The California Insider will return on Monday, Dec. 1.
Posted by dweintraub at 2:05 PM
Finance Director Donna Arduin laid out the details of the first phase of Schwarzenegger's fiscal plan to the Legislature today -- the spending limit, the bond measure and the first round of budget cuts. He wants to limit spending next year to Arduin's revenue forecast this May, and then cap spending at population growth plus inflation after that. While the bulk of the cuts in the near-term and those that come later due to the spending cap would come out of health and welfare programs, the education lobby is already threatening war over the impact on K-12. The spending cap, some are arguing, is a re-write of Proposition 98, because it would apply a different inflation factor and siphon off revenues for a new reserve.
Bottom line: Schwarzenegger is asking legislators to freeze spending next year, which translates into service cuts because state spending left on its own would climb by about $14 billion to $87 billion.
In her remarks to the Legislature, Arduin delivered what amounted to a manifesto and state spending and management. Here is an extended excerpt:
Over the past five years, state bureaucracy has grown and agencies have been allowed to consistently spend above and beyond their budgeted levels.
State government programs do not have accountability. By which, I mean that both lawmakers and taxpayers have no way of truly knowing if programs and services are effective, if policy goals are being achieved, and if bureaucracies are being run in an efficient manner.
The state's ability to save money and spend more wisely has been constrained by the fact that competition has been removed from government by preventing state agencies to bid out services. When you have a monopoly and no one is telling you "no," there is no incentive to be efficient with the taxpayers' dollars.
In corrections, state prisons have been continually mismanaged, running deficits every year over the past five years, rising to an estimated $500 million this year. In addition, health services are far too expensive when they are compared to private sector costs.
Parole has become a revolving door for prisons, using parole revocations as a supervision tool and letting local governments off the hook.
In health and human services, the costs for social service entitlement programs have spiraled. The gatekeepers for these programs have no incentive to make sure people coming in for services are, in fact, eligible for the programs, eligible to remain on these programs, and receiving only those services that they truly need.
Persons who are not citizens of the United States are receiving roughly $1 billion in state-funded health and social services every year without participation from the federal government - the same government that decides who should come through our borders and into our country.
Posted by dweintraub at 3:46 PM
The governor’s first list of cuts – his first list – is out and the reaction is predictable, and understandable. Schwarzenegger may have shied away from cutting food for guide dogs, but the stuff he is willing to do demonstrates how ugly the situation is for California right now. He wants to cut reimbursements to doctors who care for the poor by 10 percent, a move that the medical profession says would prompt more doctors to close their doors to Medi-Cal patients and possibly increase the public’s cost for emergency room care. He wants to take away homecare services to the aged, blind and disabled, which advocates say would force more of those clients into nursing homes, driving up the state’s cost for that service. And he wants to freeze enrollment in state programs, including Healthy Families and aid for the developmentally disabled, that have been entitlements until now. He also has cuts for transportation and higher education which, while not matters of life and death, represent setbacks for the state’s future economic growth. All of this and more to cut just $2 billion next year – or half the $4 billion taxpayers will save from the rollback in the vehicle license fee. Even if the Legislature accepted every proposal, and early reaction suggests that is very unlikely, Schwarzenegger would still have to do this six more times, with deeper and deeper cuts, if he is to balance next year’s budget with spending reductions alone. He is facing a $14 billion gap between projected spending and revenues. This gets him one-seventh of the way there – and that’s assuming he can find enough cuts in this year’s budget to pay for the first installment of his car tax rollback. But the list should also be sobering for Democrats in the Legislature. They want a tax increase, to be sure. But with a $14 billion gap, they would need more than $12 billion in tax hikes to avoid cuts at least this deep. Say that somehow, the political winds suddenly shifted and Democrats won approval of an $8 billion tax increase. Probably fanciful, but indulge me. They would still need Schwarzenegger’s $2 billion in cuts and $4 billion more. Something has to give. Here is the Bee story on the proposal.
Posted by dweintraub at 7:42 AM
A number of readers have written me suggesting that the Schwarzenegger deficit bond amounts to a tax increase. Aside from whether the bond is a good idea or a bad idea, it is simply not accurate to call it a tax increase. The bond represents a spending commitment locked in over the term of repayment. If the debt service is $1 billion a year for 30 years, that's $1 billion each year that won't be available to spend on current programs and services. Taxpayers wouldn't be paying more. They just wouldn't be getting as much in return for what they are paying. Some of the confusion may stem from the fact that local school bonds do come with tax increases attached. When you vote for a local school bond, you are voting to raise your property taxes by the amount needed to retire the bond over time. The same does not apply to state general obligation bonds. They are spending commitments, not tax increases.
Posted by dweintraub at 11:26 AM
The Chronicle has a story this morning about the fiscal crisis spreading across Bay Area local governments, with most of them blaming the state for their woes. Clearly cities and counties have reason to worry about the fate of the car tax, and the question of whether the Legislature will comply with Schwarzenegger's request to make the locals good for the $4 billion they stand to lose annually from the rollback the governor signed last week. Beyond that, though, the state has really done relatively little to crimp county budgets in recent years, and even less to the cities. I suspect a thorough examination of their plight would reveal that cities in fiscal trouble are there because of a decline in local sales tax revenue coupled with fast-rising personnel costs due to employee raises, pension hikes and health benefit inflation over the past few years. Not all cities are in dire straits. It would be interesting to compare those that are to those that are not and find out why they differ.
Posted by dweintraub at 8:57 AM
The governor and his allies are hoping to repeal the illegal immigrant driver’s license bill this week, and Schwarzenegger might also begin to lay out his budget plan in more detail. I still think he is going to get a bond measure of at least $15 billion and perhaps more. But it's starting to sound as if the idea of a new, fully developed constitutional limit on spending is not going to fly in this round. Look instead for some kind of reserve requirement or balanced budget law that Schwarzenegger could sell as a “never again” device to make his bond measure more palatable to the people. It wouldn’t shrink government over time, as some of his Republican allies would like to do, but would prevent the Legislature and the governor from committing windfall tax revenues to ongoing programs as they did in 1999-2000. It’s also possible that the deal could include some kind of short-term spending target covering the next year or two as the first step toward bringing the budget back into balance.
