In Sacramento, dumb ideas don’t have a party affiliation.  Dan Walters calls out Democratic Santa Clara County Assemblyman Jim Beall out for a doozy:

Assemblyman Jim Beall, D-San Jose, is carrying Assembly Bill 81, which would protect airlines from paying higher sales taxes on their fuel purchases in California when prices spike upward. It would levy taxes on the average of spot fuel prices for the preceding five years, rather than on the current price.

The State Board of Equalization estimates that if enacted, the measure would reduce sales tax revenue by $108 million a year – just about what Vasconcellos’ software loophole costs, interestingly enough.

Like the Vasconcellos measure, the Beall bill would grant corporations a tax break that ordinary consumers don’t get. Motorists would still pay higher taxes when fuel prices spike. (SacBee)

At a time of budgetary crisis, this is an exceedingly bad idea.  It puts stability of the airlines fuel taxes over the stability of our schools.  United’s bottom line over health care services for the elderly.

We already have too many loopholes in a disorganized and inefficient tax system, it’s not time to create more.

With the ever-vigilance of the right-wing scaring Republicans from looking into all solutions and, it looks like getting 2/3 for a revenue portion of the budget might be pretty challenging.  While I’m sure that Brown and the gang would love to get a few Republican votes, I doubt they will be holding their breaths on that.  It’s just impractical to expect the Republicans to do anything to help with the budget. And so, unsurprisingly, the Democratic leaders up in Sacramento are looking for ways to put revenue on the ballot sans a 2/3 vote.

Fortunately for us, Dan Walters has been hounding the Capitol and it seems that there are two possible roadmaps:

One [method] would be a section of the state constitution that allows the Legislature to propose amendments to previously approved statutory initiatives. In theory, therefore, the additional taxes could be framed as amendments to a previous tax measure, such as Steinberg’s own Proposition 63, which imposed an income tax surcharge on the rich for mental health programs.

Under this theory, the amendment would be passed in the Legislature’s special session on the budget and after a 90-day wait would be placed on a special election ballot.

The second potential pathway would be Proposition 25, enacted by voters last November. It reduces the legislative vote on budgets from two-thirds to a simple majority and also applies the lower vote margin to measures needed to implement the budget, called trailer bills in Capitol jargon. (SacBee)

Either method would certainly attract the attention of lawyers from the immovable Right. Given the timeline, the courts would either have to act upon this very quickly, or we could be looking at some logistical nightmares.  At this point, time is certainly of the essence.

I’m not sure which method they’ll turn to, and at this point, I’m sure there are legal minds better than mine analyzing the question. However, stay tuned here, we’ll try to get some more details on these questions as the process moves forward.

Old Man Walters forgot to eat his Metamucil this morning.

Walters is reacting to what California pundits have already decided is Governor Brown’s strategy. In a nutshell, he is going to submit a “clean” budget in early January and then ask the voters to fill in the gaps in a May Special Election. Walters doesn’t like it.

Were Brown’s doomsday strategy to fall short, he’d be stuck with an even worse budget mess and virtually no option other than following through with deep spending slashes in schools and other public services.

Huh? I’m not sure I understand what Walters means here. If the measures fail, the January budget goes into effect. It won’t be a “budget mess”-a human disaster, maybe, but not a “budget mess.” And, yes, those cuts will come, but what’s the alternative?

Walters doesn’t think it will be so easy for Brown to get a budget through in time.

Even before he could seek new taxes from voters, however, Brown would also have to persuade his fellow Democrats in the Legislature to vote for a slash-and-burn budget. And that could be extraordinarily difficult because Democrats would be getting pressure from their political constituencies, such as public employee unions, and be facing uncertain re-elections in 2012 because of redrawn districts and a new “top-two” primary system.

Maybe he wasn’t paying attention in November when the majority vote budget law was passed. That means there would have to be 13 defectors in the Assembly without picking up a Republican and 4 in the Senate without picking up a Republican. Why do I think there’s a chance some Republicans will sign on? Because it will be the kind of austerity budget they want!

Now, far be it from me to impugn the learning of our own local version of David Broder, but does Walters know anything about the dynamics of legislative bodies? There just aren’t the votes there to buck a new governor who just won a solid majority (and therefore a solid mandate from the voters) without breaking a sweat. Maybe a couple will make protest votes. But 13? Yeah, right.

Brown’s budget will sail through and the campaign will be on. I’m guessing there will be several measures covering a number of different priorities, including education, health and welfare, and so on.

