While Brown works to cobble together a centrist coalition, the corpse of Howard Jarvis speaks.

by Brian Leubitz

Jerry Brown is putting together quite the interesting coalition for his tax revenue measure.  He’s got some labor support, of course, but he’s been claiming support from some large companies that usually go by “Big” and followed by the name of some industry. He’s got some Big Oil, some Big Healthcare, yada, yada.

Hearing this, the corpse of Howard Jarvis was none too pleased. So, they’ve gone ahead and begged their Big Business friends to resist Jerry Brown’s “cajoling.”

“We know that Governor Brown, just through the power of his office alone, can cajole and perhaps even threaten vulnerable businesses,” the groups said in an open letter. “It is therefore not lost on us that, under certain circumstances, modest support to help the governor place his measure on the ballot might be viewed a lesser of two evils or, more likely, as an insurance payment. However, on behalf of citizen taxpayers and the small business community, we appeal to your sense of doing what is right for all of California.” (SacBee)

This really is quite remarkable. Though HJTA didn’t exactly get along with Gov. Schwarzenegger, they never really went this far with him.  By this far, I mean insinuating that Brown is threatening companies in order to solicit funding for his revenue measure.  Not that Arnold ever did that, because, special interests had no power on him.  He could resist them with his massive musculature.  Until he couldn’t.

But this is more a sign of desperation than anything else.  If Brown is able to pull significant resources and support from some of the traditional funders of anti-tax campaign, it will be an exceedingly difficult fall campaign for HJTA and its allies.  Because you know you are doing well when you try to quote Benjamin Franklin about hanging together or hanging separately. (I say try because it is quite possible that Franklin didn’t actually come up with the phrase.) The quote is even more out of touch considering the desperate state of many of Californians most needy who have been devastated by the continuous cuts to services.

California voters are against cuts, mixed on taxes.

by Brian Leubitz

When the Republican realized that they could make some electoral gains from becoming the “Second Santa”with their tax cuts, they knew they were on to something.  They didn’t have to be the bad guys promoting spending cuts, and their tax cuts would somehow net just as much revenue because the magic “Laffer curve” would make everything better. And if it didn’t work, well, the Democrats would have to cut spending and do the dirty work.

And, unsurprisingly, it worked. It has clearly worked in California, where Prop 13 and its anti-tax brethren have wreaked havoc on the state.  For a few decades we were able to hide much of this through some huge bubbles and creative accounting, but that is a thing of the past.  And so we have a huge deficit, a dysfunctional tax system, and a government that only allows cuts. What’s a Republican to do to keep up his role as a second santa?

Well, blame it all on “waste, fraud, and abuse.”  It’s a simple lie that, when repeated enough, becomes mantra to the media and, eventually, the general public.  Take the latest PPIC poll and the latest finding:

Most Californians (59% adults, 55% likely voters) believe state government could cut spending and still provide the same level of services.

“There remains a strong belief that the state government could spend less and provide the same services even as Californians notice local service reductions from state spending cuts and show early support for a tax increase,” says Mark Baldassare, PPIC president and CEO. (PPIC)

When the budget first got bad a few years back, perhaps there was a bit of fat to trim around the budget. Some unnecessary expenditures here and an unsuccessful program there. Not enough to fix the budget, but a few billion could be saved without fundamentally changing the role of government.

Those days are gone. Cuts to government expenditures mean direct cuts to services. There is simply no way to provide the same level of services for an ever decreasing amount of money. Go take a look at your local government offices and then compare it to the offices of your local bank corporate office.  There are no fancy waterfalls and lavish breakrooms offering wide selections of Odwalla and Rice Krispies, there are just a dwindling level of state employees working ever harder to keep up.  Teachers are spending large chunks of their paychecks to provide supplies for their classrooms and their students. Cuts to CalFire put firefighters in very real danger and mean more damage to California homes.

And yet, a strong majority of Californians are living in a world where we can somehow make painless cuts? Do they know of any of these painless cuts? Do the Republicans? Have they ever presented any of these so-called painless cuts?

