My column Tuesday on Wal-Mart brought a ton of reaction about evenly divided between criticism and praise. It was clear that one thing driving the critics is their impression that Wal-Mart doesnt offer health benefits to its employees. This is not true. The company does offer benefits, and it says that about half of its workers subscribe to them, which is about average for retail operations in America. According to a recent article on this topic in the Wall Street Journal, Wal-Mart has structured its health benefits to emphasize catastrophic care. While the company has relatively high deductibles up to $1,000 for a plan that costs an employee $13 every two weeks it also pays 100 percent of medical charges above $1,750 a year in out-of-pocket expenses. And, according to this article, Wal-Mart has no lifetime caps on its coverage, a generous benefit offered by fewer than half of the nations retailers. A company VP quoted in the piece says Wal-Mart typically covers medical bills exceeding $100,000 for at least 800 employees a year, and 20,000 cases cost the firm more than $10,000 each. Wal-Mart has paid for more than 300 organ transplants in the past five years, each costing more than $1 million. Is this the kind of first-dollar coverage for everything that some would like to see, and which is the object of so much of the labor angst in the Southern California grocery industry these days? No. But neither is it evidence that Wal-Mart is some kind of evil corporate rapist. The idea of health insurance, after all, is to prevent unexpected medical bills from bankrupting and devastating an individual. In this regard Wal-Marts coverage might be on the cutting edge. While it leaves individual workers responsible for routine expenses, Wal-Marts coverage steps in when things get serious and then covers everything, forever. Doesnt sound so bad.
Posted by dweintraub at 10:12 AM
Sheila Kuehl may not think Arnold Schwarzenegger has anything interesting to say about the state of the state, but apparently, a lot of other people do. Kuehl, a state senator from Santa Monica, told me in frustration on election night that she might boycott Schwarzenegger's first speech to the Legislature because she couldn't imagine what he might be able to tell her of note about the condition of California. Now the governor's office and Assembly staffers are busy preparing for what will probably be the largest crush of media for such a speech in California history. Credentials for the Assembly floor Tuesday night will be rationed, with priority given to members of the Capitol press corps. The California Broadcasters Assn., meanwhile, plans to establish an outdoor media center on the north side of the Capitol. And the Capitol's press conference room on the first floor will be converted to a filing center for print reporters.
Posted by dweintraub at 9:25 AM
Last weeks Paso Robles earthquake now seems like nothing compared to devastation in Iran, but Gov. Schwarzeneggers comments when he toured the damage caught my eye. Asked whether the state should mandate retrofitting of old buildings like the one that collapsed in Paso Robles, the governor wisely resisted the age-old politician urge to declare the need for a new law or regulation in hopes of placating those at a disaster site.
"I think local government should take care of it themselves, Schwarzenegger said. I own buildings [in Santa Monica]. There's always this big battle between people that want to make this place safe and the people that don't want to go and take the expense because it's very expensive to do the retrofitting.
"But I think that when you look at this main street here, the buildings that had been retrofitted those buildings stood," Schwarzenegger said. "They are safe. So I think it's a lesson to all the others, that they should retrofit their buildings."
Message: all things considered, its better to retrofit. But there is a trade-off between the risk and the cost, and neither the state nor its citizens can afford to immediately bring every old building up to current earthquake standards. Good to see the governor not afraid to exercise a bit of common sense on a touchy subject.
Posted by dweintraub at 11:18 AM
...and Happy Holidays. The California Insider will return on Dec. 29.
Posted by dweintraub at 7:06 AM
LA County Sheriff Lee Baca was among those on hand Thursday to fete Gov. Schwarzenegger for unilaterally sending money to cities and counties to avert law enforcement layoffs threatened by the governor's recent rollback of the car tax. Coincidentally, an audit released yesterday of Baca's department showed that payroll costs increased by one-third and retirement costs tripled in the five-year period ending in 2002. The story is here, in the Daily News. An excerpt:
The audit, by Torrance-based Thompson, Cobb, Bazilo & Associates, found expenditures increased by $473 million during that period, from $1.2 billion to $1.6 billion, driven mainly by a 46 percent increase in salary and employee benefits, from $913 million to $1.3 billion.
The audit found retirement benefits jumped from $46 million to $143 million, employee benefits rose 184 percent, from $8 million to $22 million, overtime spiked 39 percent, from $67 million to $94 million and workers' compensation costs rose 82 percent, from $46 million to $84 million.
In 1996-97, the average retirement benefit cost was $3,559 per employee. That had jumped to $9,631 by 2001-02. Likewise, in 1996-97, an average of $13,346 was paid per workers' compensation claim. That soared to $21,260 per claim in 2001-02.
Posted by dweintraub at 9:19 AM
Senate Leader John Burton compared Gov. Schwarzenegger's action Thursday to President Theodore Roosevelt's famed ultimatum to Congress in 1907. Roosevelt asked Congress for money to send a U.S. Navy fleet around the world. When lawmakers balked, he dispatched the ships anyway. With the fleet half way through its journey, he returned to Congress with another message: pay to bring the ships the rest of the way home or leave them stranded in the Philippines. Congress complied. It remains to be seen whether Schwarzenegger, having dispatched $2.6 billion to cities and counties, can get the Legislature to cut state programs to pay the bill.
Posted by dweintraub at 9:09 AM
In an impressive display of executive leadership if nothing else, Gov. Arnold Schwarzenegger will try to make more than $2.5 billion in disputed payments to local governments despite his failure to win approval of legislation to authorize the appropriation.
