George Lakoff writes today that this could be a moment of freedom for California Democrats.  Their compromised ballot measured having gone down in flames, they can now focus on the only solution to what ails the state: democracy.  They can include in every public utterance until the moment the 2/3 rule is repealed the theme that California’s democracy is broken, and that we must restore it with a majority vote for budget and revenue matters.  The time for half-steps and non-fixes must be over.

Up to now, Democrats have been acting like sheep being herded by the Republican minority. They need to show courage and stand up for what they believe. That’s what the voters are waiting for […]

Get rid of the 55% proposals. People understand that majority rule means democracy. 55% means nothing.

Even if you don’t address taxes and just address the budget process, the Republicans will still say you’re going to raise taxes. You may as well go for real democracy.

And finally, get a unified message that can be supported by the grassroots. Do grassroots organizing for 2010, starting now. Organize spokespeople to get that message out. Organize bookers to book your spokespeople in the media. You Democrats are a majority. Act like it. The public will respect you for it.

Unfortunately, Darrell Steinberg and Karen Bass failed the first test, stuck in a mindset that will bring the state to ruin.  First, Steinberg.

“The voters have spoken and they are telling us that government should do the best it can with the money it has. We will immediately and responsibly get to work to balance the budget and head off a cash crisis in July. Delay is not an option. The necessary decisions we must make will only get harder with time.”

That is not what voters are telling you. As I said yesterday, you cannot reconcile the supposed anti-tax fervor with the passage of a transient occupancy tax in conservative Palmdale with 64% of the vote.  California is a big state and no one message from a statewide election can predominate, but the mass boycott of the polls certainly suggests that we don’t want to do your job anymore.  I know it’s been so long since Democrats exercised their Democratic muscles and principles in Sacramento, but this election called out the political leadership for failed governance.  And everyone who has studied this for half a second understands that the failure will continue until the structural barriers are removed.  And so making this absurd and vindictive statement about voter intentions both misses an opportunity to refocus the discussion and angers the grassroots further.  

Here’s Bass:

“There are many difficult choices and a lot of hard work ahead of us.  We now have to responsibly fill the budget hole that has been caused by the national recession and deepened by the failure of today’s ballot propositions.  I hope the bipartisan cooperation between the Legislature and the Governor that went into this effort will continue as we move forward – the people of California clearly expect us to work together to get the job done.  And we will.

The people of California could give a rat’s ass who works together with who.  They don’t want to see this level of dysfunction anymore.  Bipartisan cooperation was clearly rejected last night, because inevitably that gives leverage to the minority and provides unworkable non-solutions.

Where is the argument for DEMOCRACY in these statements?  Since 1978 that democracy has crumbled and needs to be completely rebuilt.  Everyone knows this but refuses to say it out loud.  This is why the legislature and the Governor have historically low approval ratings.  People are starved for actual leadership and see none.  Only democracy will save us.  This failed experiment with conservative Two Santa Claus Theories has now become deeply destructive.  Because the democrats have provided no leadership and ceded the rhetorical ground, California public opinion holds the contradictory beliefs that the state should not raise taxes and also not cut spending.  And if it persists without leadership and advocacy to the contrary, nothing will change.

I’ve obtained a copy of the email sent to every California Democratic Party member from the Assembly Speaker and the Senate President Pro Tem, trying to scare the membership into supporting the special election ballot measures.  It’s really unconscionable for them to stretch the truth this much.  They conflate apples and oranges to make it seem like an immediate $31 billion dollar deficit is forthcoming if the measures fail, which is simply untrue.  They mostly discuss what failure would mean rather than what success would mean.  And they neglect the permanent damage that would be caused by the ballot measures in favor of the temporary tax increases.  I’ll put the whole thing on the flip, but here is the excerpt that kills me.  

There seems to be a great deal of misinformation about Proposition 1A, the spending reform measure. This is NOT a spending cap, but rather a mechanism to force savings in good years to protect funding for services when our economy sours.  If California had a rainy-day fund like most other states, $9 billion in cuts could have been avoided this year. In the long-run, Proposition 1A will stabilize state spending for critical services.