But while 40 percent of adults and likely voters prefer closing the state’s budget gap with a mix of spending cuts and tax increases-the approach Brown has proposed-similar proportions (35% adults, 41% likely voters) prefer closing it mainly through spending cuts. That being said, when read a summary, 72 percent of adults and 68 percent of likely voters favor Brown’s initiative proposal.

Interestingly, the PPIC data also shows much stronger support for raising the highest income tax bracket(74% adults, 68% likely voters) than the sales tax. The sales tax is opposed by 69% of adults, 64% of likely voters. That particular question raises the specter of competing tax measures, the “Kardashian” tax and Brown’s own measure. There is still a lot of time before signatures are due, and Brown has been working to shut down any other revenue measure. Whether he is successful or not will still take a while to know, but may end up dramatically changing the odds of his own measure.

While there have been efforts at public education on the budget by state politicians, it is a monstrous task, especially when there are players on the other side actively promoting misinformation.  But, at every opportunity, progressives must be sure to emphasize the point that waste, fraud, and abuse is not an answer to all of our budget woes and to explain the real budget situation.

Governor thinks big, highlights HSR and education

by Brian Leubitz

You can read the whole State of the State here, and the Bee has a collection of responses here, but there were a few points I thought were worth pulling out.

1) The budget

The Governor’s line was pretty much as expected.  He is planning on making some rather grievous cuts, but feels that we need some revenues to balance out the system.  He promoted his measure and spoke of the temporary nature of the increases.  I would think that temporary is a word that you will be hearing many times as we head to November.

2) HSR

Governor Brown has always been a supporter of HSR, and the recent troubles have done nothing to dissuade him that now is the right time to start building.  The state will be putting up $2B for the first segment, which the Governor calls a good deal no matter what else is built.  However, he went through the old quote book to come up with some good fodder for why we need HSR:

Critics of the high-speed rail project abound as they often do when something of this magnitude is proposed. During the 1930’s, The Central Valley Water Project was called a “fantastic dream” that “will not work.” The Master Plan for the Interstate Highway System in 1939 was derided as “new Deal jitterbug economics.” In 1966, then Mayor Johnson of Berkeley called BART a “billion dollar potential fiasco.” Similarly, the Panama Canal was for years thought to be impractical and Benjamin Disraeli himself said of the Suez Canal: “totally impossible to be carried out.” The critics were wrong then and they’re wrong now.

3) Education

Brown has been something of critic recently of the overabundant testing scheme in place under NCLB. Today was no different:

In California we have detailed state standards and lots of tests. Unfortunately, the resulting data is not provided until after the school year is over. Even today, the ranking of schools based on tests taken in April and May of 2011 is not available. I believe it is time to reduce the number of tests and get the results to teachers, principals and superintendents in weeks, not months. With timely data, principals and superintendents can better mentor and guide teachers as well as make sound evaluations of their performance. I also believe we need a qualitative system of assessments, such as a site visitation program where each classroom is visited, observed and evaluated. I will work with the State Board of Education to develop this proposal.

We’ll see what becomes of this, but reducing testing won’t make the Arne Duncan and the Dept of Education happy. However, it is the right choice for California. We spend too much time teaching to tests in what is becoming an ever-shorter school year.

You’ll be able to watch a replay of the speech soon, I’ll post a link to that when I get it.

Republicans pre-respond, but the basis of today’s speech already seems clear

by Brian Leubitz

UPDATE: Read the text as prepared by the Governor at his website here.

First, let me apologize for not “going dark” today, but since the state of the state is today, I hope the “Stop Censorship” logo on the front page will clearly state my opposition to SOPA/PIPA. Hey, if it works for Google, right?

Anyway, in a few minutes, the Governor will be giving his state of the state speech.  The Republicans have already “responded” to the Speech on the intertubes, but apparently they put those behind a password until the speech to complete the illusion or something.  Not to defend them on this, but to most Capitol watchers, the meat of the speech is not much of a mystery.