Posted by dweintraub at 8:06 AM
The Chronicle reports here on Schwarzenegger's policy on parole: he intends to give the Parole Board the benefit of the doubt when it recommends releasing prisoners who have done their time. He will reverse only when he believes a clear error has been made. Gray Davis had a practice of reversing nearly every case in which the board suggested release.
Posted by dweintraub at 9:30 AM
Unlike past administrations, Schwarzenegger's office didn't release the salaries of the people he was hiring as they came on board. The press was told that in many cases, pay rates were still being negotiated. Yesterday the information was released. Here is the Bee story with a chart on the governor's cabinet and top staffers. (The governor announced last week that he is waiving his $175,000 salary.)
Posted by dweintraub at 9:21 AM
Secretary of State Kevin Shelley has ordered county registrars using computerized voting machines to provide a voter-verified paper trail for all elections held after July, 2006. This means that every voter will now be able to verify that their vote was recorded as cast -- at least at the polling booth. If a recount is ordered, the paper voting records can be reviewed, rather than officials simply pushing the button and counting the electronically recorded votes again. Go here for a page full of document links from Shelley explaining his decision.
Kim Alexander at the California Voter Foundation has been a driving force behind this policy change. Alexander's reaction is here.
Posted by dweintraub at 4:04 PM
After three days of schmoozing with lawmakers in the Capitol, Schwarzenegger returns to campaign mode to show them his other side. Appearing at a rally to celebrate the rollback in the car tax and making appearances on three talk radio shows, the new governor warns legislators to start taking action on the state's problems or face political consequences. In the Capitol, meanwhile, legislators are still asking the governor for the budget plans on which he expects them to act. Here is the Bee's account.
This is going to be fascinating political theater. Schwarzenegger probably has the momentum, and the public support, to get his agenda passed by the voters. The question is how he will get it to them. It would be easier to go through the Legislature. But he is going to meet resistance there, and it doesn't help that some of his key planks are still half-baked, if that. Yet the Democrats probably know that if they don't work with him, the governor could very well go to the people with a spending cap, for instance, that is far more restrictive than one he might be willing to craft with them. On workers compensation, where Schwarzenegger does have a detailed plan, Davis Recall sponsor Ted Costa has just announced that he will begin gathering signatures with a business group for a plan similar to what Schwarzenegger is pushing. Are Democrats willing to risk it all in a ballot fight with the Terminator/Governator, or will they sit down with him and try to work these things out?
Posted by dweintraub at 6:18 AM
Assembly Democrats have settled on freshman Fabian Nunez as their choice for speaker to replace Herb Wesson, who is termed out. Nunez emerged as the favorite Thursday after Budget Committee Chairwoman Jenny Oropeza annouced that she was backing out and throwing her support to Nunez. As a freshman, Nunez could potentially serve five years as speaker, returning some of the stability the Assembly has lacked in its leadership since term limits led to a series of two-year speakers. Nunez grew up in San Diego, one of 12 children of an immigrant family of day laborers, according to his official biography, and is the former political director of the Los Angeles County Federation of Labor. Wesson said no timeline has yet been set for the succession.
Posted by dweintraub at 9:28 PM
While insiders ponder when a big-name candidate will enter the Republican primary for the US Senate David Dreier is out, how about Bill Jones? former United States Treasurer Rosario Marin is putting together a credible campaign of her own. Marin announced Wednesday her statewide finance committee, and it includes some pretty heavy hitters. Among them are Bert Boeckmann, owner of Galpin Motors in Los Angeles and the top Ford dealer in the world. Also: Dale Dykema, Alex Spanos, Mark Johnson, David Hanna and others. These are the kind of people who usually rally around the consensus Republican pick in the primaries. Is Marin that candidate?
Posted by dweintraub at 10:08 AM
Gov. Schwarzenegger has named Cassandra Pye as deputy chief of staff for external affairs -- a job that is the unofficial in-house slot responsible for tending to the governor's political connections in the community, especially among ethnic groups. Pye is the California Chamber of Commerce's vice president of corporate affairs and is the chamber's former political director, where she kept a close watch on legislative races. She has worked previously for the California Retailers Association, the Food Marketing Institute and the California Grocers Association.
Posted by dweintraub at 4:25 PM
Strange and rather tense hearing today of the Assembly Budget Committee. The panel called Finance Director Donna Arduin to testify on Gov. Schwarzeneggers fiscal plans but double-booked her with the Legislature's own financial analyst, Elizabeth Hill. Although Arduin was asked to appear at 10 a.m., then told she wasnt needed until 10:30, Hill went on first and Arduin wasnt called to testify until after 11:30. Arduin had a meeting with the governor scheduled for noon, so the late start sharply limited the time she could spend with the members. The mornings mood was further fouled when Arduin, suffering from a sinus infection, asked if she could sit at the witness table rather than stand to deliver her report. The Committee Chairwoman, Jenny Oropeza, asked her to stand which Arduin did until finally giving up half-way through her presentation and deciding to sit, with or without permission.
Posted by dweintraub at 4:07 PM
The Bee's Gilbert Chan, who covered the workers comp debate in the Legislature this year, offers a solid analysis of the Schwarzenegger proposal here. He says the plan seeks to cut average premiums in half.
Posted by dweintraub at 5:59 AM
Gov. Arnold Schwarzenegger wont try to design his own state spending limit from scratch but instead will work with competing proposals already offered separately by Republican Assemblyman John Campbell and a bipartisan group of Assembly members led by Keith Richman and Joe Canciamilla, administration and legislative sources say.
The Campbell proposal is a strict limit that would cap increases in spending at inflation plus population growth and would apply to the entire budget. Richman and Canciamilla, meanwhile, have a looser limit that would base spending growth on increases in population and personal income and would also limit appropriations in any year to 97 percent of estimated revenues. Both measures seek to create, over time, budget reserves equal to 10 percent of the states general fund to guard against economic fluctuations. Campbells proposal, pending for the past year, is Assembly Constitutional Amendment 6. Richman and Canciamilla formally unveiled their plan Tuesday afternoon.
