Tag Archives: Yacht Party

Republican Antics Push State Further Adrift

Having spoken out numerous times on Governor Arnold Schwarzenegger and his Republican colleagues’ inability to deliver on their promises to solve California’s budget problems, I was further outraged by their recent opposition to closing a loophole that gives tax breaks to wealthy yacht owners. At a time when California is considering drastic cuts to education, health care, state parks and the poor, this unconscionable position only underscores the Administration’s inability to deal with our budget crisis in an honest manner and their willingness to balance the budget on the backs of our most vulnerable.

Currently, it’s possible for new yacht owners to avoid paying state sales tax by parking their new purchases out of California for 90 days.  In February, the legislature considered closing the loophole that gives the wealthiest in the state a tax exemption for their extravagant toys. The proposal was simply to adjust this loophole in the tax law and increase the waiting period to a year–an action that is estimated would have netted the state $26 million.  No-brainer, right?  Well, not to the Republicans in the legislature.

Because Republicans in both houses voted against the bill, it failed to garner the two-thirds majority needed for passage.  Republicans in the legislature have taken a pledge to never, under any circumstances, consider tax increases, even during budget deficits like the $16 billion one we currently face. This unwillingness to compromise to save California from possible insolvency is the latest example of the fiscal irresponsibility that has plagued Republicans in the State House and the Governor’s mansion.  

By way of review, during the 2003 recall election, Mr. Schwarzenegger promised to be the “Collectinator.”  He said that his friendship with President George W. Bush and the Republicans in Washington, DC would allow for him to bring home federal dollars that were missing from the state’s coffers.  Subsequently, Congresswoman Zoe Lofgren, D-San Jose, identified tens of billions of federal dollars owed to California.  She and the California Democratic congressional delegation tried to get the Governor to live up to his pledge by working with him and the Republicans in a bi-partisan manner.  Unfortunately, his promises have continued to yield little results.

In his first “State of the State” address in 2004, the Governor said that he would bring great change to Sacramento by “blowing up the boxes” of government bureaucracy.  Unfortunately, this translated into dismantling essential local governmental services including police and fire safety and health programs.   One of his first actions in office was to spend over $4 billion in revenue the state did not have by rescinding the vehicle license fee.  The fee, which had been in place for 63 years, went to local governments throughout California.  Today it costs the state $6 billion a year in revenues according to Elizabeth Hill, the state’s nonpartisan Legislative Analyst.

In 2005, the Governor spent $80 million of the state’s money on his unnecessary ‘Special Election’ to benefit his corporate, special interest agenda instead of working with the Legislature in good faith to soundly address the complex issues facing California.  The measures he put forward on the ballot were soundly defeated and he succeeded in wasting a year of the taxpayers’ time and millions of state dollars.

In 2006, the Governor told the state he was working across both sides of the aisle and proclaimed a new era of ‘post-partisanship.’ Unfortunately, instead of offering real solutions to our structural budgetary deficit, the Governor pulled out the state’s credit card again and borrowed billions of dollars- essentially taxing our children’s future.

Last year, in 2007, fresh off the campaign trail, the Governor, unable to get his Republican colleagues to support the agreed-upon state budget priorities for the new fiscal year, led us once again into a budget stalemate.  The months-long stand off stymied critical state functions and stalled payments to millions of children, elderly, poor and disabled Californians.  Medi-Cal funds were frozen, hospitals and care providers had to function using IOUs, and our community college districts stretched their dollars to the breaking point until the state finally agreed on a budget.  

Now in 2008, we find ourselves straddled with a $16 billion shortfall.  Amazingly, just a few months ago the Governor proclaimed that the “budget deficit is zero.”  Fast forward a few months later and he told us that we must make draconian cuts to deal with this amazing turn of economic events. He is now proposing that we cut more than $4.5 billion from K-12 education; decimate our AIDS Drug Assistance Program; further reduce reimbursement rates for health care providers; put the children of mothers on state assistance at risk of homelessness; deny the blind, the elderly, and the disabled even a minimal cost-of-living adjustment; slash funding for our court system; virtually close down our state parks system; and continue to under-fund our higher education systems.  Part of the Governor’s plan is to make it harder for people on Medi-Cal to get reimbursed for their health care by simply creating more paperwork for them to fill out.