The governor will outline how the economy of the state is improving, which it is, but at a rate that has not kept up with the state’s demand for services from an already slashed budget. In order to combat that, he is going to ask the people of California to approve his revenue measure that will temporarily increase the sales tax by half a cent and levy a higher tax on upper income earners.

His budget already takes this measure into account, basically providing two alternatives. One that attempts to preserve K12 funding while still continuing the slash and burn of our social safety net.  The other budget, which assumes no additional revenue, cuts billions of dollars from K12 and would likely mean big teacher layoffs and a still shorter school year.

Dan Schnur and other Republicans are calling this a ransom note from the Governor.  But as Brown said, that’s where the money is. If we don’t have money, we can’t pay for education. The facts are there, we need additional revenue.

But, there is still a speech to be given. You can watch it on CalChannel online or on cable. You can hear the audio on KQED here or KALW here. The SacBee has the stream and live Dan Walters(!) commentary here. I’ll be back with more after the speech.

SACRAMENTO – In his 2012 State of the State speech, Governor Edmund G. Brown Jr. said California is “on the mend” and laid out an ambitious agenda for economic growth in the year ahead.

The full text of the speech is below: (Remarks as prepared)

As required by the state constitution, I am reporting to you this morning on the condition of our state.

Putting it as simply as I can, California is on the mend. Last year, we were looking at a structural deficit of over $20 billion. It was a real mess. But you rose to the occasion and together we shrunk state government, reduced our borrowing costs and transferred key functions to local government, closer to the people. The result is a problem one fourth as large as the one we confronted last year.

My goal then was to balance budget cuts with a temporary extension of existing taxes-if the voters approved. You made the reductions and some very difficult decisions but the four Republican votes needed to put the tax measure on the ballot were not there. So we are left with unfinished business: closing the remaining gap.

Again, I propose cuts and temporary taxes. Neither is popular but both must be done. In a world still reeling from the near collapse of the financial system, it makes no sense to spend more than we have. The financial downgrading of the United States, as well as of several governments in Europe, should be warning enough. It is said that the road to hell is paved with good intentions and digging ourselves into a deep financial hole-to do good-is a bad idea. In this time of uncertainty, prudence and paying down debt is the best policy.

For my part, I am determined to press ahead both with substantial budget cuts and my tax initiative. The cuts are not ones I like but the situation demands them. As for the initiative, it is fair. It is temporary. It is half of what people were paying in 2010.  And it will protect our schools and guarantee-in the constitution-funding for the public safety programs we transferred to local government. With enough time, we can and should devise more permanent tax reform but for now we should finish the job of bringing spending into balance with revenues.

Putting our fiscal house in order is good stewardship and helps us regain the trust of the people. It also builds confidence in California as a place to invest and realize one’s dreams. Contrary to those critics who fantasize that California is a failed state, I see unspent potential and incredible opportunity. Every decade since the 60’s, dystopian journalists write stories on the impending decline of our economy, our culture and our politics. Yes, it is fair to say that California is turbulent, less predictable and, well, different. Yet, look at the facts.

After the mortgage bubble burst in 2007, California lost a million jobs, much of it driven by the overleveraged construction industry and its financial partners in the under-regulated mortgage industry. The result is a recovery far slower than after the previous six national recessions. But now we are coming back. In 2011, California personal income grew by almost $100 billion and 230,000 jobs were created-a rate much higher than the nation as a whole.

Contrary to those declinists, who sing of Texas and bemoan our woes, California is still the land of dreams-as well as the Dream Act. It’s the place where Apple, Intel, Hewlett-Packard, Oracle, QUALCOMM, Twitter, Facebook and countless other creative companies all began. It’s home to more Nobel Laureates and venture capital investment than any other state. In 2010, California received 48% of U.S. venture capital investments. In the first three months of last year it rose even higher-to 52%. That is more than four times greater that the next recipient, Massachusetts. As for new patents, California inventors were awarded almost four times as many as inventors from the next state, New York.