The money is the amount cities and counties lost when Schwarzenegger rolled back the car tax on his first day in office. The locals say the cash is due them because of an earlier state commitment to make them whole for any money they lost when the tax was cut. Schwarzenegger promised to hold them harmless during the campaign, and after taking office and cutting the car tax he asked the Legislature to help him make good on his pledge. Democrats refused, citing the states already overdrawn checkbook. Now the governor says hell do it anyway.
Hes trying to use a process that allows governors to act when state agencies overspend their appropriations after a budget is adopted. The governor is allowed to propose the extra payments, and typically, they take effect unless lawmakers reject them within 30 days. An emergency provision allows them to take effect unless rejected within 10 days. Thats the lever the governor is pulling now.
Basically, he is turning back the clock to the day Davis raised the tax last June, saying the increase was improper (if not illegal) and trying to reset everything to the way it was then. The tax goes back down. And the state resumes its practice of making up the revenue loss to cities and counties.
The money for the reimbursements, he says, will come from revenues the state has received in excess of earlier projections and from budget cuts he is empowered to make on his own. Schwarzenegger is expected to detail those reductions today.
The governor will probably succeed with this move, at least in the short term. Controller Steve Westly, who cuts the checks, has given his approval. And lawmakers, even if they were in town to take action, probably wouldnt want to go on record voting to deny the money to cities and counties, which have mounted a major legal and public relations offensive.
But none of this changes the bigger challenge Schwarzenegger faces: balancing the budget he must propose to the Legislature on Jan. 10. He is facing a gap of about $14 billion between projected spending and expected revenues in the fiscal year that begins July 1. If he is not going to raise taxes, he will still have to come up with cuts in state spending to make that plan balance.
Posted by dweintraub at 7:42 AM
Local governments are in an uproar over the car tax cut and the states failure to provide the backfill that makes cities and counties whole for the lost revenue. Although the locals are describing this as balancing the state budget on the backs of cities and counties, thats not really what is happening here. The car tax has always been a local revenue source, controlled by the state. If the tax is lowered, as the public seems to have wanted, there is no inherent state obligation to hide the effect of that reduction in revenues by putting it on the state tab. In any case, if the burden is shifted to the states books, it will simply force cuts in other programs that people value, or tax increases elsewhere. That $4 billion is becoming like the bulge in the balloon. Budget writers can push on it here, but it simply shows up over there. It wont go away. Schwarzenegger was foolish to promise in the campaign to make local governments whole even while cutting the tax, as if local government services were somehow more sacred than those provided directly by the state. But now its up to him to find a politically acceptable way of doing that or explain why it cant be done. Here is the latest Bee story on the controversy.
Posted by dweintraub at 8:48 AM
PR Exec Donna Lucas, who served as transition aide to Maria Shriver, will take a job in the administration as senior adviser to Shriver. But just as Shriver hasn't been content with the typical first lady drill of picking "an issue" on which to concentrate, don't expect Lucas to be segregated in the spouse's corner of the governor's office. I expect that both Shriver and Lucas will be intimately involved in shaping policy and message for Schwarzenegger. Lucas cut her teeth as a young press aide in the administration of former Gov. George Deukmejian and, after a few more government stints, went on to establish a highly successful Sacramento-based public relations firm. She is married to SF Chronicle bureau chief Greg Lucas, who reportedly will sever his ties to political coverage to avoid conflicts with Donna's new gig.
Posted by dweintraub at 3:58 PM
Here is a hypothetical but perfectly plausible scenario that I believe demonstrates why the reserve requirement approved by the Legislature last week falls short of ensuring that the state will never again spend its way into massive deficits.
First, suppose that Gov. Schwarzenegger and the Legislature get the states finances back on track in the next year or two through some combination of spending reductions and tax increases. Then, as the economy expands, state revenues begin to grow again, first at a modest rate and then at a more rapid clip. By the final year of Schwarzeneggers second term, the economy is roaring and he is fulfilling all of his promises to schools, local government, health care, and infrastructure, and he is doing it all while keeping the state living within its means. He prepares to leave office as a major success story.
Here are the numbers for his final budget, the one he signs in 2010 for the 2010-11 fiscal year:
Revenues from taxes: $100 billion
Spending: $97 billion
Diverted to reserve: $3 billion
Balance in reserve: $5 billion
The next year, with Californias bio-tech industry booming, the state enjoys a surge of revenues, and the general fund grows by 15 percent. The newly elected governor, former controller Steve Westly, maintains Schwarzeneggers live-within-your-means budget policies, but accedes to interest group requests to finish the job of returning major programs to the same level of per-capita spending they enjoyed before the early 2000 downturn. His first budget looks like this:
Revenues from taxes: $115 billion
Spending: $112 billion
Diverted to reserve: $3 billion
Balance in reserve: $8 billion
Everything looks solid. But in early 2012, the economy starts to slow. Revenue growth dampens, while spending demands continue. With the reserve fully funded, the governor decides to skip this years payment to the rainy day fund. He proposes to trim the growth in spending a bit to prepare for rough times ahead. Here is what his budget, as enacted, looks like.