For nearly five years of the Schwarzenegger Administration in Sacramento, we’ve seen this movie over and over again.  It’s time to get real.  We must have an honest conversation with the people of California about the priorities we have for our families and how we’re going to pay for them with a balanced approach of spending cuts and revenue enhancements, like closing the yacht tax loophole. The Governor’s script always promises real budget solutions, but fails to deliver time and time again.

Movement on Closing the Tax Loopholes

Tomorrow morning around 7:40 AM I am going to be on Roy Ulrich’s Morning Review Friday on KPFK 90.7 FM to discuss the state’s structural revenue shortfall. One major element of that is the $2.7 billion in tax loopholes that LAO Elizabeth Hill identified. George Skelton reports in today’s LA Times that Arnold appears serious about closing these – but that much remains to be done:

Give him credit: Gov. Arnold Schwarzenegger is the first Republican in California’s Capitol to begin taking off the budget blinders.

He’s actually advocating tax increases, give or take some semantics….

It was clear to Schwarzenegger that, for political and practical reasons, the deficit hole could not be filled with spending cuts alone. He decided to support loophole closings. But advisors were surprised when the governor spontaneously popped out with the idea the next morning during an audience Q&A after addressing Town Hall Los Angeles.

“I’m a big believer,” he said, “that when we have a financial crisis like this that we all should chip in. And this is why I totally agree with the legislative analyst’s office when she says that we should look at tax loopholes….

Democratic leaders should consider it an invitation to offer Schwarzenegger a tax proposal. The governor finally agrees with them, it seems, that the state does have a revenue problem — not simply a spending problem.

This is a productive development, as it is becoming obvious that catastrophic education cuts are not the answer to our budget crisis. But even this welcome news has to be tempered by some political and fiscal realities.

First, there seems to be some disagreement among Sacramento Democrats on what to do about the budget. Skelton believes that the Arnold-Núñez vs. Perata dynamic is about to replay itself:

Senate President Pro Tem Don Perata (D-Oakland) wants to fashion a budget proposal through the traditional legislative process, with public hearings, and avoid closed-door negotiations between leaders and the governor. That’s fine. But this is ominous: He’s vowing “the fight of a lifetime,” threatening to block budget passage all summer if necessary to protect school funding, insisting loophole-closing isn’t enough and talking up a sales tax increase.

Assembly Speaker Fabian Nuñez (D-Los Angeles) is more attuned to Schwarzenegger.

“If other Democrats want to beat up the governor, I respect their views,” he says. “But I think the governor is a good man and doesn’t want to make cuts any more than I do. Now it’s up to us to show him a road map to a balanced budget.”

Nuñez isn’t ready to support a general tax increase, like on sales. That should be a “last resort,” he says. For now, he advocates closing business loopholes. For example, he’d impose an oil severance tax — California is the only state without one, he says — and raise $1 billion.

Núñez is simply wrong to believe that a general tax increase can be avoided. An oil severance tax has its place, but even with loophole closures, something like a sales tax increase – or sales tax modernization – or the restoration of the VLF is a necessity if we are to avoid crippling cuts. Tax loophole closure and an oil severance tax would bring in around $3.7 billion, but that leaves over $4 billion in cuts. The VLF sits as a fat target, with the potential to bring $6 billion a year into the state’s account. It would be nice if someone in Sacramento started talking more loudly about that.

Of course, it’s by no means clear what role Núñez, who has grown closer politically to Arnold over his term as speaker, will actually play in these negotiations. Whereas the Senate handover of power from Perata to Darrell Steinberg is scheduled for August 21, the transition from Núñez to Karen Bass is much less clearly defined. And we don’t yet seem to know where Speaker-elect Bass stands on the tax issue.