So, what does Walters want him to do? Try and do it the old fashioned way and find 3 Senate Republicans and 2 Assembly Republicans to vote to raise taxes? He must believe that “pox on both your houses” kind of rhetoric that would hold that it is equally tough for Dems to vote against the unions on the one hand and Republicans to vote to increase taxes on the other. Bullshit.

Personally, I think Brown’s strategy is brilliant. The voters have wanted it both ways for too long and the Republicans have been able to pin all of the tax increases on Democrats. They won’t be able to do that if the voters approve (though surely they will still try).

As an aside, I am strongly in favor a ballot measure that would reduce to 55% or to bare majority the ability of school districts to raise parcel taxes. I hope that shows up too, and I plan on doing some work to make sure it does.

UPDATE:

Joe Matthews apparently also thinks Dan Walters is being a dick.

Peter Schrag is one of the few columnists left in this state who consistently makes sense, and today he attacks that silly NYTimes article about California, in particular the elements of conventional wisdom:

In his passing references to California’s serious issues, many of which have major implications for the nation as a whole, Leibovich collects pieces of the conventional wisdom, even when, as in his facile summary of the causes of gridlock in Sacramento, it’s wrong. Since Democrats have again and again agreed to multi-billion dollar cuts, it is not, as he thinks, just a matter of “‘no more taxes’ (Republicans) and ‘no more cuts’ (Democrats).”

And while Jerry Brown, in his prior tenure as governor was indeed labeled “Governor Moonbeam” (by a Chicago columnist) for his space proposals, as Leibovich says, the label applied much more broadly to his inattention to the daily duties of his office and, most particularly to his dithering while the forces that produced Proposition 13 began to roll.

Brown later acknowledged that he didn’t have the attention span to focus on the property tax reforms that were then so urgently needed to avert the revolt of 1978. But to this day, almost no one has said much of Brown’s role in creating the anti-government climate and resentments that helped fuel the Proposition 13 drive.

It was the Brown, echoing much of the 1970s counter-culture, who, as much as anyone, was poor-mouthing the schools and universities as failing their students and who threatened to cut their funding if they didn’t shape up. It is Brown who spent most of his political career savaging politics and politicians, even as he ran for yet another office. Now this is the guy who wants to be governor again. But Leibovich doesn’t tell his readers that long history. Maybe he doesn’t know it.

The line about how those who fail to learn from history are doomed to repeat it can be inserted here.  But Schrag hits on the most important failing of the article, and indeed of a good chunk of the political media here in California – they airbrush out the people who suffer for the failures of the politicians.

Where are California and the people who are feeling the pain – the school kids and teachers in hopelessly underfunded schools, the children who are losing their health care, the minimum-wage working mothers struggling to pay their child care, the students who are losing their university grants? Is all this really about nothing?

To far too many, the answer is yes.  It’s politics as theater, as a sporting event, where winners and losers are checked on a board, and whether or not a leader will keep their position is made the story rather than the principles he or she represents.  And yet it’s not Governor Hot Tubs and Stogies who will feel the pain of an economic downturn and massive budget cuts, nor well-heeled consultants or columnists who make up the scorecards.  It’s people.

People like the students in the Cal State system who may see their fees raised 20%, just months after a 10% hike approved in May.  This will effectively block higher education for a non-trivial number of students, as will proposed enrollment reductions of 32,000 students.

People like LA County homeowners who have defaulted at twice the rate in May as they have in the previous month, as a foreclosure backlog builds up due to various moratoriums and an increase in repossessed homes entering the market.

People like IOU holders who may have to turn to check-cashing stores to get less-than-full value for their registered warrants after Friday, when most major banks (who have all been bailed out by the federal government, by the way) stop the exchange of the notes.

And people like the elderly, disabled and blind, who rely on the in-home support services that the Governor is trying to illegally cut in contravention of a contempt-of-court citation, at least in Fresno.

These are the great unmentioned in this California crisis, the people who Dan Walters tries to smear in his column today by turning every Democratic concern for the impacts of policy as a sellout to “public employee unions.”  Behind those unions are workers, and the people they serve need the help the provide, in many cases, simply to survive.  But it would be too dangerous to Walters’ beautiful mind to consider those faces, so he chooses to make political hay out of the violation of people.

This is the point of the People’s Day of Reckoning Coalition.  They refuse to have their existence denied any longer.

