Rainy Day Deal: 1.5% of General Fund

May help resolve long-term credit rating issues

by Brian Leubitz

S&P has never had much faith in the California legislature. Even after the majority vote budget amendment passed, and after Prop 30’s additional revenues, S&P never really had faith.

Earlier this week, in a memorandum supportive of a budget reserve, the Wall Street credit-rating agency Standard & Poor’s said that “when it comes to reaching a legislative supermajority on fiscal matters, California has a weak track record,” raising concerns about the possibility that Brown and lawmakers might fail to reach an accord.

S&P called the negotiation “a test of sorts for the state,” adding that “if the Legislature succeeds in assembling the consensus necessary to move the measure forward, it could mark another step in California’s ongoing journey toward a more sustainable fiscal structure.”(SacBee / David Siders)

Now, despite voters continually supporting revenue and large Democratic majorities, the late 2000s budget fights never really went away. Sure, the players are completely different, but that kind of madness leaves a mark. Yes, we’ve made wholesale reforms to the system, we’ve never actually missed any debt payments, and we have a constitutional requirement to pay debt before anything (save Prop 98 requirements). But, the credit bureaus like to see reforms that make them and their Wall St. friends happy.

That brings us back to the rainy day fund. California has always struggled with boom-bust cycles, and the idea was to stash away some of that boom money to spend during the busts. In general a good concept, but the very ominous devil is in the details. And with the recent indictments and subsequent suspensions, the Senate Republicans are relevant again. But, Brown’s framework brought a little bit of something for everyone to build off, and today we get this:

But on Thursday, following several weeks of private negotiations, Brown and the legislative leaders of both parties announced an agreement on a proposal to set aside 1.5 percent of total general fund revenue every year, plus revenue from capital-gains taxes when the economy is especially robust. (SacBee / David Siders)

Republicans get their rainy day fund and something to list as an accomplishment. (Giving them an extensive list of…1 accomplishment). Steinberg and the Senate Democrats got a commitment to use half of the 1.5% to pay down debt, rather than having to argue that issue later in the budget fight. That could have been a huge problem down the road, and the inclusion here is a big victory for Steinberg and could be enough to get a much broader base of support.

Prop 13’s Effects Still Rippling. Bodega Bay and other small fire districts struggle for survival

Small fire departments facing long-term financial sustainability questions

by Brian Leubitz

Last night I attended a meeting of the Bodega Bay Fire Protection District. Not normally the type of event that I cover here at Calitics, but beyond some self-interest, it was a fascinating experience. The meeting was attended by embattled Sonoma County Supervisor Efren Carillo as well as a host of Sonoma County officials from the City Administrator’s office, the Parks Dept, and County fire dept.

The reason for the meeting was pretty simple: the fire district is running out of money. If nothing happens in the next 15 months, crews will be cut from three to two leaving the district incapable of responding to simultaneous incidents. Of course, the money question brings up a series of other questions. First, to clear it out of the way, as far as I can see there has been no issues of any kind of glaring mismanagement. Rather, it is a case of a system set up to fail doing just that.

It wasn’t always that way. The fire district is post-Prop 13 district, which is something of an immediate strike one in terms of revenues. But in a county that gets a lot of tourists, it is particularly popular. The tiny hamlet of about 1,000 attracts over 13% of Sonoma County’s transient occupancy tax (TOT) and over 4 million visitors per year. Putting aside the issues of collecting that tax, particularly for airbnb and similar services, almost all of the burden for providing fire and ambulance services falls upon local property owners. It is why Bodega Bay has one of the highest parcel taxes for a fire district in the state.

At the meeting last night, many homeowners expressed frustration with the lack of TOT coming back to the community. While there has been varying levels of support over the last few years, next year’s budget includes no such support for the district after the district’s proposal to replace their aging ambulance was rejected. Given the large number of tourists, and the fact that 57% of calls were for non-residents, many feel they are carrying an outsized burden and subsidizing ambulance protection for the state and county parks in the district.

There are additional available revenue sources, the county general fund, and Prop 172 funds chief among them. There is a change.org petition here about the Prop 172 fund that I highly recommend folks sign.

The County officials certainly seem committed to working on finding additional sources of revenue, and residents are organizing to make their presence known at the budget hearings this June. And in an election held on April 8 (because of a recall election in the neighboring Russian River fire district), a new tax measure, Measure A, was defeated by a final tally of 206-356. Most of the reasons for that failure are listed above, but the consensus last night was that it was mostly the unfair burden on the small community surrounding the parks. Well, that and a bit of off-topic ass-hattery calling for a No vote based on “saving the salmon”.