Um, actually, folks, that’s what a spending cap IS.  It caps spending and puts money into a rainy day fund.  Of course, the way this cap is structured, the rainy day fund would have to take money even in DOWN budget years, due to its stringent, restrictive nature.  The line about how $9 billion in cuts could have been avoided this year with rainy day fund money is offered without the knowledge that the money would have had to come FROM somewhere, and would have meant $9 billion in cuts in years prior.  Not to mention the fact that it would have had to be replenished almost immediately.  With this spending cap – yes, Madame Speaker and Mr. President pro Tem, sorry to burst your bubble but that’s what it is – spending will be forced $16 billion dollars below the Governor’s baseline budget next years.  That’s the ENTIRE gain of the $16 billion in temporary tax increases in just one year.  And the cap goes on and on and on.

Pathetic.  About the only good thing here is the shout-out to eliminating 2/3 for budgets and taxes.  I appreciate that, but would appreciate some honesty about the spending cap even more.

UPDATE: Funny, Steinberg and Bass’ pal Mike Villines, who has been going around the state with them promoting 1A, has some different thoughts about what the measure would do:

Proposition 1A represents a significant victory for taxpayers at a time when our state needs it most. Proposition 1A ties the hands of legislative liberals, and it forces our budget into a fixed formula and a hard spending cap. That means, for the first time in decades, that liberals will have to make tough spending choices and cut their pet projects.

It also means the taxpayers will no longer be treated like a giant ATM machine. Consider this fact: if we had Prop 1A in place today, our state would not be $31 billion in the red. Instead, our state would have a much more manageable $5.4 billion budget gap. That means that during the worst economic recession since the Great Depression, Proposition 1A would have ensured that our budget gap was manageable. That’s the proof that Proposition 1A protects taxpayers.

Villines is wrong about this being a good idea, but he happens to be right on the numbers.  With a spending cap, approximately $27 billion MORE would have had to been cut in the years leading up to the current budget.  That’s more than half of the entire education budget.

Did you guys think we wouldn’t notice the diametrically opposed arguments, depending on the constituency?

Dear Fellow California Democratic Party Member:

At this month’s California Democratic Party Convention in Sacramento, you will be asked to take a position on Propositions 1A, 1B, 1C, 1D, 1E and 1F that will appear on a special statewide election May 19.  We strongly urge you to support this package to provide California the short-term revenues to get through these difficult economic times, as well as the long-term reforms to stabilize our budget process and protect funding for vital services.    After months of difficult negotiations, we made some of the toughest decisions elected officials could ever make.  We closed a $42 billion budget shortfall that threatened to send California into fiscal collapse – halting thousands of jobs, devastating critical education, health, children’s and senior services, and plunging our economy into deeper meltdown.

The tough choices we made will begin the long process of getting California back on track and providing long-term stability to the programs and services we all value.

Make no mistake: the final budget agreement contains important victories that hold true to our shared Democratic principles.  In particular, we negotiated four years of desperately needed revenue increases, worth $12.5 billion this year alone.  We cannot overstate the significance of this achievement.  By doing so, we were able to protect education, health care and safety net services from even deeper cuts.

We were also able to stave off Republican demands to roll back hard-fought environmental and worker protections.  And, through Proposition 1B, we will ensure that schools are repaid over time for the painful cuts they have endured because of this budget crisis.

But the package and revenues we negotiated will all be for naught if we don’t pass Propositions 1A-1F in May. Unless Prop. 1A is approved, California will lose $16 billion in revenues from the sales, vehicle license and income taxes beginning in Fiscal Years 2011-2013.  Prop. 1A also provides the mechanism to restore $9.3 billion in funds to schools.  And without Propositions 1C, 1D, and 1E, we will lose another $7 billion in funding.

Losing $23 billion in revenues, on top of the $8 billion deficit projected by the Legislative Analyst, will result in renewed demands for catastrophically deep cuts to schools, hospitals, essential children’s services and senior programs for the foreseeable future.