Dont expect much action out of the Legislature in the days ahead, meanwhile. Except for possibly repealing SB 60, the bill giving illegal immigrants the right to obtain drivers licenses in California, lawmakers said Tuesday theres not much they can do until they get specific proposals from Schwarzenegger on workers compensation, government reform and the spending cap and bond measure he is seeking.
Were going to deal with each issue as it comes before us, Sen. John Burton told reporters.
Burton said he would oppose repeal of SB 60 and would not look favorably on any proposal to borrow more money without a tax increase dedicated to repay it. He also said he doubted the Legislature would approve Schwarzeneggers request to give local government $3.2 billion to make up for the money they will lose because of his reduction in the car tax.
There is no money, Burton said. We dont have the money to appropriate.
Democratic legislative staffers said they expect Schwarzenegger to endorse a package of workers compensation changes backed by Republican lawmakers and the California Chamber of Commerce. That would probably be a non-starter in the Legislature and lead to a ballot fight next November.
Posted by dweintraub at 4:26 PM
Facing the press for the first time as governor, Arnold Schwarzenegger this morning unveiled an outline of his early agenda but offered few details beyond the plans he laid out during his campaign.
Schwarzenegger demanded that the Legislature pass a general obligation bond measure of up to $15 billion to restructure the states existing debt, coupled with a plan to cap future spending -- all by Dec. 5. He also asked for changes in workers compensation to save employers $11 billion. But the governor offered no specific plans for cutting spending, saying he was waiting to hear ideas from Republican and Democratic lawmakers who told him Monday that they wanted to present plans to his office. He revealed no details about his proposed spending cap and only a brief outline of his workers compensation proposal.
I cannot get into details, Schwarzenegger said, adding that his finance director, Donna Arduin, would do that within a couple of days.
Schwarzenegger said he can guarantee there will be at least $2 billion in budget cuts. But if he limits his bond measure to $15 billion and refuses to raise taxes, he will need cuts several times that large to balance the budget next year. According to Arduin, the state is facing a gap between spending and revenues next year of $14 billion on top of the existing debt that Schwarzenegger wants to refinance.
But Schwarzeneggers message Tuesday wasnt aimed at policy wonks and Capitol insiders. It was directed at the voters, whom he urged to let their voices be heard.
Write and call your legislators, Schwarzenegger said, and let them know you want action and you want action now.
At this point, though, the Legislature has nothing from Schwarzenegger on which to act.
Posted by dweintraub at 12:38 PM
The latest on Gov. Schwarzenegger's campaign fundraising: $1 million since the election. From the LA Times. Registration required.
Posted by dweintraub at 8:01 AM
Glenn Ellmers, director of research for the Claremont Insitute, offers some provocative ideas for political reform: increase the size of the Legislature, give each county two senators, and replace term limits with a part-time Legislature.
Posted by dweintraub at 8:39 PM
Here is a pdf file I have uploaded containing the executive orders and proclamations issued today by Gov. Schwarzenegger. The orders roll back the car tax, call the Legislature into special session and order the suspension of all pending regulations and a 90-day review of all regs adopted during the Davis Administration.
The folks at arnoldwatch.org, a division of the Foundation for Taxpayer and Consumer Rights, say that his regulation review will "wreak enviro and consumer destruction." See their site for the latest from the left on Schwarzenegger's ties to corporate interests.
Posted by dweintraub at 5:09 PM
"I will not rest until the people of California come to see their government as a partner in their lives, not a roadblock to their dreams."
The text of Schwarzenegger's inaugural address, via CNN.
Posted by dweintraub at 4:29 PM
Arnold Schwarzenegger is scheduled to be sworn in at 11 am today as California's 38th governor. The first of 716 credentialed media began arriving at 3 am and were soon joined by Schwarzenegger allies and advisers eager to spin them on the events of the day. Rep. David Dreier, former LA Mayor Dick Riordan and Republican Chairman Duf Sundheim were working the crowd before 7 am. The ceremony itself will be brief. Schwarzenegger's speech is expected to be shorter than 15 minutes long. He will then sign orders rolling back the car tax and calling the Legislature into special session to deal with his proposals on the budget, workers compensation and the repeal of the bill giving illegal immigrants drivers licenses. He plans his first press conference for Tuesday.
Posted by dweintraub at 7:44 AM
Several bloggers are raising questions about the county-by-county recall results and what they say about the new electronic voting machines. The problem is that despite a fairly high statewide percentage of votes-not-cast in various races by people who went to the polls, the results in three counties show exactly zero people not recorded on the recall question. Does this mean the machines might be working too well -- either by preventing people who want to skip a race from doing so or even by deleting their ballot altogether if they choose not to vote in one contest? Rick Hasen has a round-up here.
UPDATE: Nobody seems to have commented on the fact that the three counties in question: Alameda, Kern and Plumas -- did record plenty of "votes not cast" on the race to replace Davis.
UPDATE 2: One mystery solved. See Hasen here.
Posted by dweintraub at 7:01 AM
Sixty-two billion. That’s the number the Schwarzenegger team wants you to remember. It doesn’t have a whole lot of real-world significance, but you will probably be hearing it plenty just the same. It’s the number Schwarzenegger auditor (and Finance Director-designee) Donna Arduin has come up with to describe what would happen if the new governor, after rescinding the tripling of the car tax, left the rest of state spending and revenues on auto pilot throughout the three-year term to which he was elected. The $62 billion is the total of the annual deficits that would ensue under that scenario.
The more useful number is $14 billion. That’s the amount of the structural gap between spending and revenues that Arduin says will exist in 2004-05 if Schwarzenegger rolls back the car tax, makes local governments whole for the money they’d lose in the deal, and leaves everything else as is. That’s pretty much the same number Legislative Analyst Liz Hill put out on Friday.
