Decision of Nicholas Berggruen’s good government committee means one less possible revenue measure

This morning, CalBuzz released polling data showing the revenue measure of the Think Long committee to be trailing two other measures.  CalBuzz posited that they would probably just go along with Brown’s when push comes to shove. And, well, I guess the push came quickly, as this afternoon they just announced that they won’t be pursuing their measure for the time being.

Therefore, we have decided to proceed as follows:

1)      Continue communicating the necessity and benefits of the Tax and Revenue Reform Plan and engage a diverse range of stakeholders, with the goal of releasing draft ballot-measure language for comprehensive public and fiscal review during 2012, for the purpose of filing the strongest-possible measure for the November 2014 ballot.

2)      In the meantime, a high-turnout election is a terrible thing to waste.  California voters deserve the opportunity in 2012 to begin the long process of reforming state government.  Therefore, in the coming days, we will be announcing our intention to partner with other organizations by generously supporting one or more reform measures that have already been filed for the 2012 elections, consistent with our Blueprint.

My guess would be that Berggruen will write a check to Brown’s campaign and then participate in the gentle nudging of the other measures to the side.

Full release over the flip

STATEMENT OF THINK LONG COMMITTEE FOR CALIFORNIA REGARDING THE 2012 BALLOT, BUDGET AND TAX REFORM AND NEXT STEPS

“Six weeks ago, the independent Think Long Committee for California concluded more than a year of investigation and deliberation by releasing ‘A Blueprint to Review California,’ a list of bipartisan recommendations for fixing the state’s dysfunctional government and rebooting California’s future.  Most importantly, we invited all Californians to openly engage in this process by reviewing our proposals and providing immediate feedback.

We’ve been vigorously discussing and developing a viable action plan and timeline for implementing our broad range of proposals ever since.

Consistent with our collective view that California needs to think, plan and act for the long term, we’ve been guided by the cardinal rule that it is far more important to get our reforms done ‘right’ than ‘right away.’

In the case of two of our proposals – our long-term tax and revenue reform plan and a proposal to establish a new, independent Citizens Council for Government Accountability – we have been gratified by the overwhelming interest from elected leaders in both parties, including Governor Brown, stakeholders and everyday citizens in these bold, broad-based changes.  It is clear from public reaction, stakeholder meetings and our own public opinion research that Californians are hungry for real reform and are more willing than ever to support a sweeping plan that is fair and will put an end to California’s perpetual financial volatility and suffocating wall of debt.

At the same time, we recognize the practical constraints of the 2012 election calendar – and have come to the conclusion that it will take more time to perfect these proposals, eliminate unintended consequences and provide every stakeholder and everyday Californians a meaningful voice in that process.

Therefore, we have decided to proceed as follows:

1)      Continue communicating the necessity and benefits of the Tax and Revenue Reform Plan and engage a diverse range of stakeholders, with the goal of releasing draft ballot-measure language for comprehensive public and fiscal review during 2012, for the purpose of filing the strongest-possible measure for the November 2014 ballot.

2)      In the meantime, a high-turnout election is a terrible thing to waste.  California voters deserve the opportunity in 2012 to begin the long process of reforming state government.  Therefore, in the coming days, we will be announcing our intention to partner with other organizations by generously supporting one or more reform measures that have already been filed for the 2012 elections, consistent with our Blueprint.

We will also pursue implementation of other elements of our “Blueprint” by:

·         Co-sponsoring the California Economic Summit in May to develop a statewide job creation and competitiveness implementation plan.

·         Supporting a coordinated regulatory reform effort – including CEQA reform – that maintains California’s environmental leadership while expediting permitting for job-creating new and/or expanded projects.

·         Forging a partnership with the Governor, Lieutenant Governor, as well as federal and local officials, to establish “plug-and-play” pre-permitted zones to attract new investment to California.

Pursuing reform on these multiple fronts and engaging a broader coalition will exponentially increase our reach, effectiveness and odds for success.

We are extremely pleased by the progress we’ve already made in a relatively short period of time – and look forward to supporting and helping to lead the hard, time-consuming work of achieving California’s comeback.

Because, in the end, Think Long means acting long, as well.”

The Think Long Committee for California is: Nicolas Berggruen (Founder), David Bonderman, Eli Broad, the Honorable Willie Brown, the Honorable Gray Davis, Maria Elena Durazo, the late Matthew Fong, the Honorable Ronald George, Antonia Hernandez, the Honorable Robert Hertzberg, Gerry Parsky, the Honorable Condoleeza Rice, Eric Schmidt, Terry Semel, the Honorable George Shultz and Dr. Laura D’Andrea Tyson.