California has problems but rumors of its demise are greatly exaggerated.

The year 2012 presents plenty of opportunity and, if we work together, we can:

Stimulate jobs

Build renewable energy

Reduce pollution and greenhouse gasses

Launch the nation’s only high-speed rail system

Reach agreement on a plan to fix the Delta

Improve our schools

Reform our pensions, and,

Make sure that prison realignment is working-to protect public safety and reduce recidivism.

Last year, I appointed a top advisor with an impressive background in the private sector and charged him with finding out what doesn’t work for business in this state and how to fix it. What he heard consistently was that business needed an effective champion to navigate the state’s plethora of complex laws and regulations which can discourage investment and job creation. You enacted a law to restructure our office of business development and place it in the governor’s office. Under the name GO-BIZ, we now have a point of contact at the highest level for businesses large and small. More than that, the GO-BIZ office is staffed with people who understand what it’s like to be in business and stand ready to intervene and give real help to get businesses open and projects off the ground.

Already California is leading the nation in creating jobs in renewable energy and the design and construction of more efficient buildings and new technologies. Our state keeps demanding more efficient structures, cars, machines and electric devices. We do that because we understand that fossil fuels, particularly foreign oil, create ever rising costs to our economy and to our health. It is true that the renewable energy sector is small relative to the overall economy but it pays good wages and will only grow bigger as oil prices increase and the effects of climate change become more obvious and expensive.

I have set a goal of 20,000 megawatts of renewable energy by 2020. You have laid the foundation by adopting the requirement that one third of our electricity come from renewable sources by that date. This morning I can tell you we are on track to meet that goal and substantially exceed it. In the last two years alone, California has permitted over 16,000 megawatts of solar, wind and geothermal energy projects.

In the beginning of the computer industry, jobs were numbered in the thousands. Now they are in the millions. The same thing will happen with green jobs. And California is positioned perfectly to reap the economic benefits that will inevitably flow.

California also leads the nation in cleaning up the air, encouraging electric vehicles and reducing pollution and greenhouse gases. Our vehicle emissions standards-which have always set the pace-now have been adopted by the federal government for the rest of the country.

Under AB 32, California has stepped out and crafted a bold plan to deal with climate change and foreign oil dependency. The plan will require less carbon in our fuels, more efficient technologies across a broad swath of businesses and a carefully designed cap and trade system that uses market incentives instead of prescriptive mandates.

As a result, California is attracting billions of dollars in clean tech venture capital investments. In 2011, almost 40% of such investments were made in California, making our state not only the leader in the nation but in the world.

My commitment is to continue these innovative programs and build on them in the coming year in every way that I can.

Just as bold is our plan to build a high-speed rail system, connecting the Northern and Southern parts of our state. This is not a new idea. As governor the last time, I signed legislation to study the concept. Now thirty years later, we are within weeks of a revised business plan that will enable us to begin initial construction before the year is out.

President Obama strongly supports the project and has provided the majority of funds for this first phase. It is now your decision to evaluate the plan and decide what action to take. Without any hesitation, I urge your approval.

If you believe that California will continue to grow, as I do, and that millions more people will be living in our state, this is a wise investment. Building new runways and expanding our airports and highways is the only alternative. That is not cheaper and will face even more political opposition.

Those who believe that California is in decline will naturally shrink back from such a strenuous undertaking. I understand that feeling but I don’t share it, because I know this state and the spirit of the people who choose to live here. California is still the Gold Mountain that Chinese immigrants in 1848 came across the Pacific to find. The wealth is different, derived as it is, not from mining the Sierras but from the creative imagination of those who invent and build and generate the ideas that drive our economy forward.  

Critics of the high-speed rail project abound as they often do when something of this magnitude is proposed. During the 1930’s, The Central Valley Water Project was called a “fantastic dream” that “will not work.” The Master Plan for the Interstate Highway System in 1939 was derided as “new Deal jitterbug economics.” In 1966, then Mayor Johnson of Berkeley called BART a “billion dollar potential fiasco.” Similarly, the Panama Canal was for years thought to be impractical and Benjamin Disraeli himself said of the Suez Canal: “totally impossible to be carried out.” The critics were wrong then and they’re wrong now.