The audit, in other words, has so far uncovered little that we did not already know. It does show that the annual gap is projected to grow, even with a moderately healthy economic recovery. And it provides one helpful new number for each year: the size of that year’s projected operating deficit in isolation, stripped of the effect of prior-year gimmicks, tricks and transfers.
Given those numbers, if Schwarzenegger is going to stick to his guns on the car tax and other issues, here is the task he has ahead of him. General fund spending in the current year will be $77.2 billion. Revenues will be $72.9 billion. Next year, revenues remain basically unchanged at $73.1 billion. The year after that, they climb to $76.7 billion. The year after that, in what would be the final budget of the Schwarzenegger term, they climb to $83.2 billion.
And so, if Schwarzenegger is somehow going to balance the budget while cutting the car tax and increasing no other taxes, he must cut $4 billion, or about 5 percent, from this year’s spending (with half the year already gone), and then freeze spending for the following year. But programmed spending, absent any changes in law, is already projected to rise on its own to $87 billion in the fiscal year that begins July 1. So he must cut $14 billion, or 16 percent, from that number. And if he is going to leave untouched school spending dictated by Proposition 98, he must cut his $14 billion from $56 billion, which is the projected spending for the non-education part of the budget. That’s a reduction of 25 percent.
There is no way Schwarzenegger is going to do this. So his only way out, if he really is not going to raise taxes, is to do some kind of borrowing.
How does that help? Basically, it buys him time. If you fast-forward to the third budget he would need to propose, for 2006-07, projected revenues are $83.2 billion. Since current year spending would be $77 billion, that means that during this three-year period, if he can bridge the gap between here and there, spending could grow by a total of 8 percent, or about 2.7 percent per year. Limiting the spending growth to that pace would be no easy task, given the growth in caseloads, inflation, employee compensation and the burden of temporary measures already adopted that will drive up costs in future years. It would translate into a serious reduction in state services. But it doesn’t sound quite as intimidating as a $62 billion projected accumulated deficit.
NOTE: Some of Arduin’s numbers are different from Elizabeth Hill’s, but none of the differences change the basic scope of the problem Schwarzenegger faces and the outlook over the three-year period. Arduin, for example, expects $83 billion in revenue in 06-07, while Hill projects $85 billion. But given the time between now and then and the uncertainty about the strength of the economy, that’s a difference not worth arguing about.
Posted by dweintraub at 1:46 PM
Schwarzenegger has appointed Roderick Hickman as Secretary of the Youth and Adult Correctional Agency, which oversees the prisons and the California Youth Authority. Hickman, a Democrat, has been the chief deputy director of the Corrections Department and is the former warden of the Mule Creet State Prison.
Posted by dweintraub at 1:39 PM
California 's economy added 35,000 jobs in October, the most in three years. Here is the Bee's story.
Posted by dweintraub at 9:24 AM
Gov.-elect Arnold Schwarzenegger has named Kimberly Belshe as his Health and Human Services Secretary. Belshe was director of Health Services for former Gov. Pete Wilson and deputy secretary of the Health and Welfare Agency. She most recently has been program director for the James Irvine Foundation.
Posted by dweintraub at 4:04 PM
Secretary of State Kevin Shelley has officially certified the vote from the Oct. 7 election. The recall passed 55.4 percent to 44.6 percent. The measure won by just under 1 million votes. Schwarzenegger finished with 48.6 percent, to 31.5 percent for Bustamante and 13.5 percent for McClintock. Schwarzenegger's margin of victory over Bustamante was about 1.5 million votes. About 4.6 percent of those who went to the polls did not record a vote on the recall question, and about 8 percent of those who went to the polls -- about 755,000 voters -- were not recorded in the replacement election.
Here is the link to the statement of vote.
Posted by dweintraub at 3:44 PM
Legislative Analyst Liz Hill has just published her annual fall outlook on the state's fiscal condition, and it contains few if any surprises. She puts the size of the state's structural gap between projected revenues and expenditures at about $10 billion for 2004-05, and $14 billion if Schwarzenegger follows through on his promise to repeal the increase in the car tax. Here is a link to the full report, which has tons of detail on revenue and spending trends and her forecast for the state's economy.
Posted by dweintraub at 10:31 AM
Do California lawmakers have a political death wish? See the Bee's story here about a planned trip by key legislators to a session with the prison guards union at a swank hotel in Hawaii. The trip would come Thanksgiving week, just when Schwarzenegger is pressing lawmakers for quick action to start solving the state's long-term budget woes. The same junket took place a year ago, and was probably noticed by only a handful of voters. But if Schwarzenegger is looking for action and the Legislature is in Hawaii, something tells me a few more people might hear about it this time around. This is the kind of thing that could spark a movement to create a part-time Legislature. The trip's guest list, by the way, is bipartisan.
Posted by dweintraub at 9:25 AM
Have you noticed that a lot of the people who criticized Schwarzenegger during the campaign for implying that he could balance the budget with a minimum of pain now are criticizing him because they fear the budget proposal he is about to release will do just that?
Posted by dweintraub at 9:01 AM
Don't get too excited -- one way or the other -- about reports that the state Resources Agency might be shutting down due to budget cuts. The agency probably won't go away, which should be good news to Bill Jones, who is expecting to be appointed to run the place any day now. And even if Schwarzenegger tasked Jones with closing the agency's doors, all the departments and offices beneath it would continue to exist. The state's super-agencies, including Resources, were a creation of Jerry Brown and Gray Davis in the 1970s. They don't actually run any programs or provide any services, but only serve as a bureaucratic bridge between the governor's office and the departments. California could surely survive without them, though the savings to taxpayers would be relatively small. Here is one story on the development, from the Chronicle.
Posted by dweintraub at 8:19 AM
The scores for "The Nation's Report Card" -- the National Assessment of Education Progress -- are out today, and California made big strides in both 4th and 8th grade math while holding steady (at a fairly low level) in reading. The biggest improvement was in 4th grade math, where two-thirds of California students reached the "basic" level, compared to 50 percent three years ago. "Basic" is nothing to get excited about -- it suggests only minimum competency. But one-quarter of California 4th graders also were rated "proficient" on this test, compared to just 13 percent in 2000. There was a similar if less pronounced trend among 8th graders.