We do know where the Yacht Party stands. Capitol Alert reports today that Dick Ackerman and Mike Villines have both come out strongly against any new taxes. They’ve decided to stake their party’s future on the construction of an aristocracy in California, where low taxes are paid for by permanent inequality as our education, transportation, and health care services are destroyed and with it, the state’s economy.

A united front is going to be necessary to break the Republicans. Democrats need to work out their differences soon and present that unity, for the sake of Californians and the state’s future.

Yacht Party Follies

UPDATE by Julia: Watch the video on the Yacht Party.

UPDATE by Robert: Arnold’s now getting in on the follies – the SacBee reports he said he agreed with Elizabeth Hill’s call to close $2.7 billion in tax expenditures but then backtracked a little while later.

Judy Lin at the SacBee took a look at the Yacht Party’s bankrupt arguments about how we simply have to enable tax evasion or poor people are going to starve.

“The immigrant who sprays fiberglass on a boat will lose his job. The small-business owner who installs avionics on an airplane will lose his business,” state Sen. Dennis Hollingsworth of Temecula told GOP members during a Feb. 15 floor debate. “Those are the people who are going to be affected by this. It’s not the rich.”

You know, never does a day go by that the Yacht Party doesn’t show its deep respect and concern for immigrants.  Somehow, though, I have the sneaking suspicion that they’re being, what do I call it, completely disingenuous.  The Legislative Analyst has correctly described this as tax evasion, the Governor has correctly described this as tax evasion, even the TAX EVADERS have correctly described this as legalized tax evasion.

Chuck Lenert, 57, of Sacramento saved nearly $30,000 in taxes when he bought a used 58-foot Kha Shing motorboat near Victoria, Canada, three years ago. It came with a docking slip in Canada, he said, so it was cheaper to leave it there and pay an attorney $2,500 to ensure his tax status was in order with the state.

“I was just following the rules of the state of California, so why should I pay sales tax?” Lenert said. “I wasn’t trying to do anything but follow the law.”

For a year, Lenert, who sells hardware for a living, would travel every few weeks with his family and friends and take the $376,000 vessel, named Knots and Bolts, around the waters off Vancouver Island to catch crabs, salmon, oysters and shrimp. After a year, he moved the boat to Washington state.

“I would say that the 90-day guys are more cheaters,” said Lenert, who has since brought the boat down to Sacramento. “I had a bona fide use.”

Not that it should even be a question, but contrary to the Yacht Party’s protestations, actually making yacht owners pay their sales tax would have no material effect on sales whatsoever.

The analyst’s report found that a longer exemption period had little impact on manufacturers and sellers because their products sell nationwide.

Tim DeMartini, owner of DeMartini RV in Grass Valley, said the length of the exemption doesn’t affect his business because two-thirds of his orders come from outside California. The average 40-foot big diesel, he said, sells for $150,000.

“It won’t make that much difference to us,” DeMartini said, adding that the impact might be greater for the buyer.

Due to this “conflicting” information, Yacht Party members are just so gosh darn confused about the issue that they’d rather just walk away from it, which has the added benefit of, you know, saving Commodore Ackerman’s yacht tax.

“I haven’t been able to conclude which argument makes the most sense,” said Assemblyman Roger Niello, R-Fair Oaks, who abstained from the vote.

As for Dan Walters’ predictable media “he said, she said” argument, I think there’s a slight difference between yacht owners avoiding sales tax and income tax credits for children for working-class families.  Call me nuts.

California Yachting Association Call-a-Thon: Day 2

Yesterday we got almost a thousand views of this video message from the California Yachting Association, and we shut down the California Republican Party’s phone linestwo days before their state convention.  But I’m not certain that the CRP got the message yet.  They need to hear from us again today.