Another huge issue we must tackle is water. Last week, Secretary of the Interior, Ken Salazar – met here in Sacramento with those in my administration who are working to complete the Bay Delta Conservation Plan. Together we agreed that by this summer we should have the basic elements of the project we need to build. This is something my father worked on and then I worked on-decades ago. We know more now and are committed to the dual goals of restoring the Delta ecosystem and ensuring a reliable water supply.

This is an enormous project. It will ensure water for 25 million Californians and for millions of acres of farmland as well a hundred thousand acres of new habitat for spawning fish and other wildlife. To get it done will require time, political will and countless permits from state and federal agencies. I invite your collaboration and constructive engagement.

Next, I want to say something about our schools. They consume more tax dollars than any other government activity and rightly so as they have a profound effect on our future. Since everyone goes to school, everyone thinks they know something about education and in a sense they do. But that doesn’t stop experts and academics and foundation consultants from offering their ideas – usually labeled reform and regularly changing at ten year intervals-on how to get kids learning more and better. It is salutary and even edifying that so much interest is shown in the next generation. Nevertheless, in a state with six million students, 300,000 teachers, deep economic divisions and a hundred different languages, some humility is called for.

In that spirit, I offer these thoughts. First, responsibility must be clearly delineated between the various levels of power that have a stake in our educational system. What most needs to be avoided is concentrating more and more decision-making at the federal or state level. For better or worse, we depend on elected school boards and the principals and the teachers they hire. To me that means, we should set broad goals and have a good accountability system, leaving the real work to those closest to the students. Yes, we should demand continuous improvement in meeting our state standards but we should not impose excessive or detailed mandates.

My budget proposes to replace categorical programs with a new weighted student formula that provides a basic level of funding with additional money for disadvantaged students and those struggling to learn English. This will give more authority to local school districts to fashion the kind of programs they see their students need. It will also create transparency, reduce bureaucracy and simplify complex funding streams.

Given the cutbacks to education in recent years, it is imperative that California devote more tax dollars to this most basic of public services. If we are successful in passing the temporary taxes I have proposed and the economy continues to expand, schools will be in a much stronger position.

No system, however, works without accountability. In California we have detailed state standards and lots of tests. Unfortunately, the resulting data is not provided until after the school year is over. Even today, the ranking of schools based on tests taken in April and May of 2011 is not available. I believe it is time to reduce the number of tests and get the results to teachers, principals and superintendents in weeks, not months. With timely data, principals and superintendents can better mentor and guide teachers as well as make sound evaluations of their performance. I also believe we need a qualitative system of assessments, such as a site visitation program where each classroom is visited, observed and evaluated. I will work with the State Board of Education to develop this proposal.

The house of education is divided by powerful forces and strong emotions. My role as governor is not to choose sides but to listen, to engage and to lead. I will do that. I embrace both reform and tradition-not complacency. My hunch is that principals and teachers know the most, but I’ll take good ideas from wherever they come.

As for pensions, I have put forth my 12 point proposal. Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a real problem. Three times as many people are retiring as are entering the workforce. That arithmetic doesn’t add up. In addition, benefits, contributions and the age of retirement all have to balance. I don’t believe they do today. So we have to take action. And we should do it this year.  

As for prison realignment, we are just at the beginning. The cooperation of sheriffs, police chiefs, probation officers, district attorneys and local officials has been remarkable. But we have much to do-to protect public safety and reduce recidivism-and together, we’ll get it done.

It is one thing to pass a law and quite another to implement it and make it work.

As I see it, that’s my job as governor and chief executive: make the operations of government work-efficiently, honestly and in the peoples’ interest. With your help, that’s what we’ll do in 2012 and prove the declinists wrong once again.

Thank you.

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.