In reading, 50 percent of 4th graders were at basic levels and 21 percent were proficient. For 8th graders: 61 percent basic, 22 percent proficient. These numbers were essentially unchanged from 2000.
Here is a link to the NAEP's California page, where you can get more detail on the state's profile and also branch out to see the national scores.
Posted by dweintraub at 7:39 AM
The Bee reports that former Secretary of State Bill Jones will be named Resources Secretary by Schwarzenegger. It's a development that might be more significant for the Republican primary for the nomination to oppose Barbara Boxer next year, a race Jones was seriously thinking of joining. More on that later.
Posted by dweintraub at 6:15 AM
The merger of the Senate Republican fiscal staff and the new Department of Finance management is complete. Three aides to Republican Leader Jim Brulte were named Wednesday as deputies to new Finance Director Donna Arduin. Mike Genest, Brulte's fiscal chief, will be Arduin's chief deputy. David Harper, who was Brulte's consultant to the Senate appropriations and budget committees, will be the department's liason to the Legislature. And H.D. Palmer, who was communications director for the Republican Caucus with an emphasis on fiscal issues, will return to his former post as spokesman for Finance, a job he held under Gov. Pete Wilson.
Posted by dweintraub at 6:00 AM
Gov.-elect Arnold Schwarzenegger has named his management team for the Environmental Protection Agency, choosing a veteran environmentalist for the top job, flanked by a timber industry executive and a former Wilson Administration lawyer. Schwarzenegger also named former Contra Costa County Supervisor Sunne Wright McPeak as his secretary for Business, Transportation and Housing.
The EPA team includes Terry Tamminen as Secretary, James Branham as undersecretary and Maureen Gorsen as deputy secretary for law enforcement and counsel. Tamminen is executive director of Environment Now, a Santa Monica-based foundation, and was a founder and former executive director of Santa Monica Baykeeper. Branham, director of external relations for Pacific Lumber, is a former undersecretary at the EPA, chief deputy director of the Department of Forestry and state Senate staff member. Gorsen is a partner in the law firm of Weston, Benshoof, Rochefort, Rubalcava, MacCuish LLP and is the former general counsel for the Resources Agency under Wilson.
McPeak has spent the last six years as president and CEO of the Bay Area Council, a regional planning group. She is the former president and CEO of the Bay Area Economic Forum and was a Contra Costa County supervisor for more than 15 years.
Posted by dweintraub at 1:09 PM
Debra Saunders in the Chronicle on miscalculations by both Lockyer and Schwarzenegger on the groping issue.
Posted by dweintraub at 7:42 AM
Gov.. Gray Davis last night appointed 187 people to various boards and commissions, slots that do not require confirmation by the state Senate. Some of these appointments could be rescinded by Schwarzenegger after he takes office. You can download a copy of the list of appointees and jobs here.
Posted by dweintraub at 7:12 AM
My colleague Peter Schrag takes a look here at Finance Director Donna Arduin's record in New York and Florida, where, Schrag writes, she got by with some of the same tricks and gimmicks that have left California mired in deficits.
Posted by dweintraub at 6:49 AM
Gov. Gray Davis late Tuesday appointed five aides and advisers to Superior Court judgeships in Los Angeles, Contra Costa and Sacramento counties.
Davis named Burt Pines, who as his judicial appointments secretary is the man who helps him pick his judges, to the Los Angeles Superior Court. Pines is the former city attorney of Los Angeles.
The governor named Barry Goode, his secretary of legal affairs, to the Superior Court in Contra Costa County.
And he appointed Robert C. Hight, Allen Sumner and Stephen W. White to sit on the Sacramento County Superior Court. Hight is director of the California Department of Fish and Game. Sumner is chief deputy legal affairs secretary for Davis and held the same job in the administration of former Gov. Jerry Brown. White is the inspector general for the state prison system and is the former district attorney of Sacramento County.
Posted by dweintraub at 7:30 PM
Gov.-elect Arnold Schwarzenegger has appointed Cynthia Bryant as his deputy legislative secretary, where she will serve as an assistant to Richard Costigan, the former Assembly aide and Chamber of Commerce lobbyist who will be the governor's primary negotiator with the Legislature. Bryant, a lawyer, has been the top policy adviser to Republican leader Jim Brulte in the Senate. Brulte's chief fiscal aide, Mike Genest, will also be going to work for Schwarzenegger, as a deputy to finance director Donna Arduin.
Posted by dweintraub at 12:06 PM
Gov.-elect Arnold Schwarzenegger seems to be creeping closer toward a plan to restructure the states accumulated debt and borrow some more to ease the way to a balanced budget. As we reported here Oct. 9, such a bond -- possibly as large as $20 billion -- is the only plausible way for him to fulfill all of his campaign promises on the fiscal front, given the budget and political realities he confronts.The Times today reports that this approach is drawing protests from some Democrats while getting support, or at least acquiescence, from Republicans and anti-tax activists. Critics say its a cop-out, and are especially skeptical of the plan to cut the car tax and then put the first-year bill for that move on a credit card.
Count me among the skeptics. I see nothing wrong with Schwarzenegger's plan to restructure the Davis debt and present it to the voters to protect the state from a legal challenge now pending. I would argue that it is prudent to get voter approval, as the constitution requires, rather than risk a court ruling that would strike down the deficit bonds adopted last summer and send the state into yet another crisis. I could even imagine adding a few other elements of existing, internal borrowing to the new debt measure in order to wipe the slate clean. But I think it would be folly to cut taxes and cover the difference with borrowing.
Here is the problem, though. Schwarzenegger was just elected, convincingly, after a campaign during which he pledged to do pretty much this. He said over and over that he would cut the car tax. He said he would restructure the debt. And he said he would rein in state spending with a new constitutional spending limit that would prevent California from ever again getting itself into this kind of fix. I dont think people who lost the election, or whose party lost the election, have the standing now to demand that the winner renege on his promises.