New Poll shows Millionaire tax fares best, while Brown is forced to re-file initiative

by Brian Leubitz

Not an entirely good news day for Jerry Brown’s attempt to get some revenue in the system.  First, he is forced to refile his measure because of drafting errors:

Gov. Jerry Brown is taking a mulligan, tripped up by a typographical error and forced to re-file his ballot initiative to raise taxes.

The Democratic governor on Friday filed paperwork with the state for “The Schools and Local Public Safety Protection Act of 2012- ver. 2.” The measure is identical to one Brown filed in December, the governor said in a filing with the attorney general’s office, “except that we have corrected a typographical error that resulted in two numbers being transposed.”(SacBee)

While this is a bit of annoyance for his efforts to get the measure onto the signature gathering process, his team has allowed plenty of time.  I can’t imagine there will be any major issues caused by the re-filing.

The other big news comes from a leaked poll from the center-right Think Long Committee (funded by rich dude Nicholas Berggruen). The results of a seemingly well-considered scientific poll, just published by CalBuzz, show that the CFT/Courage Campaign “Millionaire’s Tax” leads the pack at a 70/30 split.  Brown’s package is ahead by 62-37, and Molly Munger’s taxes for education just above water at 51-45.  Think Long’s own proposal to extend the sales tax to service was ahead 57-30.

I would have to agree with the Buzzers sentiment that Think Long would probably defer to Brown eventually, especially armed with these numbers.  As I mentioned before about Molly Munger, she is a bit of a wild card. Whether she intends to move forward on her income tax increase for education will play an important role in the fall campaign for these measures.

The CFT/Courage Campaign measure has some broad grassroots support, and has received some positive media attention. However, whether the progressive coalition can come up with enough money to get it on the ballot is an open question.

The revised Brown measure appears over the flip.

Tax Initiative

Illinois slips below California in Moody’s credit ratings

by Brian Leubitz

Sometimes you just have to celebrate small, even microscopically small achievements.  I think this would be one of those small ones:

After being stuck in the ratings basement since 2009, California’s credit rating now ranks better than Illinois, according to Moody’s Investors Service. Illinois was slapped with an A2 rating last week, worse than California’s A1. Moody’s penalized Illinois for unresolved pension liabilities and delayed payments. (SacBee)

Hooray, we’re #49 in one of the three major credit ratings.  Of course, much of this discussion is baloney for a number of reasons.  As Robert pointed out in 2010, we actually have a much lower debt to GDP ratio than any of the European countries of concern.  It is currently hovering around the 5% mark, hardly crisis levels.

And then there is the underlying guarantee enshrined in our Constitution. As Treasurer Lockyer wrote in the LA Times:

California has never failed to make its bond payments on time and in full, not even during the Depression. And there is no chance we will smudge that pristine record.

Payment of debt service is constitutionally protected, with bond payments required even when the state is operating without a budget. Debt service has second call on general fund dollars, right behind education. Under the California Constitution, making sure bond investors get their money is a higher priority than providing healthcare to kids, protecting the environment and keeping our communities safe.(LA Times)

But you know, the credit rating agencies have their own priorities, shock doctrine and all that.

Hooray for #49!

Lower than expected revenues and higher expenditures create additional budget pressure

by Brian Leubitz

These are not exactly the figures that the Governor wanted to see right now: Disbursements exceeded projections by $2.65 Billion and revenue was $165 million below the Governor’s latest estimate from his budget proposal last week. That is $1.4 bil below the most recently passed budget. All in all, some nasty numbers.

“While we saw positive numbers in November, December’s totals failed to meet even the latest revenue projections,” said Chiang. “Coupled with higher spending tied to unrealized cost savings, these latest revenue figures create growing concern that legislative action may be needed in the near future to ensure that the State can meet its payment obligations.

With the most recent lower than expected projection for the Governor’s revenue measure, it is looking increasingly likely that there will be even more significant mid-budget cuts to services.  Cuts that will continue to fall in the lap of those who can least afford them.

Valuation of tax measure adds to uncertainty

by Brian Leubitz

In case you were asleep for the past few years, we have a revenue problem with our budget.  Namely, we don’t have enough cash coming in to pay for our state’s priorities.  Gov. Brown is hoping to clear the field for his own measure, but it seems he has a lot of work to do on that front judging from the news of the day.