Revenues from taxes: $121 billion
Spending: $121 billion
Diverted to reserve: 0
Balance in reserve: $8 billion
By early fall, however, it's apparent that the projections aren't matched by reality. Revenues are coming in short of estimates, and spending is exceeding what was budgeted. A deficit is emerging. The governor asks the Legislature to approve mid-year cuts. They refuse, and propose a tax increase instead. In a compromise, they agree to keep the budget balanced by pulling money out of the reserve. Here is what the year-end numbers look like:
Revenues from taxes: $117 bllion
Diverted from reserves: $6 billion
Spending: $123 billion
Balance in reserve: $2 billion
By early 2013, the economy has tanked and the stock market crashes. The bio-tech industry, hit by liability lawsuits and declining demand for its products, sinks into a depression. State revenues decline, back to $112 billion. Now here is what the situation looks like:
projected revenues from taxes: $112 billion
diverted from reserve: $2 billion
projected spending: $132 billion
balance in reserve: 0
projected shortfall: $18 billion
This scenario, in broad terms, is similar to what California just went through, with the numbers enlarged to reflect economic growth, inflation and a larger population. The reserve doesn't really change much; it simply allows the state to keep spending beyond what ongoing revenues will support for a bit longer before everything comes crashing down. At this point in our hypothetical cycle, the state would be pretty much where it was during 2002: facing a large and growing shortfall, with revenue growth stalled and spending pressures continuing. The only difference is that at this point, the problem is still a projected shortfall, not an actual deficit. But nothing in the new plan would prevent the Legislature and the governor from borrowing to balance projected revenues with projected expenditures. Again.
The Schwarzenegger reserve might work to smooth out mild and short-lived fluctuations in revenues. But the only way to prevent a recurrence of what we have just endured if the same kind of conditions repeat themselves is to recognize the difference between ongoing revenues and windfall revenues and treat them accordingly. And nothing in the new plan accomplishes that.
Posted by dweintraub at 11:39 AM
The more times I read the bill, the more I’m left scratching my head at how little Gov. Schwarzenegger seems to have extracted from Democrats in exchange for a huge concession: his decision to drop any plans for writing a spending cap into the state constitution. Once he dropped that demand, he should have been able to run the table on the rest of the negotiations to establish a real balanced budget requirement, a bullet-proof reserve for economic downturns and a solid process for making mid-year corrections to stop a deficit from growing out of control. These are all sensible, good-government ideas to which the Democrats should not have even objected. But Schwarzenegger seems to have let them pick away at the details until they reached the point that they were barely more than symbolic gestures. As several senators said Friday, this measure probably doesn’t do any harm. But it doesn’t do a whole lot of good, either. Examples:
--The reserve isn't big enough. The level of the proposed reserve dropped from 10 percent to 5 percent in the final version of the bill. While Schwarzenegger said all along he wanted a “never again” provision, a 5 percent reserve would not have been enough to keep the state from the deficits it has encountered the past few years, especially when combined with the bill’s other provisions.
--There's no guarantee that the reserve will be funded. The governor doesn’t have to fund the reserve if he doesn’t want to. He can just skip the required transfer of 3 percent of the general fund revenues by issuing an executive order. This perhaps makes sense when you consider that the reserve shouldn’t be funded at the same time that revenues are dropping and a deficit is emerging. But the law should have set some standard for when the governor could decide to skip the reserve payment. As this bill is written, a governor faced with revenue growth of 15 percent who wants spending to climb by more than the 12 percent that would be allowed can simply decide to shift the 3 percent reserve payment to ongoing spending instead. Does that make fiscal sense?
--The reserve isn't protected from routine raiding, even in good times. The Legislature can shift money out of the reserve and into the general fund with a majority vote. This should not have been allowed short of a declaration of emergency by the governor, and probably only under certain conditions defined in the law.
--The governor didn't get sufficient authority to intervene when a deficit emerges. The authority to cut the budget mid-year was weakened to the point of being almost meaningless. Schwarzenegger probably over-reached by asking in his first proposal for the right to change state law without a vote of the Legislature. But it would have been reasonable to give the governor, when a deficit emerges, the same kind of blue-pencil authority he has now to reduce spending when he signs the budget. Instead, Schwarzenegger settled here for a fig leaf, a provision that does little more than restate current law while allowing changes approved by the Legislature to take effect immediately.
--The balanced budget provision isn't mischief-proof. The only future borrowing explicitly outlawed is the kind of deficit bond the Legislature and Gray Davis approved last year and hoped to sell without a vote of the people. But the measure is silent about borrowing from special funds, local government subventions and all the other tricks and gimmicks lawmakers use to artificially increase revenues to hide a deficit. And while the bill appears to ban other forms of long-term borrowing, say pension obligation bonds or tobacco litigation bonds, it does so only if they are used “to fund a year-end budget deficit.” I don’t see anything that bans such borrowing if the loans are justified as needed to prevent a year-end deficit. Medi-cal obligation bonds, anybody?
The outcome suggests that Schwarzenegger is not as good a negotiator as he thinks he is, or at least those skills weren’t evident in this round. He was smart to demand more than he needed and then scale back from there. And he was smart to abandon the concept of a formula-driven spending cap. But in the end, he swung too far in the other direction. This looks as if his only bottom line was ending the negotiations with a deal, any deal. And now, to make it worse, he has begun to try to sell this package as more than it is. He should just admit the truth: this is the best he could get from the Democrats. It’s a harmless first step but not nearly enough to achieve the goal he set for himself and the state. More work will have to be done.
Posted by dweintraub at 9:18 AM
After collecting more than 600,000 signatures to place a referendum on the March 2 ballot, opponents of a bill mandating employer-provided health insurance were told Friday that their petitions were flawed and the signatures collected will be thrown out. The decision by Sacramento Superior Court Judge Lloyd Connelly cited technical details about the way the petition pages were laid out but also focused on the title and summary prepared by the office of Atty. Gen. Bill Lockyer. That part of the document, Connelly ruled, was misleading because it said the proposed insurance requirement would apply to businesses with 20 or more workers. Actually, firms with fewer than 50 employees won't be affected unless the Legislature provides a subsidy for them. It seems odd to me that petitions can reach this stage without issues such as this being settled, especially since a state official, not the proponents of the referendum, prepared the ballot description. Here is the story in the Bee.