There seems to be a great deal of misinformation about Proposition 1A, the spending reform measure. This is NOT a spending cap, but rather a mechanism to force savings in good years to protect funding for services when our economy sours.  If California had a rainy-day fund like most other states, $9 billion in cuts could have been avoided this year. In the long-run, Proposition 1A will stabilize state spending for critical services.

Passing Propositions 1A-1F is the first step in restoring our state’s fiscal health and voter confidence in state government.  This is essential for us to move forward with our shared priorities such as expanding healthcare to all Californians, further reforming the budget process to eliminate the destructive 2/3 requirement for budgets and taxes, protecting against climate change, and ensuring necessary education, health and social services for the people of California.

We hope you will join us in supporting Propositions 1A-1F.

The Senate Health Committee held its first hearing on SB810 (Leno), the single-payer health bill.  While I’ve made my belief in the inevitable problems of states trying to fund health care when they cannot deficit spend well-known, if I was on that committee I’d go ahead and vote for it.  But I recognize the need to strengthen the broken health care system on all fronts, given the political realities that the Governor has vetoed single-payer multiple times in the past, and that the Republicans will never sign off on the funding, and so even if by some miracle the Governor put pen to paper we would have to wait until 2010 for full passage, and another year for implementation.  In the interim, a number of very interesting health care reforms have cleared the Assembly Health Committee already, and progressives should take notice of them.  Anthony Wright has some of the details.

The Assembly Health Committee on Tuesday approved a number of key health consumer protections. The measures would expand guarantees of coverage to Californians who are underinsured, uninsured or, in some cases, just plain inadequately served by their health care providers.

One of the bills would sharply increase civil fines in response to the insurer practice of retroactively canceling policies after patients become sick and need expensive treatments. Another would address a vast, and quickly expanding, demographic of the uninsured–young adults transitioning between school and careers that offer financial stability and benefits.

Yet another would require insurance brokers and employees to reveal their financial interests-such as paid commissions – in selling certain health care policies. One measure would require private providers to cover more of the costs of doctor-ordered medical equipment, something Medicaid and MediCal already do.

See the post for the full details on AB1521 (insurers revealing their commissions), AB730 (big fines for rescissions), AB29 (raising the age limit for dependent coverage from 19 to 26) and AB214 (requiring health plans to cover durable medical equipment).  All 4 would have an immediate and tangible benefit for Californians, and all are common-sense reforms.  Fining rescissions would attack the inequities in the system and prevent fraud, as would the agent commission rule.  Raising the age limit would provide stability for those young people transitioning from college to starting a career, and adding protections for what is insured also adds stability (the fact that people can be made to pay for their own wheelchair is kind of nuts).  None of these deal with the long-term cost drivers that bust state and federal budgets, and none deal comprehensively with the crisis of the uninsured.  But all of them help, and we need to press forward on all fronts right now.

The Los Angeles County Democratic Party held their endorsement meeting for the May 19 special election yesterday.  The Yes side brought out all the big guns to talk up Prop. 1A: four State Senators, including President Pro Tem Steinberg, Attorney General candidate Ted Lieu, State Superintendent for Public Instruction candidate Gloria Romero and Lieutenant Governor candidate Dean Florez.  The No side had two union members from the SEIU and the California Faculty Association and a 2008 Assembly candidate. (UPDATE: It was Carol Liu, not Ted Lieu.)

And the LACDP went neutral.

It’s quite remarkable to see practically the entire establishment of the Democratic Party selling fear and so few people buying.  My fear is that they will chalk up their failure to the typical right-wing anti-tax bias, when the real indictment here is a failure to lead, to articulate an actual solution instead of the same nonsense that does nothing to effect structural reform.  The first ads for 1A and 1B only have one unequivocally true statement in them – that the budget is “A total mess, and we all know it.”  And yet the prescription for solving the mess is nothing more than making people afraid of some amorphously bigger mess, while neglecting the clear disaster that would arrive with the passage of a spending cap.