…THE Jerry Brown commented in Schrag’s post:

Mr. Schrag’s latest screed is a good example of why politics in Sacramento is so dis-functional. Instead of trying to find the truth in the Leibovich article, he mocks both the writer and each of the subjects. In recent years, Schrag has become increasingly bitter. That’s very sad because he once was an open-minded person with real insight into the predicaments of modern society. Finally, his memory is not serving him well regarding Propistion 13 and the factors that constituted the ethos of that period. In fact, there was a long and hard fought battle to get property tax relief that got all the way to the state Senate but foundered just short of the necessary two thirds vote. There is much to say about government, schools and taxation in California. But to get anywhere it requires a degree of empathy and engagement with opposing perspectives that no longer seems congenial to Mr. Schrag.

Posted by: Jerry Brown at July 8, 2009 08:41 AM

Wow.

Dan Walters had a funny column a few days back, excoriating anyone who use “numbers” and “projections” to theorize about the impacts of budget cuts.  As if it’s some kind of novel idea that an economy dominated by government spending would rise or fall based on the amount of that spending.  Mr. Walters, 1937 called and wants a word with you.

Anyway, let’s look at the heart of Walters’ complaint.  First he says that we must have a hefty budget reserve because the economy is likely to go south, and because it will signal to bankers that “we’re solvent so they’ll buy our short-term notes.”  As I noted earlier, this is nonsense given the clear Constitutional duty to repay debt before practically everything else.  Then he says this:

Democrats and Republicans are equally guilty, meanwhile, of emitting self-important nonsense about the impacts of their actions on the state’s recession-wracked economy. While Democrats claim that cutting “safety net” programs and/or public payrolls will worsen the recession by taking money out of circulation, Republicans claim that raising taxes will retard recovery by discouraging investment and/or consumer spending.

Both practice voodoo economics. The entire deficit on which they are working, $24.3 billion including Schwarzenegger’s desired reserve, is well under 2 percent of the state’s economy. The lesser cuts and taxes they are debating would merely shift relatively small amounts of money from one form of spending to another, all within the state’s economy, so the macro economic impact would probably be nil, no matter what they do.

That’s a strange opinion, especially because in the next sentence, he argued that a budget filled with gimmicks would threaten our economic future, even though such gimmickry would effect the same small amount of cash, from a macroeconomic perspective.  But to his main point – cutting spending for state services, cutting jobs, cutting salaries for public employees and their related vendors, has a multiplier effect that in fact does weaken the prospects for economic recovery.  You don’t have to take my word for it.  John Myers ran a story on this just today.

“It’s hard to see how the country recovers if California does not,” says U.S. Rep. Zoe Lofgren (D-San Jose). Lofgren says she thinks congressional authorization of loan guarantees for any state will happen. But no one thinks it’ll happen in time for California, which needs to go to market — assuming a budget deficit deal is agreed to in the state Capitol — early next month.

Lofgren says she’s particularly troubled that the national stimulus and recovery programs… which are expected to benefit California by as much as $80 billion… could be drained of their help by the cuts needed to balance the state budget. “It is contrary to the efforts that we’re making,” she says.

This is a fact neglected by Walters, the very real possibility that certain spending cuts would result in the forfeiture of stimulus funds as well as regular funding, multiplying the effect of the cuts.  Many of the programs that Schwarzenegger wants to eliminate, like Healthy Families,  CalWorks and Medi-Cal, have their funding matched by the federal government.  Clearly any dollar cut there would mean $2 in practical cuts to Californians.  And losing out on stimulus dollars could number in the tens of billions.

This UCLA Anderson Report also speaks to the impact of state spending on California and the nation at large.

According to UCLA Anderson Forecast senior economist Jerry Nickelsburg, there is nothing happening in California that will help pull the state out of recession in advance of the nation.

“California,” Nickelsburg writes, “is in for a continued rough ride for the balance of 2009 and is not going to see economic growth return until the end of the year, shortly after the U.S. economy begins to grow.”

The dire conditions surrounding the state budget will contribute to prolonging tough conditions in California, according to the report.

In his essay, Nickelsburg notes that Gov. Arnold Schwarzenegger is attempting to close the state’s $24 billion budget gap with a combination of fee increases, forced borrowing from local government, the sale of state assets and, primarily, budget cuts.

Yet that the real risk for California, Nickelsburg writes, is the possibility that there will be no budget agreement at all and that the chaotic and inefficient spending cuts that would likely follow would have an even more severe impact on the ability of California to stem the downturn in economic activity this year.

The rhetoric has risen to the extent where a prolonged stalemate, like every year given our broken governmental structure, is possible.  But clearly, Nickelsburg is demonstrating that state spending does have an impact on the economic picture at large, especially at a time when there’s 11.5% unemployment and a growing dependence on state services.

That one of the top political reporters in the state would deny this economic reality is just baffling.