Posted by dweintraub at 8:18 AM
He did get the votes. And now he has signed the bills. The $15 billion bond and budget reserve package will appear on the March 2 ballot. Here's a story via the Bee. My first impression is that Schwarzenegger gave away too much to the Democrats in these negotiations. But I will have more to say about that in the days ahead.
Posted by dweintraub at 7:10 PM
The big question about the bond-and-reserve deal emerging today in the Legislature is how Schwarzenegger is going to get Republicans to vote for it. Hes given up the formula-driven spending limit they wanted as a way to control the growth of government over time, settling instead for what he said he wanted all along: a balanced budget amendment and a new rainy-day fund to prevent the state from ever again digging a hole this deep. But Schwarzenegger will get the votes. He will probably get the minimum he needs for the bond and more than that for the reserve requirement. On the bond, he will tell Republicans that without it, he will almost certainly have to raise taxes, and rejecting it would leave the state without a safety net should the courts strike down the legally questionable defict bond Gray Davis approved last summer. On the bill creating the reserve requirement, he wont be asking Republicans to vote for anything they find abhorrent. They just wont be getting all that they would like. Big difference, when it comes to deciding whether to say no to a governor in your own party on something he really wants.
Posted by dweintraub at 12:42 PM
Nearing completion of his cabinet, Gov. Schwarzenegger has appointed San Bernardino County Supervisor Fred Aguiar as his secretary for State and Consumer Services. Aguiar, a former assemblyman, was a lieutenant to Jim Brulte when Brulte was Republican leader in the lower house. The new job sounds obscure, but it can be an important slot: it oversees much of the state bueaucracy as well as the regulatory aparatus. If Schwarzenegger keeps his pledge to enact fundamental change in the way state government does business, Aguiar will be a busy man.
Posted by dweintraub at 12:34 PM
BoifromTroy points out here that by attacking Schwarzenegger over the backfill, locals might actually be hurting their chances of getting the money. Why? Because the governor is the one who has proposed making cities and counties whole for the money they lost when he rolled back the car tax. It's the Democrats in the Legislature who don't want to go there. By attacking the governor, the locals are encouraging the Democrats to stick to their guns.
Posted by dweintraub at 8:57 AM
It's true, as the protesters inundating the Capitol say, that Schwarzenegger's first round of proposed cuts seem to have been done more with an ax than a scalpel. But the governor is getting something of a bum rap from those who say he promised during the campaign to balance the budget by cutting only "waste, fraud and abuse." While he never offered a specific list of potential cuts, a dodge I faulted him for at the time, Schwarzenegger did say many times that balancing the budget was going to take real reductions. At his Aug. 20 press conference after an economic summit in Los Angeles, for example, candidate Schwarzenegger said that under his plan, there would be "substantial cuts." According to my notes, he then added:
"Its easy to promise people programs. Its easy to go and say we are going to give you more of this and more of that. Of course I want to give away anything and everything, but can we afford it? We always have to come back to one thing, and that is can we afford it. I teach my kids, dont spend more than you have. We have to do the same in Sacramento. It doesnt make any sense if we want to help everyone. We want to reach out to everyone. But can we afford it?
Sometimes, a surgeon will say, we have to cut to save the patient, and this is what this situation is.
Before we promise anything to anyone right now, I think stop. Stop, stop, stop, with the spending. And then lets analyze the whole thing.
Posted by dweintraub at 8:47 AM
I am hearing that an agreement is imminent on the first pieces of a budget recovery plan: a $15 billion bond and a constitutional amendment to establish a rainy day reserve. Details are sketchy at this point but it sounds as if the deal will follow the framework of a proposal first offered by a group of moderate lawmakers led by Assembly members Keith Richman and Joe Canciamilla. The reserve would be established by setting aside a portion of state revenues beginning with one percent in 2006-07 and eventually climbing to three percent, with the reserve itself allowed to build to 10 percent of the general fund. Half the reserve each year would be applied to debt repayment. The measure would also require a balanced budget and create new rules for reducing spending mid-year. Members of the Assembly and Senate have been advised by the leadership to be ready for session by 11 am Thursday.
Posted by dweintraub at 12:22 PM
When Gov. Arnold Schwarzenegger awoke this morning, this is what he faced:
--Stories in the morning papers accusing him of going back on his promise not to cut spending on the schools, based on his comment Tuesday that he might consider suspending Proposition 98.
--Protests from local governments accusing him of reneging on his promise to make cities and counties whole for the money they lost when he rolled back the car tax and stories in papers across the state describing the budget cuts faced by individual jurisdictions.
--A libel lawsuit by a woman who was slimed by his campaign after she accused him of lewd conduct on a movie set.
--Complaints from womens groups about his decision to forgo an internal investigation about the accusations of improper behavior toward women over the past 30 years.
--A massive demonstration planned by advocates for the developmentally disabled and others fighting his proposed spending cuts.
--Another downgrading of the states credit rating, this time by Moodys.
Meanwhile, Schwarzenegger was said to be in the final stages of a second round of negotiations with lawmakers to determine whether Californians will vote in March on a bond to refinance the states debt and a spending limit or reserve requirement designed to prevent a recurrence of the states current fiscal problems. The governors office and negotiators from the Assembly appeared close to an agreement that would require the state to set aside a growing portion of its general fund revenues each year into a rainy day fund that could only be spent in a fiscal emergency. Some of those close to the talks believe its possible that Schwarzenegger will accept such a mandatory reserve and drop his demand for a formula-driven limit on the size of state government.