916.448.9496.  Please call.  Operators are standing by!

In all seriousness, this visibility campaign is of a piece with some contemporaneous attempts at legislative activism.  Yesterday seniors and the disabled descended on the Capitol to protest cuts to the In-Home Supportive Services (IHSS) program.  Low-income community groups are organizing against what they believe is an insufficient state cap-and-trade program that would allow polluting industries to buy the rights to continue to pollute (I’m not sure if I totally agree with them, but it’s an interesting article).  This entire year is going to require this kind of activism if we want to wind up with a state government that doesn’t dismantle its public education system, make health care less accessible and preserve tax avoidance strategies for the wealthy like evading the sales tax on yachts.  These people have to be watched, vigilantly, and through that sunshine will come eventual change, whether they accede to it themselves (unlikely) or we go ahead and take their seats away (likely if we work our butts off).

A Message From The California Yachting Association

It’s a pretty solid message.  I think all of us yacht owners out there, or those of us who sympathize with their daily hardships, should give a call to 916.448.9496 and let the state GOP know how much we love them protecting yachter’s interests, instead of those lucky duckie poor people or children or the sick.

Also, the CRP is meeting in San Francisco this weekend.  What a perfect opportunity for yacht owners and maybe even a bunch of people dressed up like yacht owners to confront their members and thank them in the loudest way possible.  Maybe someone should hold up a boom box and play “Come Sail Away” on an endless loop.  I just want to show my gratitude.

Maybe the contact form on the CRP website needs to be flooded with this message, too.  There are a lot of possibilities.  I just want them to know how much yacht owners appreciate them.

YACHT OWNER ALERT: That CRP Convention is at the Hyatt Embarcadero in San Francisco, starting Friday.  Wear your best finery!

UPDATE: I’m going to get out of character know.  Here’s the thing, there’s anecdotal evidence that we got the CRP to turn off their phones.

I got vm and then was transferred to an extension that had no vm. But I’m sending them an email. They can’t get rid of me that easily!

Great idea, dday. We need to band together all over the country to fight these corrupt, incompetent politicians who are giving away our tax dollars to their cronies.

I spent two dollars making this video, and a few hours of online organizing.  And the Republican Party in California turned off their phones.

Let’s keep the call-a-thon going tomorrow!

Kick ‘Em While They’re Down

Today’s SF Chronicle examines the turmoil within the “Yacht Party” – the state Republican Party is mired in debt and facing deepening internal divisions. As Carla Marinucci explains:

The troubles of the GOP in the nation’s most populous state – which backers of Sen. John McCain insist could be competitive in the fall presidential election – come at a crucial time. The California party convention is Feb. 22 in San Francisco, and conservatives and moderates will debate the platform and whether independent voters should be allowed to cast ballots in state GOP primaries.

But the most urgent concern for many Republicans is the appalling financial condition of the state party, which is now overdue on repaying a $3 million loan provided in 2005 by Larry Dodge, chief executive of the American Stirling Co.

The surest sign of a party that is deeply divided is when blame gets passed around, instead of folks stepping up to take responsibility (although one wonders when the last time the Yacht Party ever demonstrated responsibility to the state’s voters, finances, and basic rights). Sure enough, we have Jon Fleischmann, who runs some website whose name I forget, explaining that it’s all Arnold’s fault:

“The understanding of the California Republican Party was that the loan would be repaid today – and if it isn’t, that’s concerning,” Jon Fleischman, vice chair of the Southern California GOP, told The Chronicle on Friday.

“The governor made a commitment to resolve the debt. It was incurred re-electing him – and he stood before our convention and said he would take care of resolving it,” Fleischman said. “If we’re still dealing with the debt from Gov. Schwarzenegger’s last campaign, it makes it difficult for us to move forward on the McCain campaign.”

Naturally, Arnold’s people deny responsibility for this debt (as they have with the state’s budget deficit):

But an adviser to Schwarzenegger, Adam Mendelsohn, said the governor is not responsible for settling the loan.

