in a few good quarters. That being said, the economy is on the right track.  There will be no next big bubble to put us back in the boom times, but we’re coming back. And perhaps slow and steady isn’t really so bad.

But, I think I might know a few folks at OFA and the Governor’s office who are wishing for those numbers to creep up a little faster. These improvements don’t break us out of the woods for the budget, but perhaps voters might be a smidge more likely to vote YES on revenue in November if the economy has shown positive growth for a few quarters.

PPIC Poll Shows Questionable Future for Brown’s Tax Measure, Good Marriage Numbers

Poll shows Californians still think we are in a recession

by Brian Leubitz

Technically, we are no longer in a recession. All of the economic data shows as much. However, that doesn’t mean all that much for Californians suffering under weight of the worst economic situation since the Depression. Yes, people are hiring, but not fast enough. Despite the economic data, most likely voters (84%) believe that the state is in a recession. Nearly half (48%) say the recession is serious. And that is going to play havoc with the Governor’s revenue measure.  

While a strong majority of likely voters (78%) describe the state budget situation as a big problem, slightly more than half (52%) say they would vote yes on Governor Jerry Brown’s tax initiative when they are read the ballot title and a summary (40% no, 8% undecided). Most Democratic likely voters (71%) would vote yes, most Republicans (65%) would vote no, and independents are more closely divided (49% yes, 41% no). Because this is the first time PPIC has been able to ask about the governor’s proposal using the ballot title and a summary, direct comparison to previous surveys is not possible. However, past surveys found majority support for his plan to temporarily raise taxes (68% January 2012, 60% December 2011).(PPIC)

The Millionaire’s Tax supporters are scheduled to release their own poll showing stronger support this week. Just what those numbers say could mean that the ballot looks very different in November than what we expected six months ago.

Speaking of the ballot, the two June propositions are showing strong early support. The term limits measure, which changes the term limits for future legislators to 12 years for both houses, is starting at 68% support, while the cancer cigarette tax is at 67%.  However, wait for the No campaigns to come online before you really start analyzing too deeply.

On an unrelated note, the poll also showed increased support for marriage equality:

A number of social issues are being debated this election year. Californians’ views have undergone a marked shift on one issue: same-sex marriage. Today, 56 percent of likely voters favor allowing gay and lesbian couples to legally marry-up from 47 percent in October 2008, just before voters passed Proposition 8, which banned same-sex marriage. Among registered voters, majorities of Democrats (72%) and independents (56%) today favor legalizing same-sex marriage. Most Republicans (61%) are opposed. Support has grown in most political and demographic groups since October 2008. It is up 16 points among Democrats (56% to 72%), 11 points among Republicans (23% to 34%), and is similar among independents (53% to 56%). Support is up 10 points among Latinos (36% to 46%) and 7 points among whites (50% to 57%). Across age groups, support grew 10 points among those age 18-34 (53% to 63%), 13 points among those 55 and older (34% to 47%), and is similar among those age 35-54 (45% to 48%). Among evangelical Christians, support increased 15 points (21% to 36%).

Will State Leaders Hear the Protests?

Large protest at Capitol draws attention, results unclear

by Brian Leubitz

If you have been paying attention, you have noticed the appalling cuts that the state’s university systems have taken. In fact, a recent study showed that for most middle class students, Harvard is now more affordable than the CSU system.  No matter what your goals are for the CSU system, this is a very bad thing. It is not functioning as a way to improve the lives of middle and lower class Californians, and it is not providing the resources for economic development that it should.

And so we get yesterday’s protests from students of both university systems and their supporters:

Another day of protests played out at the state Capitol on Monday with thousands of demonstrators denouncing soaring higher education costs and a select group spending most of the day inside the rotunda to achieve one goal: getting arrested.

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The main group of arrestees, who will be charged with trespassing, apparently felt they had made their point, although it was unclear at times exactly what that was.