All this brings us back to the whole system set up to fail. In the world after Prop 13, revenue is increasingly difficult to acquire, and because it can, money tends to drip upward to the state. In case after case, the state has reached for local money to pay for various constitutional requirements. While some of that has come back, including through Prop 172, somehow it is never really replaced. Counties are then forced to reach down the ladder to finesse finances, and it becomes harder and harder to consistently fund local districts. (See the closure of Palm Drive hospital, which also complicates the situation in Bodega Bay.) And then you have situations like the $150 fire fee, where the money never actually went to the fire districts that actually did the fire protection.

Perhaps the system was meant to fail, or perhaps it is just a patchwork system that now has seen so many patches that the entire system is now completely dysfunctional. But in the end, the long-term answers need to come from the state. If we are to have this local control of our fire protection and other public services, they need to be able to access their fair share of revenue to provide these vital public services.

Peak Crazy? Donnelly Accuses Kashkari of Supporting Shariah Provisions

Yes, that really happened

by Brian Leubitz

You knew at some point that Tim Donnelly would break out of his standard issue right-wing rhetoric to really reach for some crazy stuff. Something that would really grab attention and force Republicans to redouble their efforts to somehow make sure that he isn’t the GOP standard bearer in November. Sure, polls have him up big over former TARP administrator Neel Kashkari, but that doesn’t wipe away years of crazy. After all Donnelly is that guy →

But linking Neel Kashkari to Shariah law, can’t say that I saw that one coming. But, in a facebook post still available today, Donnelly links to a bizarre and factually ridiculous commentary in the Washington Times and posted the following comment:

Neel Kashkari supported the United States submitting to the Islamic, Shariah banking code in 2008 when he ran TARP.

Shariah is “the seditious religio-political-legal code authoritative Islam seeks to impose worldwide under a global theocracy.”

This revelation is spreading fast, as people like Anita Gunn refer to Mr. Kashkari’s support of Shariah an “October Surprise”.

Now, I don’t normally go around defending Republicans who are campaigning on shutting down high speed rail, but I think this is worth a mention. First of all, it is racist on its face. If Neel Kashkari was white, would he face this ridiculous accusation? His family comes from a tradition of Hinduism, which turns out is not a tradition that is generally friendly to Shariah, but I suppose that knowledge would require a bit of reading. This is about ignorance.

The Washington Times article itself is a joke. Kashkari and Treasury officials were actually supporting the idea of connecting the Shariah-approved financial system into the larger global finance system, not making everything submit to Shariah law. It turns out that wouldn’t really work well for our finance system anyway, as Islamic banking forbids the practice of receiving interest. That’s kind of the point of Wall St., so I don’t think we’ll all be converting to Islamic Banking anytime soon.

A tip of the hat to Josh Richman for pointing to the LA Times article where Donnelly doubled down on this crazy:

Donnelly stood by his remarks late Monday.

“Given the recent stories and protests about the outrage of the discriminatory nature of Sharia law, we’re horrified that Kashkari would support Sharia anything,” he said.(LA Times)

Ladies and gentlemen, this is your leading GOP gubernatorial candidate, Tim Donnelly.  

The Wrong Candidates For the Right Reasons

LA Times, SF Chronicle looks for balance

by Brian Leubitz

You have to give both the SF Chronicle and the LA Times some credit to promote moderate Republicans. The state is clearly better served by having (at least) two strong parties. With Tim Donnelly looking strong at the top of the ticket, you have to look for moderates elsewhere. Both papers endorsed non-partisan Marshall Tuck for the non-partisan State Superintendent position, because, you know, he doesn’t like labor and wants us to charter school and test our way to educational nirvana.

Unfortunately, ex-legislator Tom Torlakson, who now occupies that office, is much too deferential to the teachers unions. Torlakson, a former teacher, is a dedicated and knowledgeable advocate for education – but when tough choices need to be made, he too often ends up on the wrong side. For example, Torlakson has opposed attempts to consider student test scores as one factor in teacher evaluations, a dogmatic stance that cost the state federal dollars. (SF Chronicle)

It appears that the Chronicle is upset because Torlakson doesn’t support the failed “Race to the top” scheme. Note failed isn’t merely a personal opinion: it’s backed up by hard research. The grants were too small, the goals too big, and the guidelines were not necessarily the right path to meet our real educational goals. So rather than merely castigating (former teacher) Torlakson for standing up for teachers, perhaps we should investigate why he made those decisions. We simply can’t test our way to educational success, Torlakson knows this.