Posted by dweintraub at 11:09 AM
Keep your eye on Gavin Newsom, who was elected mayor of San Francisco Tuesday. He made his name couragously battling leftist dogma about homelessness, arguing for programs that provide shelter and drug treatment rather than just handouts. But he has a long list of other reforms that also go against Democratic Party orthodoxy, and he is anxious to push them. If he succeeds in San Francisco, Newsom, who is only 36, could be a rising star in the party.
Posted by dweintraub at 7:39 AM
Moody's, citing the effects of Schwarzenegger's car tax cut and his stalemate with the Legislature over the first steps toward a long-term fix, downgrades California again. From Bloomberg.
Posted by dweintraub at 3:12 PM
Gov. Arnold Schwarzenegger might have postponed his Sacramento fundraiser Monday night, but he's having no trouble at all bringing in money from the special interests -- er, individuals and businesses who support his political goals. Schwarzenegger on Monday reported receiving more than $750,000 in contributions to his political committee in the past couple of weeks. The money comes from all the usual sectors -- alcohol, finance, real estate, insurance, etc., including many of the same interests that used to contribute to Gray Davis. The reports are on the Secretary of State's web site, under late contributions, here.
Posted by dweintraub at 2:22 PM
State worker Jack Hastings, who calls himself the "Poet of the Pencil Pushers, Bard of the Bean Counters, Cubicle Cowboy and King of the Red Tape Rodeo," has penned and recorded a song called the "State Worker Blues," which he is performing for the Department of Health Services talent show to raise money for the Sacramento Food Bank. The ditty ain't exactly Johnny Cash, but it's entertaining enough and will surely win the hearts of his fellow employees, if not his bosses in the Schwarzenegger administration. One stanza:
For year after year I done more with less
And the less got less, now theres nothing left
If you want a paperclip, your chief has gotta sign
And theyre handing out staples one at a time
We got a new boss with a million-dollar smile
Hes gonna pump us up but it might take awhile
Hes got a magic bullet to cure this mess
Straight from Hollywood, its special effects
Anyway, if you like this sort of thing, check it out here.
Posted by dweintraub at 1:17 PM
Schwarzenegger confirms what many suspected: he's re-thought his earlier decision to hire a private investigator to examine allegations that he acted inappropriately toward women. The probe made little sense. Nobody understood what the investigators would be looking for: evidence clearing Schwarzenegger, confirming the allegations or turning up dirt on the women? Some of the accusers were quoted saying they wouldn't talk to any firm hired by Schwarzenegger. And if he investigation had cleared him, no one would have taken it seriously. These allegations, if they are aired further, deserve a neutral forum -- either civil courts if someone wants to sue or criminal courts if a prosecutor thinks there is a case. Here is the Bee story on the decision.
Posted by dweintraub at 8:01 AM
The talks continue. With Secretary of State Kevin Shelley saying the deadline for getting on the ballot could be extended until Wednesday, Gov. Schwarzenegger met today with three of the four legislative leaders and did separate conference calls with the bipartisan women’s caucus and a group of moderate lawmakers. The issues haven’t changed since Friday, and there’s no sign that any of the parties have given ground. But Schwarzenegger aides said he was willing to keep talking as long as there was any hope of getting a package of budget fixes on the March 2 ballot. Rob Stutzman, the governor’s communications director, also suggested that Schwarzenegger might be willing to go around the legislative leadership if those talks failed to show progress and other groups of lawmakers demonstrated the ability to put together sufficient votes to pass their legislation.
Posted by dweintraub at 6:51 PM
Rhonda Miller, one of the women who accused Schwarzenegger of lewd conduct in the days before the election, is suing him today for libel as a result of his campaign's attempt to discredit her. The lawsuit stems from an e-mail in which campaign spokesman Sean Walsh urged the media to check the Los Angeles County courts web site, where they would find detail on a Rhonda Miller with a long list of felony convictions. Problem was, the Miller with the rap sheet wasn't the same woman who was accusing Schwarzenegger of misconduct. The lawsuit is here, at smokinggun.com. LA Weekly columnist Nikki Finke has been all over this angle for weeks. Her most detailed account of it is here.
Posted by dweintraub at 12:10 PM
Moderate lawmakers hoping to rekindle talks with Gov. Schwarzenegger are circulating a letter to be sent to Secretary of State Kevin Shelley asking him to officially extend his deadline for placing measures on the March 2 ballot. The same group, led by Assembly members Keith Richman and Joe Canciamilla, will try to set up a meeting, or at least a conference call, with Schwarzenegger to discuss restarting negotiations and doing so in a way that seeks to avoid the partisan standoffs that often come with leadership-based talks. So far, about 15 members have signed the letter.
Posted by dweintraub at 12:00 PM
A few helpful readers have pointed out that the calculations underlying the foolproof spending limit I proposed yesterday have a hidden flaw: theyre based on revenue numbers published after-the-fact by the Department of Finance. Those numbers include not just tax revenues but transfers. And the transfers include the $6 billion that went out of and then back into the general fund when the state first bought electricity for the utilities then recouped its costs by the sale of bonds to be repaid by consumers. The departments published revenue numbers also include all the borrowing the state has already done to keep revenues artificially high. Those accounting shifts, then, make the revenue numbers during the boom and bust appear more stable than they really were. Here is what the actual revenues looked like, in billions, before transfers:
While my idea of using the prior years revenue number to guide the next years expenditures still works, even with the stripped-down numbers, it doesnt work as well. The accumulated surpluses would still have helped avoid deficits, but actual spending would be quite volatile, perhaps unacceptably so. Heres how it looks using only tax revenues, and no transfers:
Year revenue spending deficit
99-00 70.8 58.3 12.5
00-01 77.6 70.8 6.8
01-02 64.3 77.6 -13.3
02-03 68.6 64.3 4.3
But my plan did include one more safeguard. I suggested that to guard against a quick revenue reversal, the state would be allowed to spend either the amount collected in the prior year or the amount forecast for the budget year, whichever was less. And the forecasts for 2001-02 were quite a bit lower than the revenues collected for the prior year. The controllers estimate, for instance, was just $69.4 billion for 01-02, compared to $77.6 billion collected in 00-01. Plugging the lower projection into the trend reduces the allowed spending in 01-02 and returns a great deal of the desired smoothing:
Year revenue spending deficit
99-00 70.8 58.3 12.5
00-01 77.6 70.8 6.8
01-02 64.3 69.4 -5.1
02-03 68.6 64.3 4.3
So, all in all, foolproof is probably overstating it. A three-year or five-year revenue averaging would still be the better way to go. But if you want a simple, easy-to-understand improvement over todays project-and-pray method of budgeting, prior-year revenues are still a pretty good place to start.
