You know this whole mini-Depression/Mega-Recession that we’re going through right now? Well, it’s hit our revenue coming into the state coffers.  Hard:

Senate President Pro Tem Don Perata estimated Tuesday the state will face a $3 billion to $5 billion deficit this fiscal year without corrective action, a significant gap that increases the possibility lawmakers will have to consider new spending cuts or tax increases in a special midyear budget session.

State Controller John Chiang, meanwhile, announced California has taken in $1.1 billion less through the first quarter than state officials projected earlier this year.(SacBee 10/8/08)

So, there you have it.  This is where we are. Broke, and slashing at the very heart of our government.  Perata and other state leaders are further estimating that next year’s budget deficit could be another $15-20 Billion. There is nothing left to cut. We’ve already cut services that shouldn’t have been cut. We already on the hook for about $8 Billion in prison building thanks to “ToughOnCrime”.

Of course, the Republicans continue to fiddle while the walls of our government come crashing down in flames.  There is no more choice, there is no more chance to hedge. We either raise taxes or our government will end up like Lehman Brothers.  Well, you can call Dave Cogdill the new Richard Fuld.

“As this continues to get more serious, it’s going to take even more drastic action on the part of the state to rein in spending,” said Senate Republican leader Dave Cogdill of Modesto. “We’re not supporting any additional tax increases. It makes less sense today than it did the day we put the budget out.”

Besides raising taxes, Perata suggested the state could save money by releasing low-level prisoners who committed nonviolent crimes. But Cogdill said the state could find other ways, such as selling off excess state-owned land.

We need capital, ie cash, just like some of these big banks. Unlike Lehman, however, we have a means of getting it. It’s called taxation.  All of Cogdill’s little techniques are merely tricks that won’t bring in anywhere near the amount of money that we need.

Perhaps it is time to start gathering signatures for a progressive budget reform measure on the special election ballot? The outlines of such a plan are still hazy in my mind, but the general concept of going to the ballot to avoid the legislature might end up, unfortunately, being the only way to save the state from Dick Fuld the legislative Republicans.

And on the way out the door, he had to twist it one more time.

Legislative Democrats and the governor are backing off their demand that the state budget be balanced with new taxes, according to a confidential e-mail the state Senate leader sent to fellow Democrats and obtained by The Times.

Senate Leader Don Perata (D-Oakland) told his caucus in the e-mail, sent Thursday night, that he informed the governor “we urgently need a budget — let’s see if I can work on a deal with the Reps [Republicans] that is no tax, no borrowing. He agreed.”

I quibble with the words “Legislative Democrats” at the head of the article.  It sounds like Don Perata is backing off his demand.  The Assembly appears to have no say whatsoever.  Later in the email, Perata writes “We then bring in Assembly leaders to show them what we’re sending them,” as if they are supposed to just carry out whatever The Don wishes.  Maybe he’ll force them to contribute to his legal defense fund while he’s at it.

A no tax, no borrowing budget is either cuts-only or the mother of all accounting gimmicks, probably both.  We do urgently need a budget – but we more urgently need Don Perata to extricate himself from this process.  He is nothing but a poison.  At a time when 82% of Californians are extremely worried about the late budget, and large majorities favor a balanced approach over the cruelty of the Yacht Party, NOW he decides to cave in?  If so, why wait 74 days and cripple working Californians everywhere?

Without 2/3, we can’t move forward as a state.  But of course Perata has single-handedly made it impossible to get to 2/3 in the Senate, so he’s been wrong in practically every respect.

Please resign, Don.

According to the LA Times Don Perata is ready to wave the white flag and give in to Republican anti-tax demands:

Senate Leader Don Perata (D-Oakland) told his caucus in the e-mail, sent Thursday night, that he informed the governor “we urgently need a budget — let’s see if I can work on a deal with the Reps [Republicans] that is no tax, no borrowing. He agreed.”

Perata wrote that he anticipates working with Republicans through the weekend, trying to pull together a final deal.

“We then bring in Assembly leaders to show them what we’re sending them,” Perata wrote. “And then we go to the floor the moment we have mocked-up language ready. . . . We’ll do our best to hold the line on borrowing.”