But you have to laud both papers for looking for better educational outcomes. But when we spend less per pupil than states with much lower cost states, perhaps we need to look in the mirror first. And perhaps we should be doing the same thing in the Secretary of State race, and it seems that both the Chronicle and the Times have looked to the Secretary of State race for some balancing.

The Times endorsed Pete Peterson this morning and the Chronicle endorsed Dan Schnur last week. Both are Republicans, though Schnur has now moved away from that label in an attempt to win the center. But neither has the looks of a career politician, and both editorials mention the fact that neither appear to be looking for the job as a stepping stone.

For the SoS gig, these are some laudable aims. But they’ve both looked past the best candidate. A candidate that has a history of working for a better campaign finance system, Derek Cressman. Cressman appeared last week in San Francisco to protest the big fundraising at the annual AT&T Speaker’s Cup, and would use the office as something of a bully pulpit. But more than that, he has the management experience to take on the real dysfunctions of the office that are the heart of the job.

Peterson and Schnur are both reasonable options, but in a Democratic dominated state, we need a Democrat with a history of advocating for real and substantive reform with the experience to run a big office. That’s Derek Cressman.

Republicans Start Hustling To Avoid Donnelly Top 2 Appearance

Ramona_Tea_Party_Aug2012 082Republicans beginning to fear a nativist on a large stage

by Brian Leubitz

Gov. Brown is looking good in all the polling. He’s well over 50% against all the challengers, and the leading Republican is nativist Tim Donnelly. That raises something of an existential question for the future of the California Republican party: are they a niche right-wing party or can they compete for statewide races?

So, with that in mind, much of the establishment of the national GOP is looking to push Wall Street’s candidate, Neel Kashkari. The endorsements are flooding in:

Bush, who’s considering a 2016 run for president, joins 2012 GOP presidential nominee Mitt Romney, former California Gov. Pete Wilson and San Diego-area GOP Rep. Darrell Issa, who signed on with Kashkari on Monday.

*** **** ***

Kashkari’s endorsers make all the right noises about how “it’s clearly time for new leadership” (Issa) and how the former investment banker’s skills are “exactly what we need in leading California today” (Romney). But it’s probably not Democratic Gov. Jerry Brown’s 57 percent support in that poll that worries Republicans both inside and outside the state – it’s the 17 percent backing that San Bernardino County GOP Assemblyman Tim Donnelly has picked up.(SF Chronicle / John Wildermuth

That 17 percent is pretty close to Donnelly’s ceiling. He won’t get much in the way of minority votes, and he’s certainly not going to do well with independents. Brown could rack up vote totals that are rarely seen in politics. The Republicans know they aren’t going to beat Brown, but they don’t want to go down in flames. That kind of losing leaves a mark that you can’t wipe away the next day, or the next cycle.

And so you have Republicans from seemingly everywhere pouring in to endorse Kashkari. Given that he was at 2% a few days ago, and has only five weeks, it’s a big hill to climb. But, it’s a hill that establishment Republicans are desperate to conquer.

Glazer and JobsPAC: What’s that all about?

Recycle Can Photo Op with CC 006Former Brown consultant Steve Glazer’s work with Chamber PAC raises questions

by Brian Leubitz

Let’s put this out there, the 16th Assembly District, given the current candidate list, and barring any major craziness, will be electing a Democrat in November. But that is a statement that can be made in many districts across the state. And given that knowledge, the Chamber of Commerce and its allies are getting smarter. They are supporting moderate Democrats against more progressive candidates. In other words, the Democratic Party’s big tent is stretching further than ever.

One such moderate candidate is Steve Glazer, a member of the Orinda city council, and a consultant to Governor Brown. But what has been raising some questions this week has been his work on behalf of JobsPAC, the somewhat notorious PAC of the Chamber of Commerce and its right-wing allies. Robert Gammon of the East Bay Express dug into this relationship:

During the campaign, Glazer, a Democrat, has repeatedly criticized Sbranti’s union backing, while portraying himself as the true “independent” candidate in the race, not beholden to special interests. But public records show that Glazer, who is part of a new breed of pro-business moderate politicians now increasingly known as Corporate Democrats, owes his financial well-being in part to special interests: Big Oil, insurance, and tobacco companies. In addition, Glazer worked for a powerful political committee at a time when it was only supporting Republicans and was spending huge sums trying to defeat liberal Democrats for the state legislature.