Posted by dweintraub at 9:15 AM
Perhaps the budget talks really are dead, but I am assuming they are not. The talks hung up on the details of a spending limit. I think one of the problems is that all the formulas offered are so complicated that most people can't understand them and everyone can find something to hate about them. So in the interest of offering simpler and simpler spending limits that the public can comprehend and both parties should be able to accept, I have refined even further my own concept of using past revenues to guide future expenditures.
Heres my latest: dont budget more for next year than you took in this year.
That little change would have been enough to eliminate all the angst, heartache and red ink the state has been suffering since the implosion of the stock market and the resulting downturn in tax receipts.
The states tax revenues are like that of a salesman whose income climbs almost every year but remains unpredictable and subject to wide swings. Rather than estimate his income forward 12 months and then commit himself to higher expenses to match, the prudent thing for our man to do is see how much he earned this year, and plan to spend no more than that next year. Any money that comes in above and beyond what was budgeted goes into the savings account to guard against a sudden reversal.
Its hard to believe that anybody could object to adopting such a policy for the state. Yet if it had been in place since the early 1990s, California would be trouble-free today, fiscally speaking, with a level of annual spending almost equal to what it is today.
Here are the states general fund revenue and spending numbers from 1997-98 through 2002-03:
Year Revenues Spending
97-98 $55 billion $52.9 billion
98-99 $58.6 billion $57.8 billion
99-00 $71.9 billion $66.5 billion
00-01 $71.4 billion $78.1 billion
01-02 $72.3 billion $76.8 billion
02-03 $70.8 billion $78.0 billion
As you can see, the state spent more than it took in for three years running, and it is expected to do so again this year. But in none of those years did lawmakers pass a budget declaring their intention to run a deficit. Each one resulted from spending outrunning revenues, after projections showed that they would be in sync. So why not abandon projections altogether and instead use a revenue number thats already been confirmed, and see what happens?
Here is a chart that shows what would have happened through this period if spending had been limited to the previous years actual revenues, beginning in 1998-99:
Year Revenues Spending Reserve/deficit
97-98 $55 billion $52.9 billion $2.1 billion
98-99 $58.6 billion $55.0 billion $3.6 billion
99-00 $71.9 billion $58.6 billion $13.3 billion
00-01 $71.4 billion $71.9 billion -$500 million
01-02 $72.3 billion $71.4 billion $900 million
02-03 $70.8 billion $72.3 billion -$1.5 billion
The system isnt perfect, as it still yields potential deficits in two of the past three years. But instead of those deficits being in the $10 billion-range, as they have been, they would have been just a billion or two. And they would have been more than covered by the reserves our system would yield. Even this risk could be eliminated by adding one more wrinkle: limit spending next year to this year's revenues or next year's projected revenues, whichever is lower. That makes the system foolproof in all economic conditions.
Certainly the public could understand and support such a reform. Dont spend the money until you have taken it in. What could be more sensible?
Democrats ought to support it for two reasons:
1. It allows the state to spend all the revenue that comes in, eventually. It just slows down the spending a bit to make sure that the books stay balanced.
2. It leaves the core question of the ultimate size of government to each generation of policymakers. If the Legislature and the governor want to cut taxes, they can. If they want to raise them, they can. This system doesnt affect that decision.
Republicans ought to support it for two reasons:
1. It ensures that the state will live within its means.
2. It provides a disincentive for tax increases. Even if you raise taxes, you cant spend the money for at least a year, when actual accounts show that the cash has indeed arrived in the states coffers.
As with the more complicated proposals kicking around the Capitol, there are still two major questions to be decided. One is how to handle the reserves. The other is when to implement the policy.
We know from experience that neither politicians nor the public will tolerate a surplus that grows too large. So I suggest the rainy day reserve be limited to 5 percent of the general fund. This would be on top of a 3 percent operating reserve. Policymakers would have to decide how to dispose of any excess on top of that 5 percent. The only rule I would offer is that it not be built into any ongoing operating budget.
The other major question for negotiators to decide is when to implement the new system. This is the issue that hung up the talks between the governor and the Legislature last week. If the system were put in place immediately, that would lock Democrats into this years revenues for next year, an idea even more restrictive than the one they have already rejected. They will never accept such a rule. So I propose that the new system take effect for the budget year beginning on July 1, 2005.
That way, the governor and the Legislature can hash out the coming years budget using the current rules. Everybody gets to see if the economy is going to generate more revenue than we expect, or less, as it begins to recover. Legislators and the governor can still have their great debate about the appropriate size and scope of state government and the revenues needed to pay for it.
Then, after the budget is brought back into balance, either with spending cuts, tax increases or a combination of the two, this policy would prevent it from ever again spinning out of control.