That doesnt mean the Democrats have the obligation to support him. But soon we will see that it is in their interest to do so. If they dont, the programs they value will be devastated. Because the alternative to new borrowing is not a tax increase, as the Democrats would prefer. It is deeper cuts. Having held out last summer against higher taxes and then seen their position vindicated in the recall, Republicans in the Legislature are not now going to reverse that position and support a tax increase. They might not have the nerve to cut their way to a balanced budget, but they would cut more than the Democrats would. And a fiscal train wreck that comes about because the Democrats blocked the new governors plan is not likely to leave the majority party in good standing with the voters.
As an aside, I think the critics at this point are wrong to assume that Schwarzenegger will not push for serious budget cuts, that he simply wants to borrow his way out of the problem. I expect him to put some very tough cuts on the table, perhaps as soon as his first or second day in office. In the end, the Democrats will be the ones pushing for more borrowing, as a way to close the gap with minimum pain. I would predict that the final bond issue will be at least a little bit larger than whatever Schwarzenegger proposes next week.
The key for me in evaluating all of this is to look at where the state is likely to end up after the first year. If, after restructuring the debt and adding some new borrowing to ease the transition and build Democratic support, Schwarzenegger can get a spending cap or reserve requirement adopted that plausibly prevents a relapse, and he shows a credible plan for a budget that is balanced not only in 2004-05 but in the years beyond that, I think that not only works, but it keeps faith with what the voters demanded on Oct. 7. If the spending cap includes a provision to dedicate some of the new revenue generated by economic growth to paying off the debt ahead of schedule, so much the better.
Youre going to hear a lot of screaming and yelling about a $20 billion deficit bond. But remember, at least $13 billion of that is already on the books. Probably $16 billion if you count all the other shifts and gimmicks in the current budget. About $4 billion of the total, if indeed the total is that large, would represent the distasteful element of financing the first year of the cut in the car tax.
Remember these elements:
Rescind the car tax increase.
Restructure the debt.
Adopt a never again spending cap.
Thats what Schwarzenegger promised. Lets see if he delivers.
Posted by dweintraub at 4:53 AM
Gov.-elect Arnold Schwarzenegger has selected as his press secretary Margita Thompson, a veteran of California and national politics who has been working as political producer for CNN's Larry King Live. Thompson was California press secretary for the Bush campaign in 2000 and served in the same job in Dick Riordan’s campaign for governor last year. She was also director of external affairs for TechNet, a public policy organization that lobbies for high tech firms and interests. She worked for former Gov. Pete Wilson in two different stints and is a graduate of UC Berkeley.
Posted by dweintraub at 11:44 AM
The LA Times, in what it admits is a difficult task, tries to figure out what is going through Bill Lockyer's mind with his embrace of Arnold Schwarzenegger followed by his suggestion that an 800-number be established to solicit more allegations against the governor-elect for mistreating women. Here is the story. Registration required.
NOTE: Don't be alarmed by the posting time. I am in St. Petersburg, Florida, through Wednesday, where I will be leading a session on blogging for a conference of political reporters and editors. I am on east coast time even if my blog software is not.
Posted by dweintraub at 4:24 AM
For Central Valley-ians and others with an interest in the rare credible primary challenge to a sitting legislator, here is the take of Fresno County Lincoln Club chairman Mike Der Manouel on Assemblyman Steve Samuelian's battle to save his seat against several challengers in March.
Posted by dweintraub at 6:46 PM
Yesterday I said it wasn't clear to me how Schwarzenegger could consider Lockyer to be his lawyer on matters involving the groping charges. Now, having read the takes of a number of legal experts, it's less clear still. In fact, it's quite clear no attorney-client privilege exists in this matter between the two of them. Again, I understand why Schwarzenegger is ticked, and I think Lockyer was stupid to blab about his private conversations with the governor elect. And I believe the Schwarzenegger people when they say Lockyer led him to believe that he was acting as his legal counsel. But I don't see what the new guv accomplishes by airing this laundry in public. Were I in his shoes, I would have just picked up the phone, called Lockyer, reamed him for violating the confidence and made it clear that our relationship had just taken a giant step backward. Perhaps a well-placed leak to a journalist or two about the governor-elect's disappointment. End of story. As it is, Schwarzenegger is left looking foolish and in the process has dredged up all the allegations one more time.
Meanwhile, the quote of the day on this topic can be found in the last line of the LA Times piece here:
"Unbelievable," said Democratic campaign consultant Richie Ross. "How ironic that California's strangest political bedfellows would find themselves in an argument about groping."
UPDATE: The New York Times story today says that Lockyer himself mentioned the attorney-client relationship:
In speaking with reporters, Mr. Lockyer at one point said that he and Mr. Schwarzenegger "have that client-attorney relationship in many respects." But a spokeswoman for Mr. Lockyer said later that there was no such relationship because Mr. Schwarzenegger is not yet governor.
The story is here.
Posted by dweintraub at 11:13 AM
Look for Schwarzenegger to name his legislative secretary on Friday: Richard Costigan, a longtime aide to Assembly Republicans who has been working this year as lead legislative lobbyist for the California Chamber of Commerce. Costigan was policy director for the Assembly Republican Caucus and chief of staff to two Republican leaders before leaving the Legislature to work with the law and consulting firm of Manatt, Phelps & Phillips. He has been with the chamber since earlier this year. The legislative secretary can be a crucial position on the governor's staff. If the secretary has the confidence of the governor and gets to know him well, he can effectively represent him in the Legislature and cut tentative deals that stand up when reviewed by the chief executive. On the other hand, negotiations have been known to break down because representations made to lawmakers by the legislative secretary are reversed by the governor. Costigan is a pro but has no pre-existing relationship with Schwarzenegger. It will undoubtedly take some time for him to build that crucial bond. I would love to listen in the first time EPA director Terry Tamminen and Costigan go at it over an environmental regulation opposed by business....