Throughout 2012, Glazer worked as a political consultant for JobsPAC, an influential group operated by the California Chamber of Commerce. Records show that during that time, JobsPAC paid Glazer $172,500. And while Glazer was on the group’s payroll, its three big funders by far were oil companies ($660,000), tobacco interests ($334,500), and the insurance industry ($446,000). The single largest donors were Chevron Corporation ($610,000) and Philip Morris USA Inc. ($334,500).(EBExpress / Robert Gammon)

The June primary is a really big deal here. With one Republican in the race, we will likely see a Democratic likely winner emerge in June. There are plenty of Republicans to push the one Republican into the top two. The only question is which Democrat will join them. Steve Glazer has been working in this kind of race for a while. JobsPAC was involved in the Daly/Garcia race in OC, and getting Tom Calderon elected (before his recent fall from grace). And while Glazer has stated that he was working on supporting moderate Democrats rather than Republicans, he was on the payroll for a long time while JobsPAC was spending nearly all of its money on Republicans.

We are still learning a lot about Top-2 and how it will impact these races, but AD-16 should be a fascinating test case on the success of corporate Democrats in Dem-leaning districts.

Note: I helped design Tim Sbranti’s website

Sugary Beverage Warning Law Lands in the Suspense File

Sugary beverage warning stalled over $400,000 bill

by Brian Leubitz

That number you read above is not missing any zeros. Apparently the policy decision to help reduce diabetes fell to a bill of less than half a million dollars, which in the grand scheme of obesity costs, is quite small.

A state bill that would require health-warning labels on sugar-added drinks and sodas in California was sidelined Monday for further review of its enforcement costs even though its author argued that it would cut costs to taxpayers in the long term by reducing diabetes and other obesity-related diseases.

The Senate Appropriations Committee moved SB 1000 to the suspense file. Sen. Bill Monning (D-Carmel) said he will work to reduce the $390,000 in immediate costs of enforcement for his measure so it can be revived for a floor vote. (LA Times)

Can it be really argued that the net expense of this will be positive for the state? Dialysis and other diabetes care is rapidly becoming one of the biggest expenses to our health care system. A single patient on dialysis can cost around $75,000 per year. $390,000 vs even a small handful of reduced diabetes cases would be a huge savings to the state. Expand that out to the entire state, and we could see significants savings.

Yet the beverage companies, specifically the two large soda companies, are in no mood to see such regulation. They don’t want to break the myth of having a good time with a refreshing beverage, or “quenching your thirst” with a “sports drink.” But with the threat of a soda tax in San Francisco, any small crack in the armor is not something that the beverage industry can tolerate. All this despite the fact that big majorities of likely voters favor the warnings.

Even if it would save lives, in today’s climate, the corporate bottom line takes priority.  

The Fallacy of Taxes v Services

Field poll shows voters want lower taxes and services, just not any of the services they like

By Brian Leubitz

The Field polling organization occasionally asks voters how they feel about the balance of government services versus taxes. And in the most recent such poll, by a 54% to 35% margin, most California voters say they prefer lower taxes and fewer

government services to higher taxes and more government services. But if you are a Republican, you are going to want to stop reading there.

You see, voters aren’t really sure what they want. They say they want fewer services, but when it comes to choosing services that they would be willing to cut, well that’s a different story. When it comes to pretty much anything that costs a substantial part of our state budget, nobody wants to make any cuts.

However, when voters are asked whether state and local government spending in each of six specific program areas should be increased, reduced or left the same, there is much less support for spending reductions. Only small proportions of voter (between 8% and 15%) support less state and local government spending on the k-12 schools, mental health, road and highway building and repair, and law enforcement and police. In the case of k-12 schools and mental health, majorities favor increased government spending. In the case of road and highway building and repair, and law enforcement and police, pluralities support keeping spending at current levels. Voters are divided when asked about government spending on environmental protection and public assistance programs. (Field)

So, cut our taxes and reduce our services, except the services that we like, which are most of them. It’s a frustrating dynamic, to say the least, but it is a dynamic that the Republicans have been playing off for decades in California and beyond. It hasn’t been all that successful here, but it has worked very well elsewhere, and it is all they really have.