This is not about an aversion to two years’ worth of sales taxes.  It’s about an aversion to more demonstrably awful solutions to layer onto an already dysfunctional system.  Maybe instead of dictating to their constituents, the leadership in Sacramento could bother to listen to them.

Building off Brian’s post, George Skelton’s discussion of Prop. 1C gets things about right – the choice is between a terrible public policy and deeper debt.  Supporters of the special election will only show you one side of that argument, the expanding budget deficit that would result from failure, wrapping that into a fearmongering message of urgency.  Opposers of the special election prefer to look at the actual policy, which Skelton describes accurately.

Prop. 1C — the “Lottery Modernization Act” — is one of six budget-related measures proposed by the Legislature and Gov. Arnold Schwarzenegger. It is by far the measure with the biggest immediate money impact.

It would authorize significant tweaking and expansion of the state lottery, creating more winners. And it also would allow the state to borrow $5 billion immediately against future lottery revenue.

Those should be separate questions: 1) Should the state expand its gambling operation? 2) Should Sacramento take out a loan for, say, 30 years just to help pay one year’s worth of daily expenses? […]

You could also call it a payday loan. That’s how far Sacramento has fallen.

This is probably the easiest $5 billion the state can pocket, even if it would have to pay back double, including interest.

Put aside the fact that lottery revenues have dropped consistently over the past several years (per capita participation is among the lowest in the nation), and that, even if this scheme of more advertising and bigger payouts worked, you would be balancing the budget on the backs of a lottery-buying constituency composed mainly of the poor.  But borrowing policies like this, as a result of putting off tough decisions and mortgaging the future for 30 years, are why our deficit bursts at the seams relative to other states.  In the long term we will pay far more for this borrowing that could ever be brought in.  The solution from the legislature and the Administration, literally, is to not call it borrowing.  David Crane (Arnold’s economic advisor) initially makes a decent point, then hides behind the word “securitization” to mask the reality.

Crane maintains that both tax increases and government spending cuts slow economic recovery. Government programs are “a way of keeping more people employed,” he says. “In a recession, you want government to be counter-cyclical — the teeter-totter” to a falling private sector.

“The overriding principle is that, at a minimum, you want government to be retaining the same level of expenditures, if not expanding.”

Crane points to President Obama’s economic stimulus package, which is heavy on new spending.

Of course, the feds can run up huge deficits and print money. States can’t. And many California conservatives would rather see state government go belly-up than pay higher taxes.

Part of the distasteful remedy may be the lottery borrowing. Only don’t call it “borrowing” in front of Crane. It’s “securitization,” he insists. Future lottery revenue would “securitize” the state’s repayment of $5 billion in bonds.

This is a semantics game with political consequences. When the “borrow” word is used to describe the lottery proposal, I’m told, voter support for it drops by 25 percentage points.

Of course, it is borrowing – when you issue bonds and promise to pay them back later, you’re borrowing.  But the “securitization” model also masks the fact that California officials will have to go out into the market and find investors to buy debt based on future lottery revenues.  Despite the success of recent state forays into the bond markets, that’s not such an easy sell:

The ballot measure simply gives the state the legal authority to go out into the financial markets and find investors willing to purchase debt backed by a revenue source that has declined since 2005-06.

Before counting on quick cash from the sale of lottery bonds, it is worth reviewing borrowing-related assumptions made in recent budget agreements, such as the $1 billion in proceeds from the sale of EdFund booked as part of the 2007-08 budget agreement, a sale that was never consummated, or the $1 to $2 billion in proceeds assumed in various budgets from proposed, but never sold, pension obligation bonds. Or the $1 billion in proposed, but never issued, bonds for transportation programs that were to be repaid out of tribal gaming receipts. The careful reader may note a pattern here – a pattern that began long before the global meltdown in financial markets that has made obtaining loans more difficult for even the most creditworthy borrowers.