Posted by dweintraub at 10:49 AM
Arnold Schwarzenegger considers himself a master strategist. But in the heat of his first legislative battle, he seems to have lost sight of what his goal really was. He ended up losing while fighting for something he didn't really need and might not have even wanted. Having morphed from Arnold Schwarzenegger into Gov. Schwarzenegger, he allowed himself to get sucked into the very kind of non-sensical partisan deadlock that, as a private citizen, he used to decry.
Schwarzenegger watched from his office Friday night as lawmakers rejected his proposal for a $15 billion bond and a new state spending limit. Although on the surface the votes appeared to be an embarrassing first defeat for Schwarzenegger, the turn of events probably wont be much of a political blow. Schwarzenegger, if he likes, can now go to the voters and say, See, this just confirms what we knew all along: the Legislature is dysfunctional. He can gather signatures for his spending limit and likely pass it, either in a special election this spring or in November. If thats what he wants to do.
But the real problem Schwarzenegger faces isnt political, its mathematical. Even with his bond, which mostly refinanced current debt, he was still facing a projected gap next year of at least $10 billion. Now that chasm will grow to $14 billion or more, depending on whether the Legislature agrees with his proposal to use state money to make local governments whole for the billions they lost when he rolled back the car tax.
That $14 billion will have to be cut from less than $50 billion of the general fund if Schwarzenegger lives up to his commitment to spare K-12 education from cuts and reject any tax increases. But the governor already has expressed regret, and some reservation, about the $2 billion in annual cuts he has put on the table so far. He needs to do that at least six more times to balance the budget. And no spending limit is going to make that chore any easier.
Whats more, the $10.7 billion deficit bond which the Legislature approved last summer and which Schwarzenegger said was legally suspect is now, for the moment, all that stands between the state and effective insolvency. If the courts strike it down, and they might, that money would be added to the shortfall for next year. California would be out of cash and out of luck, at the mercy of the bankers and facing a certain tax increase, deep cuts and national shame.
Such a scenario is the one Schwarzenegger, to his credit, was trying to avoid with his own bond measure, which would have gone to the voters for their blessing, making it legal and safe from challenge. And Schwarzenegger, after an early feeling-out stage, came to terms with lawmakers from both parties on the shape of a bond issue. He also was within reach of a deal on a balanced budget amendment and some sort of new reserve requirement, a rainy day fund to prevent future deficits in economic downturns.
The problem was always the spending limit. While Schwarzenegger told the people he was proposing a never again measure that would have prevented a recurrence of the states fiscal meltdown, his bill actually went much further than that. It sought to put in the constitution a formula that would have reduced spending next year to revenue levels projected this May, then allowed spending to increase after that at a rate no faster than the growth of population and personal income.
Schwarzenegger, in effect, was asking legislators on a few days notice to adopt a constitutional amendment that would have banned tax increases to solve next years problem and made higher tax rates all but impossible to enact forever more. There was simply no way the Democrats who control the Legislature were ever going to agree to such a provision.
Faced with that reality, the governor had two options. He could have dropped the idea for a formula-driven spending limit and won approval instead for a balanced budget amendment and reserve requirement, both of which were clearly doable and would have kept faith with his campaign promises and recent rhetoric. Or he could have pushed for a spending limit that wouldnt take effect until after the state dug itself out of its current abyss. That would have let the Democrats preserve their right to push for tax increases next year while still giving Schwarzenegger his long-term win on fiscal reform, or at least the Republican version of it. And ultimately, the Democrats cant raise taxes next year unless Schwarzenegger lets them. He can veto anything they send his way. So he would have remained firmly in control of the states fiscal fate. In a sense, the spending limit seemed to be aimed more at restraining his impulses than the Legislature's.
There were other problems with Schwarzeneggers bill. In one section designed to let governors initiate mid-course corrections when a deficit is building, the measure allowed chief executives not just to reduce spending but to change any state law to close an emerging gap. Under such a provision, a governor could change sentencing laws and let prisoners go free, or raise taxes by fiat, and those changes would take effect automatically unless two-thirds of the Legislature voted to reverse him within 30 days.
The governors bill also was sloppy in its handling of Proposition 98, the existing constitutional provision that guarantees minimum funding for schools. While the measure appropriately trimmed the growth of future education spending when necessary in order to build a reserve, the bill also would have forced the state to increase spending on schools whenever a governor dipped into the reserve in a fiscal emergency. That didnt make any sense.
But those kinds of details could have been fixed. The real problem was that Schwarzenegger was asking the Democrats, as they head into a pivotal battle over the future of California government, to lay down their weapons and surrender. They werent going to do that Friday night. They wont ever do it. His only choice now is to stop asking them to do it, or to go to the voters.
Before he does so, the governor might want to think for a while about whether thats really what he wants to do. Given his campaign promises for more funding for the schools, for higher education, more roads, more transit, more health care, Schwarzenegger doesnt sound like a small-government Republican. His first words as a candidate were to say that more jobs would bring more revenue to the state for more programs he and others support. Now he is fighting for a constitutional provision that would prevent him from spending the very revenues he said he wanted to see flow from an improved economy.
What Arnold Schwarzenegger wanted before he became Gov. Schwarzenegger was a government that lives within its means, one that spends no more than it takes in and doesnt face massive deficits. He could have won a measure guaranteeing all that Friday night. He still might, if he takes a step back, takes a deep breath, remembers who he is and gets back to work.
Posted by dweintraub at 9:48 AM
Gov. Arnold Schwarzenegger suffered his first legislative defeat Friday night when lawmakers rejected his proposals for a $15 billion bond and new state spending cap. Schwarzenegger aides say he is preparing to take his case to the ballot. I will comment on that development and what it means for the near and long term future later today. For now, here is the Bee’s story on the action.