On another front, support for Prop 13 remains high. However, a big majority of voters would like to see the commercial property values reset on any property transaction, not just a complete sale. That change would be bigger than it sounds, as commercial property rarely changes hands completely. This would shift the balance that had been shifting heavily towards housing. But, who knows if it would ever happen, the Chamber of Commerce is still strong, and would bust out “job killer” in under 2.5 seconds.

Gov. Brown looks to fix Rainy Day Fund measure

Looks to fix 2010’s ACA 4 that will appear on November ballot

by Brian Leubitz

Gov. Brown has always been fond of the concept of a rainy day fund. He’s included the concept on many occasions, speeches, budgets, etc. Add “special session” to that list:

Gov. Jerry Brown on Wednesday called a special session of the Legislature to replace the “Rainy Day Fund” measure on November’s ballot with a dedicated reserve to let the state to pay down its debts and unfunded liabilities.

“We simply must prevent the massive deficits of the last decade and we can only do that by paying down our debts and creating a solid Rainy Day Fund,” Brown said in a news release, which accompanied a proclamation convening the special section next Thursday, April 24. (Josh Richman / Political Blotter)

It seems that pretty much everybody in Sacramento, across the political spectrum, supports the move, with Richman pulling supportive quotes from the Speaker, Senate minority leader, and the Chamber of Commerce. But, of course, they all have different ideas of what this means. Brown wants to account for the wild swings in revenue we get due to stock options and the like, while Huff and the Chamber focus first on spending one-time revenue on ongoing expenses.

What exactly this means for the November ballot is unclear. Any changes could push the ballot measure to 2016, but there is some flexibility with a lot of time still remaining.

The Problem with Polling and Top-2

Flawed polling in SoS race

by Brian Leubitz

With Sen. Yee dropping out of the Secretary of State’s race, the media and the polling operations have been in something of a frenzy to figure out how that will impact the race. And, so, you would think that a poll that was being conducted during that mess could have some very interesting data.

It could, but the Field Poll that was being conducted while Yee was arrested has a few very serious flaws. First, here are the up-front numbers after the Yee arrest: Peterson-R: 30%, Padilla-D: 17%, Curtis-G: 5%, Schnur-NPP: 4%, Cressman-D: 3%, Other/Undecided: 41%.

That’s all well and good, but let’s look at a few flaws in this poll.

1) The poll didn’t include all the candidates on the ballot. Ordinarily in a competitive race with just a few relatively well-known candidates, you can kind of forgive that. However, this is a different kind of race. There are a slew of unknown candidates. Even Padilla, who is the most known candidate in the race, was basically an unknown to 54% of likely voters. But the poll did not include two candidates who haven’t filed fundraising reports with the state: Jeffrey Drobman and Roy Allmond.

Now, to be clear, neither of these two will be your next secretary of state. And they won’t pick up a ton of votes. But Allmond is running as a Republican, splitting the generic Republican vote. Drobman is running as a Democrat and may cause problems for Democrats as well. However, that split of base Republican vote could be meaningful. Peterson, with his $1800 or so that he has in the bank still seems likely to grab one of the top-two positions, but that is hardly a given.

2) The poll was split between pre and post-Yee. The margin of error is higher than most Field polls, with a 5.5% pre-Yee MoE, and 6.5% post-Yee MoE.

3) Winning the June primary is essentially meaningless. We do not have head-to-head matchups in this poll

Conclusion: I normally love the Field Poll data, and some of the things about the coverage that have been bothering me have nothing to do with Field at all. The media should know that winning the June election doesn’t really make you a frontrunner, but that doesn’t stop Breitbart declaring that Peterson is “favored” to win. Yes, he is favored to win the vote totals in June, but that and a quarter will get you a gumball.

Give me data for a head to head matchup between Peterson and Padilla, and then see what we get before any leads are declared. Note that this is also an issue in the Controller’s race. SacBee declared Mayor Ashley Swearingen the leader in that race, despite the fact that Democratic vote is split. Top-2 is apparently creating a lot of confusion for both reporters and readers, but in many ways, it isn’t that different than a regular primary when it comes to vote consolidation. Most Democrats will vote for the Democratic candidate in November, so comparing June vote totals is more than a bit confusing. Perhaps headline writers could do a better job on this front?

I mean, come on, do you really think this video at the top of this post is going to push Peterson to the win?