This isn’t a serious funding measure, it’s an accounting trick – a way to take $5 billion off the books quickly and easily with a minimum of pain.  It’s symptomatic of the failed solutions taken by this legislature and this Governor for years, which constantly try to push off solutions and never deal with the consequences (of course, the needy in this state always do).  That anyone would sink money into protecting this status quo speaks to a failure of imagination, and a willingness to delay fundamental reforms that must happen before it’s too late.

(Registration is an important feature as we look for opportunities to get to 2/3. Thanks for organizing all this data! – promoted by Brian Leubitz)

The Secretary of State has just published new voter registration statistics.  Compared to the February 10 update, there were 115,300 fewer voters in California on March 20–46,445 fewer Democrats, 41,538 fewer Republicans and 23,295 fewer decline-to-states.  Democrats now make up 0.03 percent more of the electorate than they did in February (now 44.55%), while Republicans make up 0.03 percent less (now 31.10%) and Decline to States have remained virtually unchanged (at 19.99%).

At the county level, Republicans have lost ground to Democrats in 36 counties, and gained on Democrats in 21.  One county, Napa, has remained perfectly unchanged.  The Republican registration advantage in Orange County, for example, has shrunk from 12.21 percent in February to 11.84 percent now.  Similar leftward shifts (percentage-wise) are occurring in San Mateo, Alpine, Yolo, Sierra, Tuolumne, San Bernardino, San Francisco and Imperial counties.  The only comparable Republican gains are in Kings and Madera counties.  If the Orange County rate of Democratic relative growth continues (it most certainly won’t), Democrats will outnumber Republicans in Orange county by 2012.

In the State Senate, there are 14 districts where the incumbent party has been losing its relative share of voters since February–nine currently held by Republicans (SD-01, SD-12, SD-14, SD-15, SD-17, SD-18, SD-29, SD-33, SD-35) and five by Democrats (SD-05, SD-16, SD-25, SD-26, SD-39).  Only SD-12, SD-15 and SD-17 are competitive.  All three of those are held by Republicans and all three already have Democratic registration majorities.  SD-12 is the only one of these seats that is up in 2010 and is almost certainly the only 2010 Senate race that will be even close to competitive (Democrats have a 14.04 percent registration edge).  SD-04 is theoretically possible to flip if we get a very, very strong Democrat (Republicans have an 11.05 percent registration advantage); but we’d probably wind up with a Democrat like Bob Nelson or Evan Bayh who’d vote against the budget anyway.  Our best chance at 2/3 anytime soon is for Maldo or Strickland to quit.

Assembly details over the flip….

In the Assembly, there are 50 districts where the incumbent party is losing ground.  Among potentially competitive districts, there are nine such districts, all of which are currently held by Republicans: AD-03, AD-05, AD-25, AD-26, AD-33, AD-36, AD-37, AD-38, and AD-63.

POTENTIALLY COMPETITIVE ASSEMBLY SEATS

An * signifies a term-limited incumbent.

A couple quick updates to stories we’ve been following:

• The State Senate today approved two bills relating to unemployment insurance on a near-unanimous vote.  The bill  (AB 23×3) to extend benefits for an additional 20 weeks using federal stimulus money passed 38-0, and the bill (AB 29×3) changing eligibility requirements to allow seasonal workers to benefit from unemployment benefits, also with federal money, passed 37-1.  The latter bill needs to go to the Assembly for concurrence; the former will go right to the Governor.  Sen. Gil Cedillo remarked in his release:

“Our immediate action on this issue was necessary to help almost half a million unemployed Californians stay afloat. These bills put to use the estimated $3 billion dollars in federal stimulus monies made available by the American Recovery and Reinvestment Act (ARRA),” remarked Cedillo. “We have a tremendous opportunity to turn our economy around and put federal dollars to work for California. The bipartisan leadership today highlights what we are able to accomplish when we focus on results,” Cedillo added.

At least 76,000 people whose benefits would run out on April 11 would see immediate relief.  It appears the Governor, after hedging, will sign both bills, but we shall see.