First, Molly Munger dropped half a million dollars on her own measure that aims to raise $10 billion for schools. Her measure raises the entire tax structure in a progressive fashion.  You can read more here, but this is the type of measure that progressives would ordinarily support. However, given the need for budget flexibility, there will be substantial pressure on this measure to get out of the way.

However, Molly Munger is no lightweight. She’s a veteran civil rights litigator who also happens to be the daughter of Warren Buffet’s longtime business partner, Charles Munger.  Her brother, Charles Munger, Jr, spent a bunch of money ($12mil) on Prop 20 to get Congressional redistricting into the commission. Molly Munger has not indicated how deep her pockets on this one will go, but if she’s willing to put up $500K, will she drop the other million or two to get it on the ballot?  As Peter Schrag has said, shepherding this thing through the whole process will be quite the challenge for Ms. Munger.

The other big news today was the joint LAO/Dept. of Finance estimation of the Governor’s proposed revenue measure.  Suffice it to say there are a few problems:

The Democratic governor is counting on a voter-approved tax increase on sales and the wealthy to generate $6.9 billion for the 2012-13 budget. But the nonpartisan Legislative Analyst’s Office says Brown’s plan would raise only $4.8 billion in the first budget cycle.

The Analyst’s Office and Department of Finance included their separate projections in a joint letter to Attorney General Kamala Harris that is required for ballot preparation. (SacBee)

In other words, more uncertainty for a Capitol building that is rife with it now.  Of course, trying to project the economy right now is somewhere between ridiculously hard and impossible right now, but the $2.1 billion gap is larger than the Gov. would have liked to see right now.  We’ll have to see what kind of contingency plans the governor makes for this extra whole that he now will have to make up.  

Might we see “Return of the Triggers”?  If the Governor thinks that the $6.9 estimate is worth gambling on, the situation ends up being remarkably similar to where we found ourselves last year, waiting on cash to come in.  One would hope that the triggers don’t become a regular feature of our budget cycle, but it might be, once again, the easiest way out of a box.

Or, you know, some other random number will pop out of the sky in a few days and the whole scenario will change.  Heisenberg pretty much rules Sacramento these days.

Top 2 Creates Interesting Scenarios Within Republican Assembly Caucus

by Brian Leubitz

The headline itself sounds like insanity.  But with only a month until candidate filing opens it is looking increasingly like Republicans may realize they have to choose between keeping a few RINO pets or face extinction.

We all know the situation in the Senate, where Republicans are pinning their hopes of keeping Democrats below 2/3rds on a handful of seats along the Central Coast.  They are so worried they have launched an expensive referendum challenge in hopes of getting more favorable lines from the Supreme Court.  Members of their Caucus must think they are in trouble as they resemble rats on the proverbial ship with both Senators Blakeslee and Strickland announcing they will not be running for re-election.

The Assembly is more interesting.  Most analysts believe that Democrats cannot reach two-thirds in that house in 2012.  But looking at the Republican frontrunners they may not have to.  In AD 77 there is Brian Maienschein, a former San Diego City Council member who is well liked by local labor and who the Flashreport had labeled as too moderate to be considered a real Republican.

In AD 61 they have Bill Batey.  Besides being a Moreno Valley City Councilmember, this guy is pro-choice, fine with gay marriage and won’t sign the no-tax pledge.  And yes, he says he is a Republican.

In AD 8 they have Peter Tateishi who is a by-the-book Republican.  But leadership is so worried about his ability to win the seat they have been quietly encouraging local developer Jon Bagetelos to run.  Why quietly?  Because among his moderate credentials, Bagetelos is a major backer of Sacramento’s Democratic mayor Kevin Johnson.  Bagatelos lost an Assembly race once before to a conservative Republican and this time is trying to quietly set himself up before the tea party people figure out who he really is.

Then you can throw sitting Assemblymember Jeff Gorrell in the mix.   The only reason he hasn’t been branded a RINO yet is that he hasn’t had the chance to vote due to an extended military deployment to Afghanistan.  But once he is back and if he has some other moderate voices to give him cover, expect Gorell to go up on votes for taxes, labor, choice and marriage equality.

So unlike the Senate where Republicans are putting up a vigorous fight, if something doesn’t change by the time candidate filing closes Assembly Republicans may simply hand Democrats the two-thirds votes we need to advance our agenda no matter what happens in November.  Where is Republican leader Connie Conway?  Are the conservative members of her Caucus giving her a pass because they would like to remain at least sort-of-relevant?  Or are they asleep at the wheel as she pulls the wool over their eyes?  Given Assembly Republicans penchant for dumping their leaders, I guess we will know soon enough.