How lawmakers can close a $15.2-billion gap without taxes and borrowing is unclear.

Evan Halper and Patrick McGreevy are understating that last part. It is not possible to close the gap without taxes and borrowing. There’s no way around that fundamental fact, unless Perata thinks the solution to California’s budget crisis is to bankrupt every city in the state by taking their funds. That in turn will lead to massive layoffs, worsening an already bleak economic picture in the state.

This is why Democrats lose – Republicans know that if they hold the state hostage long enough Democratic leaders will give in. Speaker Karen Bass has been a strong leader and making the right moves in resisting Republican demands. But Perata is set to undercut her with this sellout, which as the email suggests, is going to be presented to the Assembly leaders as a fait accompli.

Democrats are poised to win several seats in both the Senate and the Assembly as a result of Republican obstructionism on the budget. As Brian noted earlier today the public supports the Dems and opposes the Reps on the budget and on taxes. For Perata to toss all that out the window because he suddenly has cold feet would undercut Democratic candidates across the state and continue to leave Californians vulnerable.

Of course, that’s par for the course with Perata, who has a long record of backstabbing Democratic activists. His latest move to give Republicans what they want on the budget is a sorry parting gift to the state and to his caucus. And it would ensure that we will see exactly the same tactics from the Republicans next summer.

If this report is accurate, then Perata needs to resign immediately – or his caucus needs to remove him from power and give Darrell Steinberg the power to work on the budget instead. Californians and Democrats have suffered from what passes for “leadership” from Perata for long enough. It’s time we got real Democrats who understand the stakes and are willing to use their advantage with and support from the people of this state and break Republican hostage tactics for good.

Man, it’ll be good to have a Democrat in charge who understands the importance of progress instead of covering your ass and rewarding your friends:

“First of all, though it doesn’t help much this year, I think this process and the frustration many of us are expressing reveals what must be done next year.

We need to not only think about but begin planning for taking significant questions about state and public finance back to the people of California. And next year as your leader I intend to do that. I’m not going through this anymore. I’m tired of it. It’s unproductive. It does nothing for the way people view us.

You’re right Senator Aanestad, under the current state of the Constitution; it is a two-thirds requirement to pass a state budget. And I know that question has been taken to the people in one form or another. But maybe it has not been take to the people in the right form, at the right time. And so, be prepared next year. Whether it is through the legislature or by the initiative process, we’re not going to go through this anymore.

If Darrell Steinberg was in charge right now, Jeff Denham wouldn’t be in the State Senate.  Abel Maldonado would be hanging on for dear life.  And we’d have a 2/3 majority.  Because he would prioritize it.  He would design the entire year around achieving it.  Don Perata simply has failed in understanding what is crippling this state.  Steinberg gets it.  And finally, progressives and the legislature will be on the same page.  For now, we struggle with the failed perspective of the past.

He was elected by voice vote with no opposition as the new President Pro Tem of the California State Senate.  I’m not sure what this means for the current legislative leadership, though it seems that he wouldn’t start until December, so Perata is likely to continue through the budget slog.

I wish it was sooner, but I’m happy to get to the day when we have the leadership of Steinberg and Bass in the legislature.

Congratulations, Senator.

I will be on KRXA 540 AM at 8 this morning to discuss this and other California politics issues. Cindy Sheehan will be on at 9 – any questions you want asked?

The supposed budget deal that Don Perata claimed he had with Arnold and that we roundly denounced yesterday apparently was a figment of Perata’s imagination, according to the Sacramento Bee:

Senate President Pro Tem Don Perata began Wednesday saying he had made enough concessions to secure a budget deal with the governor and called for Republicans to sign on.

But the day ended with little progress, as Perata concluded that negotiations remained at “impasse.”…

In the five hours between Perata’s two comments, it became clear that Republican leaders were not joining Perata’s call for a vote. Neither were Assembly Democrats nor Schwarzenegger.

“I think we keep getting closer, but there are still issues to work out,” said Aaron McLear, Schwarzenegger’s spokesman. “We hope that the legislators have the same sense of urgency that we do. We need to get this done.”

Assembly Speaker Karen Bass was not ready to end budget talks, spokesman Steve Maviglio said.