• As early as tomorrow, says Marty Omoto, we may have a decision from the Finance Director Mike Genest and Treasurer Bill Lockyer on whether the state will receive enough stimulus funding to “pull the trigger” that would reduce some of the worst cuts in February’s budget, and eliminate some of the tax increases.

The determination by the State Treasurer and Department of Finance Director is crucial on whether major permanent cuts happen or not to several critical programs that serve hundreds of thousands of people with disabilities, mental health needs, the blind, seniors and low income families. While there has been no official word on what the State Treasurer or the Finance Director will report, most observers feel that the likely news will not be good.

If you want the details on the cuts at risk, read Marty’s post.  Given the fact that the Legislative Analyst already foresees an $8 billion dollar hole in the budget, and that the special election poll numbers are tanking, which would add another $5-$6 billion hole, I would expect the bad news as well.  Because of the murkiness of what money counts toward the General Fund and what doesn’t, there’s a fair bit of room for politicking in there.

I think the state legislature and the Governor might want to try the tactic of opposing the May 19 ballot initiatives, because apparently, anything they support, the public does the opposite.

When read the full text of the ballot measures, likely voters express these preferences:

Proposition 1A: About four in 10 support the measure (39% yes, 46% no, 15% undecided) to change the

budget process by increasing the state “rainy day” fund. Less than half say the measure would be very (7%)

or somewhat (38%) effective in helping California avoid future state budget deficits.

Proposition 1B: They are divided (44% yes, 41% no, 15% undecided) on the initiative that would require future

supplemental payments to local school districts and community colleges to address recent budget cuts.

Proposition 1C: Half oppose (37% yes, 50% no, 11% undecided) the measure to modernize the lottery and

allow for $5 billion in borrowing from future lottery profits to help balance next year’s state budget.

Proposition 1D: Nearly half support (48% yes, 36% no, 16% undecided) the proposition to temporarily transfer

funds from early childhood education to help balance the state budget.

Proposition 1E: Nearly half favor (47% yes, 37% no, 16% undecided) the measure to transfer money from

mental health services to the general fund to help balance the state budget.

Proposition 1F: An overwhelming majority (81% yes, 13% no, 6% undecided) support the initiative that would

block pay increases to state elected officials in years of budget deficit.

Keep in mind that the first poll, taken about a month ago, showed all six measures passing by a fairly decent margin.  And there has been no coordinated opposition.  So what changed?  I’d gather the confidence in the legislature and the Governor has completely collapsed:

Eight weeks before the special election-called as part of the 2009-2010 budget agreement between the governor and legislature-those Californians most likely to go to the polls are feeling grim about the state of their state: The vast majority (77%) say it is headed in the wrong direction and see its fiscal situation as a big problem (85%). They give record low ratings to the legislature (11%) and to their own legislators (29%). Their approval rating for Governor Arnold Schwarzenegger (33%) has dropped to a new low among likely voters. For the first time, a majority of Republican likely voters (54%) disapprove of the job performance of the Republican governor.

The results are striking when compared to rising approval ratings for Congress and California’s senators and to  

a strongly positive view of President Obama-despite a challenging economic climate.  

“Californians are clear that the budget situation is serious, but most disapprove of the leadership in

Sacramento-the people who are providing the solutions,” says Mark Baldassare, PPIC president, CEO, and

survey director. “These leaders have their work cut out for them if they want to persuade voters that the ballot

measures are necessary to address the problem.”

If you want to know why the Governor had to explain that he’s not running for future office, that would be because nobody likes him.  And the legislature, obviously, is even worse – the 29% rating for people’s local legislator is absurdly low and quite dangerous.  In a normal world, that would spell lots of primary challenges.

Let me stress that this election is not over – the opposition still isn’t well-funded, and the CTA just put $2 million into Prop. 1B.  The Governor has already started funding the other measures.  With an unbalanced funding war, these measures could bounce back.  But the rule of thumb is that measures in this position right now lose.  I see 1A in particular in the situation of the mountain climber from The Price Is Right, with just a little opposition sufficient to send him over the cliff.