Posted by dweintraub at 11:24 PM
The furor over allegations that Arnold Schwarzenegger mistreated women erupted again Thursday. The governor-elect, through his spokesman, ripped Atty. Gen. Bill Lockyer for what Schwarzenegger said was a breach of attorney-client privilege after Lockyer revealed the gist of conversations the two have had about the matter. Schwarzenegger also disclosed that he had decided to hire a private investigative firm to examine the allegations first published in the Los Angeles Times, and he said he had decided to do so even before Lockyer suggested it Thursday. But a spokesman said the governor-elect was now reconsidering an earlier decision to hand the results of the private probe over to Lockyer.
Stutzman, by the way, said the name of the investigative firm would be made public once a firm is hired. He did not say whether the results of the investigation would be made public.
Lockyer, speaking to reporters earlier Thursday, characterized Schwarzenegger as very concerned about the groping allegations and said the govenor-elect "obviously thinks there's not a legitimate basis for a complaint" and that any review would clear him. Rob Stutzman, Schwarzeneggers communications director, then gathered Capitol reporters on a 2:30 p.m. conference call and accused Lockyer of a breach of legal ethics. He said Lockyer, as attorney general, had presented himself to Schwarzenegger as his lawyer and that the two had discussed the groping charges in that context. Stutzman said Schwarzenegger was extremely disappointed that Lockyer had discussed those conversations with the media.
So ends the Schwarzenegger-Lockyer lovefest, apparently. Schwarzenegger had once called Lockyer the best attorney general in the country, and Lockyer, a Democrat, made public after the election made the fact that he had voted for Schwarzenegger over fellow Democrat Cruz Bustamante. The two had met several times before Wednesday's session that led to Lockyer's comments.
While its certainly fair to say that Lockyers comments revealing his private discussions with Schwarzenegger were in bad form, its not clear they were a breach of attorney-client privilege. Lockyer said little more Thursday than he said before and after the election. And its difficult to see why Schwarzenegger would consider Lockyer his legal counsel on personal matters, especially personal matters that occurred before he was elected governor.
Posted by dweintraub at 3:07 PM
With reports circulating in the Capitol that the Schwarzenegger team might propose adding next year's structural deficit onto the already accumulated debt and floating a massive deficit bond to the voters in March, Treasurer Phil Angelides warns against using borrowing to postpone dealing with the state's fiscal mess. A $20 billion deficit bond, he says, would cost taxpayers $39 billion to retire over 30 years. Angelides has issued this warning before, through the press. This time he includes it in his annual report to the governor and the Legislature on the status of the state's general obligation bond debt. The report is here, halfway down the page to the right.
Posted by dweintraub at 12:51 PM
Gov.-elect Schwarzenegger is considering a sweeping plan to re-order state and local finance in California, giving city and county governments more of the property tax and less sales tax while also making it easier to allow local voters to increase taxes, the Chronicle reports. The plan is part of Schwarzeneggers effort to make good on his pledge to replace the $4 billion in local revenue that will go away if, as promised, he rescinds the recent tripling of the car tax, or vehicle license fee. But its not clear whether the governor-elect intends to replace that money directly from the states general fund or merely give locals the option to increase sales taxes in order to make their budgets whole. What is clear is that the new administration has ambitions to take on a problem that analysts have long identified but which the states political leaders have never been able to solve: the states wacky and convoluted system for financing local government.
Posted by dweintraub at 9:17 AM
Showtimes depiction of the three American political consultants who helped re-elect Boris Yeltsin president of Russia in 1996 won the award for best narrative feature at the Hamptons Film Festival. The real-life trio of advisers was led by George Gorton, recently a top strategist in the Arnold Schwarzenegger campaign, who is played by Jeff Goldblum in the movie, titled Spinning Boris. The others were pollster Dick Dresner (Anthony LaPagalia) and consultant Joe Shumate (Liev Schreiber). A Variety review says the film has terrific energy and is stuffed with dialogue and political detail. The mag says the film portrays the Americans as smart, savvy, and smoothly manipulative. Most curious is the mention that the Gorton character is shown in shirtless workout scenes so frequent that they become, in Varietys words, something of a joke. No word yet on whether Goldblum will also play Gorton in an upcoming film on the Schwarzenegger campaign.
Posted by dweintraub at 12:20 PM
An idea first floated by Democratic staffers in the Capitol has become conventional wisdom in Sacramento and now defines the Schwarzenegger swearing in: no glitz. Aides to majority party legislators, sensing early in the recall campaign that Davis was toast, began telling their Republican counterparts that Schwarzenegger would be wise not to "rub it in" with a lavish celebration of his inauguration. The idea spread -- or sprung up on its own in other quarters -- and the transition announced Tuesday that the Nov. 17 swearing in will be a simple affair followed by a Chamber of Commerce luncheon. The new governor will host no galas or other parties, though some private groups may wish to do so on their own. Still, Schwarzenegger allies will be raising $250,000 to pay for the event, which, weather permitting, will feature a swearing in and inauguration speech on the Capitol's west steps. About 7,500 guests will be invited. It's not clear what opportunity the general public will have to view the event. Here is a story from the Bee on the plans.
Posted by dweintraub at 8:02 AM
Gov.-elect Arnold Schwarzenegger filled out a big chunk of his senior staff today with a selection of conservative, liberal and bipartisan figures a pattern that we can probably expect to see a lot of from this point forward. The most eye-popping appointment was Bonnie Reiss as senior adviser to the governor. Reiss is a friend and associate of Schwarzenegger for nearly 25 years. She is also a Democrat who first came into the Schwarzenegger orbit while working for Teddy Kennedy in the late 1970s, when the new governor and his future wife, Maria Shriver, were dating. Reiss, a former entertainment lawyer, was an environmental activist who formed a group to encourage Hollywood stars to promote environmental causes through their television shows. She later ran Schwarzenegger's private charity focused on inner-city after-school programs. Officially, Reiss will focus on retaining Californias entertainment industry and on childrens issues. But she will also be a sounding board for Schwarzenegger, an anchor from his former life as he enters a world filled with advisers and associates with whom he has little history and about whom he knows little. She was a key figure in the campaign and has been at his side throughout the transition.