The ballooning cost of attending public colleges and universities in California was the primary focus, but at times the leaderless Occupy movement supporters discussed issuing demands on a range of issues, from the repeal of Proposition 13 to being allowed to use Capitol restrooms during their sit-in.(SacBee)

Occupy is very good at actions and getting attention. But in this case, and in others, the message got overpowered by the theatrics.  And maybe that’s fine, as there are more than enough wonks in Sacramento. Maybe the theatrics will be just the thing to open a few eyes.

But those eyes are just as recalcitrant as ever. The Republicans just look out on this, behind their anti-tax pledge suits, and glaze over.  Will this be the action that breaks through?  Or will there be more actions until it does? This protest was something of an organizing nightmare. But whether the state can continue to ignore the protests, when the function of our higher education systems continues to dwindle, is the larger question.

But as Dan Walters points out, higher education has taken a drubbing:

The thousands of college students who marched on the Capitol on Monday to protest rising fees and decreasing state support had a point: Higher education has taken a disproportionately heavy drubbing in recent years as politicians attempted – and largely failed – to balance the state budget.

The Legislature’s budget analyst has calculated that under Gov. Jerry Brown’s 2012-13 budget, state general fund spending on the University of California, the state university system and community colleges will have dropped 21 percent in five years, while fee and tuition revenue will have increased by 64 percent.(Sacbee)

There are a number of reasons for this, but you can mostly chalk it up to the fact that cutting higher education is the easiest. It involves the fewest lawsuits, and so the students get screwed over and over again. It is just one more piece of the dysfunctional governance by committee that gives the legislature strange cues.

We need more revenue, and we have two initiatives that would do that.  However, the Millionaire’s tax would actually get some of that to higher education for a change. Gee, isn’t that a novel idea.

Dan Walters: Clean up the Tax Code

Effective Federal Taxes 1955-2007 between the richest 400 and a median family, Effective Federal Taxes 1955-2007 between the richest 400 and a median familyBee Columnist calls for fix of one tax provision

by Brian Leubitz

There has been much discussion on whether to tax services in the same way we tax goods.  It could bring in several billion dollars of revenue in new sales taxes. However, before we even get there, the question of what is a “good” and what is a “service” acts as a threshold question.

And Dan Walters found one particular good/service question to address:

Ordinary computer users continue to pay taxes on off-the-shelf software but custom programs designed for big corporate and government customers, some costing millions of dollars, are exempt.

Why? The sponsoring legislator, John Vasconcellos, a Democrat who often railed about cuts in state spending, offered a lame rationale about software being mostly services, but the real reason was that the industry had political clout and used it.(SacBee)

And as Walters points out, this question alone could mean nearly two hundred million of revenue annually for the state. On one level, it is hard to blame Sen. Vasconcellos for the loophole, in a hate the game, don’t hate the player sort of way. But, the state has been suffering from these little injuries as we seek to balance the budget, and they add up.  

Walters calls for tax reform generally, and that isn’t necessarily a bad idea. But, for many years that has just been a code word for reducing progressivism and putting more of the burden on the middle class. If we can clean up the tax code, great, but we have to be careful about how we go about it. We must ensure the protection of a consistent revenue stream while also avoiding a shifting of the bill away from those who can most afford it to those who can’t.

Death Penalty Headed to November Ballot

Measure has broad support from unlikely sources

by Brian Leubitz

Since 2000, we have executed a total of 6 murderers in California=CA&sex_1=All&federal=All&foreigner=All&juvenile=All&volunteer=All]. The last of those was a 76 year old man in 2006. Since then, for a variety of reasons we have had no executions.  But meanwhile we have been warehousing criminals at the exorbitant costs for death row.  

And now it appears that the voters of California will have another decision point on the death penalty in November:

For the third time in 40 years, Californians will likely vote in November on the death penalty, a practice that has had at least as much impact on the state’s politics as on its institutions of crime and punishment.