“We’re continuing to negotiate on all the pieces of the puzzle,” he said. “Until they all come together, it’s premature to say what’s in and what’s out.”

Perata’s notion of a spending cap was apparently less rigid than the Republicans were demanding, although as far as I’m concerned any spending cap is a bad cap. Another sticking point is the Republicans’ insistence that any temporary increase in the sales tax to balance the budget be not only reversed after 3 years, but that the sales tax rate gets cut below its current level.

It should be made crystal-clear to California voters by Democrats that what Republicans are demanding is a further breaking of the budget process. They don’t want solutions, instead they are actively trying to make matters worse through a hard spending cap or a sales tax cut. Democrats need to be campaigning on the budget and turning the budget into a campaign, but it’s difficult to do that if you’re willing to agree to Republican-framed proposals like a spending cap, even if your details are different from theirs.

California voters deserve to know that Republicans are trying to implement Grover Norquist’s “drown government in a bathtub” agenda. Because as far as I can tell, budget negotiations are no further advanced than they’ve been in weeks, and since this is likely to drag until the fall, Democrats need to mobilize the electorate against Republican hostage-taking. We’ve begun to see some campaigning on the budget but it needs to be massively expanded and made a core element of the Sacramento Democrats’ daily routine.

It’s also time to mobilize the unions and other stakeholders, who have been quiet of late on the budget. The model for action must be the 2005 special election, which revolved around many of the same issues. Californians don’t want Republican budget proposals, but they won’t reject them unless Democrats ask them to do so.

Finally, it’s time for Don Perata to go. His “budget deal” stunt makes him look even more ridiculous than before and suggests he has no strategy or grasp of political reality and, as a lame duck Senator, has no place in these negotiations. He should hand over power to Darrell Steinberg now, not next week, and allow the state to get on with business without Perata’s silly theatrics or distracting legal issues or his unfortunate tendency to sell out the Democratic base.

David mentioned this below, but it deserves deeper elaboration. Don Perata’s agreement on a spending cap is one of the worst possible outcomes of the budget crisis. A spending cap has been a core demand of the Grover Norquist far right.  In Colorado, where a spending cap had been in place for several years, it nearly destroyed state government and had to be suspended.

If Democrats agree to this, they will be agreeing to the destruction of the state of California, finishing the job Prop 13 started 30 years ago. I cannot stress strongly enough how bad an idea this is.

It’s also unpopular with voters. Arnold’s spending cap, Prop 76, went down in flames in 2005 with 62% of voters rejecting it.

But what is the spending cap about? And why is is such a horrible idea? An excellent LA Times article from 2005 explains how spending caps are at the core of the right-wing plan to drown government in a bathtub:

Hard-line fiscal conservatives say they hope to reinvigorate the types of populist uprising that led to the approval by California voters of landmark protections against property tax increases through Proposition 13 in 1978 and the passage of term limits on politicians here and in several other states….

The proposals put strict limits on how much state budgets can increase each year. Anti-tax activists see such controls as a means to scale back spending on education, healthcare and social-service programs that even the staunchest free-market Republicans have been reluctant to cut.

Schwarzenegger and his advisors, already battling charges that their spending cap is part of a conservative agenda the governor is trying to force on Californians, have resisted forming alliances with the national groups. But the groups have eagerly embraced the governor’s crusade.

“We think California is very important,” Armey said. “It is a trend-setting state. Getting it done in California will set a very good example for all these other states.”

The article also mentioned the impact on Colorado, which enacted a spending cap in 1990. By the 2000s the cap was gutting government, as intended. The problem is that the spending cap readjusts to a lower level during a recession – but cannot be easily increased once the recession ends, meaning the spending that was cut during the lean times can’t be restored.

It is Grover Norquist’s way of drowning government in a bathtub. Even though Prop 13 has had a destructive impact here in California, leading to a structural revenue shortfall, we have been able to muddle through and protect education, transit, and health care from total collapse. Norquist’s spending cap would deal the final blow to those services.

It would not solve our budget problems – as Colorado found it would make them much worse. In November 2005 Colorado approved a 5-year suspension of the cap, as even Republican governor Bill Owens realized the state couldn’t survive with the spending cap in place.