Also named Tuesday:
Marybel Batjer as cabinet secretary. Batjer is a former aide to the first President Bush and to Pete Wilson and has been chief of staff to Nevada Gov. Kenny Guinn since December, 2000. Guinn, incidentally, has been threatened with recall by anti-tax Republicans upset over his lawsuit that eventually led the Nevada Supreme Court to strike down that states two-thirds vote requirement for raising taxes. As cabinet secretary, Batjer will serve as traffic cop for the governors office, keeping tabs on what all the departments and agencies are doing and enforcing the governors will on them. Of note to the Indian gaming world, both Batjer and Reiss have connections to Nevada casinos. Batjer was briefly an executive in training at Mirage Casinos before joining Guinns staff, while Reiss was a member of the board of directors of Pinnacle Entertainment Inc. She resigned two weeks ago.
Peter Siggins as legal secretary. Siggins was a senior deputy to both Dan Lungren and Bill Lockyer at the attorney generals office. He began as the deputy in charge of the correctional law section, defending the state against lawsuits involving the prisons and the youth authority. He later rose to chief deputy for legal affairs, in charge of all legal work of the state Department of Justice. The legal secretary is the governors in-house lawyer, advising him on lawsuits filed against the state, on issues like the Indian gaming compacts and on the legality of proposed legislation and regulations.
Rob Stutzman as communications director. Stutzman, who was a spokesman on the campaign and has been communications chief of the transition, comes from a conservative Republican background. He was press secretary to Republican Leader Rob Hurtt of Orange County during the mid-1990s and then worked for Republican Atty. Gen. Dan Lungren. Later he was spokesman for the campaign the anti-gay marriage campaign that passed Proposition 22, defining marriage in California as only between a man and a woman. As communications director, Stutzman will work mostly behind the scenes, helping Schwarzenegger shape his message and his tactics for dealing with the media, or not.
Posted by dweintraub at 5:18 PM
Schwarzenegger has scheduled a Sacramento fundraiser for Dec. 3, for which he is soliciting campaign contributions from the usual cast of characters around the Capitol, according to the LA Times. This doesn't square, of course, with his early vow that he would be free of special interest influence because he didn't need money from anybody. But Schwarzenegger made it clear during the campaign that his definition of special interests -- labor unions and Indian casinos -- was a lot narrower than everyone else's. And he continues to maintain that the difference with him is that he really doesn't need their money and won't do their bidding in order to get it. He probably won't. But there undoubtedly will be cases in which he makes decisions that are in concert with the desires of his donors. And it will be up to Schwarzenegger to explain how this is any different from what Davis did. Here is the LA Times story. Registration required.
Posted by dweintraub at 10:00 AM
Schwarzeneggers advisers today plan to present the new governor with a draft spending limit he could pair with a debt restructuring bond on the March ballot, the Bee reports. The limit, drafted by Assemblyman John Campbell and Howard Jarvis Taxpayers Assn. President Jon Coupal, would cap spending growth at the rate of inflation plus population growth and dedicate any excess revenues to paying off the deficit and building a reserve that would grow to 10 percent of the general fund. The idea is to smooth out the ups and downs in the growth in government and provide a buffer for bad economic times. Any revenue beyond what was needed for a 10 percent reserve would be rebated to taxpayers. Democrats will initially balk at the idea of a spending cap, but I predict they will accept it in some form in exchange for a deficit bond that would relieve the need for some short-term spending cuts. They probably wont go for the one Campbell and Coupal are proposing, however, because it sets a stricter limit than they would like. I look for the final version to be based on personal income growth rather than inflation, which would allow government to maintain its current share of the states economic output rather than shrinking over time. Another key question is whether the limit rises each year even if revenues fall short. That would allow spending to catch up with the trend line in good economic years. Here is the story from the Bee.
Posted by dweintraub at 7:16 AM
CTA lobbyist John Hein resigned from Schwarzeneggers transition team on Monday in protest over the governor-elects choice of Dick Riordan as his education secretary. According to CTA President Barbara Kerr, Hein quit because the union so vehemently believes that the Ed Secretary job and the office beneath it ought to be eliminated and the money spent on kids instead. I agree. But I tend to think the real reason Hein quit was in protest to not just filling the job but filling it with Riordan, who made battling the teachers union a cause of his while he was mayor of Los Angeles. The CTA also cant be pleased that the new guv quickly went on record opposing the CTAs initiative to raise property taxes on commercial property by 55 percent and dedicate the money to schools. Schwarzenegger, who likes to think he can work with anyone, will have to chuckle at the take-my-ball-and-go-home style demonstrated by CTAs move here. Welcome to Sacramento.
Here is a link to the CTA press release on Heins resignation.
Posted by dweintraub at 7:13 AM
Gov.-elect Arnold Schwarzenegger is expected to announce two major appointments Monday, naming Florida budget chief Donna Arduin as his finance director and former Los Angeles Mayor Dick Riordan his secretary for child development and education. Arduin, who worked in the budget offices of Michigan and New York before taking the top budget job in Florida, has been conducting the independent audit Schwarzenegger promised during the campaign. No results of that investigation have yet been made public, but Arduin apparently has impressed the new boss enough to win the post. Riordan, who served as mayor of Los Angeles from 1993 until 2001, made education one of his top priorities in that job even though the mayor had no direct powers over the schools. He led a movement to elect a reform-minded majority to the city school board in opposition to a slate supported by the teachers union, though what exactly resulted from his commitment to the schools remains unclear. Riordan, 73, ran for governor last year and considered running again in the recall race until Schwarzenegger, a longtime friend, jumped in. Education Secretary would seem to be a step down for him. But he wanted the job, and campaigned for it. Look for him to use the position as a bully pulpit to advocate for local control and a reduction in the state education bureaucracy.
Posted by dweintraub at 9:59 PM
The Chronicle reports that Gov. Davis rejected two requests from San Bernardino County to declare a state of emergency because of the bark beetle infestation before acting in April of this year. His reaction at first was similar to the one the Bush Administration had this year: the problem was not acute enough to require assistance from a higher level of government. But experts say that even if Davis and Bush had acted sooner, the course of these fires probably wouldn't have been altered much.
Posted by dweintraub at 7:52 AM