Opponents of capital punishment said Thursday they were submitting 800,000 signatures on petitions for an initiative to close the nation’s largest Death Row, which has 725 condemned prisoners. The measure needs 504,760 valid signatures to make the ballot.

“California voters are ready to replace the death penalty with life in prison with no chance of parole,” declared Jeanne Woodford, who oversaw four executions as warden of San Quentin State Prison. She now heads the anti-capital-punishment group Death Penalty Focus. ([SF Chronicle

Along with Woodford, the initiative also has the support of Ron Briggs, the author of the death penalty initiative in 1978 that reinstated the punishment. And as he said in the LA Times on Feb 12, the death penalty “simply does not work”:

The ineffective legal beast created by California’s death penalty laws costs taxpayers more than $100 million annually and ties up the lives of prosecutors and victims who could be moving on to other things.

We thought our 1978 initiative created a system to support victims’ families. It didn’t. The only people benefiting today are the lawyers who handle expensive appeals and the criminals who are able to keep their cases alive interminably.

The Briggs death penalty law in California simply does not work.

Perhaps this time we can take one step towards a humane state while also addressing our fiscal concerns.

Stockton Stares Headlong Into the Abyss

Shock doctrine comes home to Central Valley

by Brian Leubitz

In many ways, it is hard to fault the current City leadership.  Sure, some of them have been around a while and had a hand in some bad decisions.  However, while Stockton over leveraged in search of the growth gods, they were doing what they thought was the American way. They were building a community based upon construction and growth. And when the bubble burst, they were out on the edge. And now they are going through an “orderly mediation”

The City Council is expected to approve an eight-point plan this evening that calls for the city to suspend approximately $2 million in bond payments through the end of the current fiscal year. The plan also calls for the city to embark on two months of private discussions with its bond holders, city employee unions and any other creditors with at least $5 million in claims against the city to determine if parties can reach accommodations that will allow Stockton to avoid bankruptcy.

If the council agrees – and it really has no other viable option – Stockton will become the first city in the state to undergo the AB 506 process, a formalized mediation period designed to help jurisdictions restructure their debts and avoid municipal bankruptcy.(Modesto Bee)

At this point, Stockton is in a corner. Under state law, they have few viable choices. Labor will have to take a big cut, whether through this mediation process or through bankruptcy.  But this is about more than some bond holders.  Stockton made a deal with its employees. In exchange for taking lower salaries, they would get better long term benefits and stability.  Turns out that they are going to fail on both accounts.

I doubt this process will make many on Wall Street happy, but even if they are going to lose a few bucks, they do get to continue their attacks on the middle class and organized labor. And so far, they seem to be winning even when they lose.

The Politicization of CSU’s Herbert Carter

Republicans aim to block reappointment

by Brian Leubitz

Herbert Carter, originally appointed by Gov. Schwarzenegger in 2004, has presided over the CSU Board of Trustees as its Chair since 2009.  As you may know, those years have not exactly been a picnic for CSU or the state budget.  However, being the guy who raised tuition while also paying higher executive salaries is going to make you a target no matter how diplomatically you handle it.

He’s up for confirmation on his reappointment, and it isn’t going smoothly.  Apparently, the Republicans are up in arms, UP IN ARMS I tell you, about high executive pay.

Last week, Sen. Joel Anderson (R-San Diego) sent a letter to Gov. Jerry Brown asking him to withdraw his appointment of Carter.

“Since 1984, Herbert Carter has been near the center of every CSU pay hike scandal,” Anderson wrote. “The CSU trustees don’t seem to understand that their ‘compromise’ of setting a CSU’s president’s pay at $325,000 is insulting to California students, parents, and taxpayers.” (LA Times)

Without jumping into the morass that is CSU executive pay, I will say that hiring for a job at institution in chaos isn’t exactly an easy prospect. And the tuition/fee issue, well, you are never going to win in that position. But Republicans playing the tuition card seems kind of rich when they are all about cutting funding for the institution.