For Democrats to consider accepting a spending cap is unconscionable. If Democratic leaders agree to a cap as part of a budget deal they deserve to be recalled from office. The current budget crisis is severe, yes. And we need a solution. But a spending cap will produce worse budget crises in future years while leaving California public services in ruins.

Dems should take comfort from the 2005 special election results. Californians do not want a spending cap. Don Perata is totally and completely wrong to agree to one. Let’s hope other Democratic leaders, especially those in the Assembly, refuse to give away the state to the Norquist crowd.

I’ve been mulling this around in my head for a few days.  Three powerful members of the House Judiciary committee have have sent a letter to the Justice Department calling for an investigation into leaks surrounding the inquiry into State Senate President Pro Tem Don Perata.

No article since November 2004 has explicitly said that any information came from a federal government source. But in a letter to U.S. Atty. Gen. Michael B. Mukasey obtained by The Times on Monday, U.S. Reps. John Conyers Jr., Linda Sanchez and Zoe Lofgren wrote, “We are disturbed and concerned that news story after news story . . . has cited federal law enforcement sources as the basis of information.”

The only article specifically mentioned in the July 31 letter was a story in the San Francisco Chronicle. The article cited “sources familiar with the probe,” a broad term that could encompass federal agents, defense attorneys and people who have been questioned […]

On Friday, the day after the congressional letter was sent, a Wall Street Journal article said the investigation into Perata “gained momentum over the past year.” The article’s details were attributed to anonymous people “close to the defense,” who said Perata’s longtime political consultant, Sandi Polka, was granted immunity to compel her to answer questions.

(Here’s that SF Chron article mentioned in the letter.)

The Perata investigation certainly has dragged on for years, leading to him needing more and more funds to raise in his defense.  In particular, the dumping of $250,000 from the California Democratic Party into his legal defense fund raised a lot of eyebrows around these parts.  After the initial explanation of “We’re the CDP and we can do what we want,” a secondary explanation was that the investigation had been politicized and that this was part of the DoJ’s efforts to prosecute and delegitimize Democrats.  A couple weeks later, out comes this letter, signed by two members of the California delegation.  But it’s Conyers’ participation that makes me believe that this is a real concern.  I trust Conyers enough to think that he wouldn’t simply badger the DoJ to help out a political problem in California.

Of course, let’s look at what the letter is actually alleging.  It’s not suggesting that the investigation itself is unnecessarily political, but that someone inside the investigation is using the media to disparage Perata.  That may well be true, but it doesn’t necessarily follow that the whole investigation is a farce.

Let’s now look at what this does NOT suggest:

• It in no way excuses the CDP for paying off Perata with $250,000 in the middle of an election year, whether that money was simply laundered through them and earmarked for Perata or not.  Based on this SacBee report, it appears Perata is perfectly capable of raising money for himself:

Senate President Pro Tem Don Perata has solicited at least $200,000 this year from political interest groups for a nonprofit foundation that promotes and rallies support for one of his bills.

The arrangement, apparently legal, allows the Senate leader to solicit unlimited funds for his own political agenda without having to detail how the money is spent.

“He may have found a loophole in the Political Reform Act that needs to be closed,” said attorney Bob Stern, a co-author of the state’s Political Reform Act who now runs the Center for Governmental Studies in Los Angeles.

Which leads me to point 2:

• There is no way that Perata should still be Senate President Pro Tem at this point.  While he has done a good job of hammering Republicans for their intransigence on the budget, this image hit, as well as the constant distraction of having to find new ways to raise money for his legal bills, are not what we need at this sensitive time, ESPECIALLY when Darrell Steinberg is waiting in the wings and perfectly capable of performing the same duties without the black cloud of indictment hanging over the head of the Democratic leadership.  They haven’t even taken a caucus vote on this yet, to my knowledge – it’s currently scheduled for August 21, but during these budget negotiations that’s doubtful to come off.

It is perfectly consistent to be skeptical of the Justice Department’s case against Perata and to ALSO demand that he step down from his leadership position, and to excoriate the CDP for their conduct in either shoveling Perata money or acting as a conduit for that fund transfer.