“This is an issue between the California Republican Party and Larry Dodge in terms of finalizing and resolving the debt,” he said….

Sources inside the party said Schwarzenegger negotiated successfully with Dodge months ago to forgive the state party’s debt, and Dodge indicated he would be willing to make substantial additional contributions – if changes were made to party operations.

Among those changes being considered is whether or not to let DTS voters cast a ballot in Republican primaries. As we saw on February 5, DTS voters packed the polls in enormous numbers to cast a ballot in the Democratic primary, and many of those voters will vote for the Democrat again in November. Republicans might have a chance at peeling off some of those voters if their primaries were open, and while the PR effect of their closed primary is negative, most Republicans seem happy with it anyway:

But Spence said conservatives believe otherwise – and will make their views known at next week’s convention.

“I think California Republicans support having Republicans choose Republican nominees,” he said. “There’s been no evidence that allowing (independents) to vote in the primaries has benefited us in a general election.”

Since conservatives captured the California Republican Assembly in the early 1960s as part of their long march through the institutions, they have seen the state party as their exclusive vehicle. Ideological purity is what they prize, and most conservatives remain convinced – against all available evidence – that Californians will come around to their way of thinking.

Whatever the reasons behind this inner turmoil – ideological differences, personal pique, money matters – what’s most important for us is that this gives Democrats perhaps the best opportunity in decades to grab seats from the Yacht Party in the legislature. Earlier this week Fabian Núñez spoke of three seats they were targeting – AD-15, AD-78, and AD-80.

If anything this is probably not ambitious enough. As we saw in 2006, most of the House races Democrats won were not on the establishment radar at this point in the cycle – including CA-11. Dean’s 50-state strategy helped Dems take advantage of the wave that year. Here in California we need a 58-county, 120-district strategy.

A broke and divided Republican Party, forced to defend yacht owners and the screwing of sick children and students, is a sign that Democrats need to take the offensive. Back the Republicans up against a wall, and take advantage of what is going to be a massive Democratic turnout in the November elections to make a bid for 2/3. It’s time for CA Democrats to be bold for a change.

We can’t even get the Yacht Loophole Fixed?

So, this is rapidly breaking news here. As of right now, Assembly Members Price and Calderon abstained from voting on the yacht loophole fix. All other Dems voted yes, with Assembly Member Soto being out sick, we don't have the 41 votes necessary to fix the yacht loophole. What does it say if we can't get even this smallest of revenue fixes passed?

As an aside, apparently Sen. Denham is taking this recall effort seriously. He voted against some of the spending cuts. Interesting. I'll update when I learn more.  

UPDATE: The Yacht Loophole has failed. Call Assembly members Curren Price ((916) 319-2051) and Chuck Calderon (Tel: (916) 319-2058) to “thank” them for not bothering to support closing this tax loophole. I wonder how many yachts are being delivered to Inglewood and City of Industry, respectively. Nice to see the Assembly members putting their constituents first.  Contact them today to ask them why yachts are more important than education.

Of course the Republicans all either voted no or abstained. It looks like Denham will vote to fix the yacht loophole, but without the Assembly support, it doesn't matter all that much. More updates as I get them.

Price: Capitol Office:
State Capitol
P.O. Box 942849
Sacramento, CA
94249-0051
Tel: (916) 319-2051
Fax: (916) 319-2151

District Office:
One West Manchester
Boulevard, Suite 601
Inglewood, CA 90301
Tel: (310) 412-6400
Fax: (310) 412-6354

Calderon: Capitol Office:
State Capitol
P.O. Box 942849
Sacramento, CA 94249-0058
Tel: (916) 319-2058
Fax: (916) 319-2158

District Office:
13181 N. Crossroads Parkway
Suite 160
City of Industry, CA 91746
Tel: (562) 692-5858
Fax: (562) 695-5852