Perhaps Gov. Brown will have to come to some compromise on this candidate, but in a world where this is one of the few votes that matters for Republican support, they are doing their best to be heard.  Whether it has any larger impact on anything whatsoever is a different question altogether.

Brown and His Metrics: Stand Together or Fall Separately

Governor releases poll showing measures would fail if all three on ballot

by Brian Leubitz

Of course, the question then becomes which measure you actually put on the ballot. Brown’s poll has some interesting figures on that:

Both Brown’s temporary tax hike — a half-cent rise in the sales tax coupled with increased levies on higher earners — and a proposed tax increase on millionaires sponsored by some unions score more than 50% on the poll. Brown’s measure is at 53% while the millionaire’s tax polls at 55%, according to a statement from Sacramento-based pollster Jim Moore.

The third proposed tax hike, an across-the-board income tax hike to fund public education pushed by civil rights attorney Molly Munger, lags with only 31% support.

But if all three appear on the ballot, the release states, none cross the 50% threshold. Brown’s wins 43% support, the millionaire’s tax 42% and the income tax 17%. (LA Times)

Munger seems not to be interested in backing off, despite what poll after poll shows: her measure really can’t pass. And, really, it should be no surprise. It increases tax increase for everybody making any amount over about $7750.  That really isn’t going to fly with any electorate really.

Now, as to the question between Brown’s measure and the millionaire’s tax, the issues become closer.  Both sides seem intent on their own measures making it on the ballot.  While Brown’s has considerably more resources to get on the ballot, there is still a strong chance of both making it.  Unless somebody backs off, we stand a chance of seeing all three measures on the ballot.

For reasons of confusion and principle, having three on the ballot makes it even tougher to get one through to 50%.  And at this point, I’m not sure the little discussion through the media is really working.

Prop8 Supporters Seek Broader 9th Circuit Review

Hurry up and wait as anti equality litigation team seeks more attractive ruling to Supreme Court

By Brian Leubitz

Given the proposition eight supporters previous statements that they preferred to go to the Supreme Court as quick as possible, the decision to appeal to Ninth Circuit as a whole probably deserves some explanation. But the big problem for the so-called protect marriage team is that the ruling from the Ninth Circuit three-judge panel is more narrow then they would have expected. It leaves open the possibility that the Supreme Court could actually decline to hear the case. And what they’re really looking for is the ability to continue on with their campaign of constitutional amendments against marriage equality.

So, rather than going directly to the Supreme Court, yesterday They decided to appeal the Ninth Circuit 11 judge panel:

ProtectMarriage, the sponsors of Proposition 8, will ask a larger panel of the U.S. 9th Circuit Court of Appeals to review the marriage dispute ruling instead of going straight to the U.S. Supreme Court, according to a spokeswoman.

The 9th Circuit would have to vote on whether to grant the extra layer of review. If a majority favors it, a larger panel will reconsider the constitutionality of the marriage ban and issue a ruling. Such a reconsideration could delay U.S. Supreme Court review by months or more than a year. (LAT)

After all, what do they really have to lose? With the appeal pending, and the previous decision of the three-judge panel stayed, the prop 8 supporters really only have money to lose. But their supporters have really shown no lack of desire to continue funding the litigation.

As it is, no marriages can go forward while litigation is pending in the 9th circuit. And while they risk the country becoming increasingly accepting of marriage equality, assuming there is no change in the composition of the Supreme Ct., the risk is minimal. So they get to delay the possibility of marriages in California for the better part of another year.

The previous, narrow, decision is just a complicating factor for them as they face the Supreme Court. It sill seems unlikely that the Court will not hear the case, but whatever small chance that is becomes greater with the narrow opinion. If they get a worse decision at the 9th, the case will definitely go to the Supreme Court. And heck, there is always the chance that the 11 judge panel would decide against marriage equality.

So, plan on doing a little more hurrying up and a lot more waiting on the final resolution of the Prop 8 litigation.