Posted by dweintraub at 7:35 AM
Secretary of State Kevin Shelley is still telling lawmakers that today is the deadline for getting measures on the March 2 ballot. But aides to legislators and administration officials believe the real deadline might still be weeks away, perhaps into early January. Even so, today is likely to mark a turning point in the negotiations. If the deal isn't done, or looking very close, warch for Schwarzenegger to announce plans soon to begin gathering signatures to place a new state spending cap on the ballot. Here is the Bee story on the latest as of Thursday night.
Posted by dweintraub at 7:43 AM
Former Secretary of State Bill Jones will run for the Republican nomination to challenge Barbara Boxer for the US Senate next year, AP reports. Here is the story, via the Fresno Bee.
Posted by dweintraub at 4:06 PM
This is going to be up and down every hour for the next day at least, but at the moment, the Capitol is pessimistic about a budget deal getting done. I'm hearing that Senate Republican Leader Jim Brulte is leaning very hard on Schwarzenegger to walk away and go to the ballot with his own spending cap. Here's the latest AP story.
Posted by dweintraub at 4:03 PM
Friday may be the deadline for getting Schwarzeneggers measures on the ballot, but today might be decision day for the governor. In order for the Legislature to hold hearings and move the legislation, Schwarzenegger has to decide soon whether to deal with the Democrats who are offering him compromises or walk away and proceed with ballot measures of his own. Late Wednesday, a Senate committee approved a $15.5 billion bond measure with a shorter repayment schedule than the governor had requested. He can probably live with that. It simply means more budget cutting next year because the debt service will be higher. The tougher issue is the spending limit. Assembly Speaker Herb Wesson has reportedly offered the governor a balanced budget measure and reserve requirement but no formulaic spending limit that would bind future legislators. Democrats in both houses have made it very clear that theyre not willing to write such a formula into the constitution, especially in the span of a few days time. So sometime today, in all likelihood, Schwarzenegger will have to accept their offer or call their bluff. Word is that his political people are pushing for a harder line. They are comfortable going to the ballot. The Democrats around him people like senior adviser Bonnie Reiss and former Assembly Speaker Bob Hertzberg are the ones trying to broker compromise. Stay tuned.
Here is the Bee story on the bond bill.
And here is my column on why Schwarzenegger should accept a never again reserve requirement.
Posted by dweintraub at 9:53 AM
In a low-key ceremony in his Capitol office, Gov. Arnold Schwarzenegger signed his first bill tonight, a measure repealing SB 60, the bill passed earlier this year that would have given illegal immigrants the right to obtain drivers licenses in California.
Posted by dweintraub at 9:55 PM
Democrat Controller Steve Westly says he supports Schwarzenegger's bond measure -- provided it does not exceed $15 billion with a repayment term no longer than 15 years. Westly said such a bond would be "a reasonable approach" when coupled with "serious and dramatic" waste-cutting efforts. Westly also said he supports a "realistic" spending limit and reserve requirement. The controller sent Schwarzenegger a letter today expressing his views and asking the governor to support granting him the authority to conduct performance audits of state agencies to find waste and possible efficiencies.
Posted by dweintraub at 3:11 PM
Gov. Schwarzenegger was all over talk radio this morning, 8 a.m. in Los Angeles, 8:30 in Sacramento, 8:45 in Bakersfield, which will be the site of his next rally at noon on Thursday. Not much new. While the governor wanted to promote his fiscal recovery plan, the hosts on two of the three stations also asked him about the repeal of the illegal immigrant drivers license bill and the chance that he will negotiate a compromise measure to replace it next year. Their listeners clearly arent interested in middle ground, but Schwarzenegger said he committed to Sen. Gil Cedillo to talk next year about doing it the right way in his view with security safeguards and insurance requirements. On the budget, Schwarzenegger also faced some skepticism from the right on his plan to borrow $15 billion, which he tried to deflect with a promise that the bond will be hitched to a new, never again spending limit.
One risk Schwarzenegger takes by putting his prestige on the line so publicly so early is that he will fall in love with his proposal, that he wont be able to walk away if the Democrats try to squeeze him too hard in the final hours of negotiations. He has already said that failure is no option words that probably have Sen. Burton licking his chops. If Schwarzenegger defines the lack of a deal by Friday as failure, Burton has to be thinking that he can extract huge concessions in exchange for anything the governor can plausibly call a win. At some point Schwarzenegger will probably have to signal, privately, that he is willing to pull back if he doesnt get the core proposals he is seeking. The real thing Democrats have to fear is not that he will unseat them next fall but that he will go over their heads with ballot measures that will be worse, from their perspective, than the compromises they have a chance to enact with him this week. If the deal doesnt come together, part of the story will be Schwarzenegger fails. But the other part will be Democrats block new governors recovery plan. And Schwarzenegger could surely use that to rally the voters against the Legislature, which the public already holds in extremely low regard.
Posted by dweintraub at 9:48 AM
If nothing else, Gov. Schwarzenegger is keeping people off balance. On the eve of a trip that had been billed by aides as a way to put pressure on legislators to vote for his fiscal recovery plan, Schwarzenegger told reporters he wasnt targeting lawmakers and would be happy to have them appear on stage beside him. And after laying out a spending limit that threatened to revise Proposition 98 the constitutional school spending guarantee Schwarzenegger said that he was entertaining suggestions from the education lobby, including the California Teachers Association, for how to change that detail. Schwarzenegger also gave mixed signals on taxes, telling reporters that his opposition to an increase is based less on principle than on his view that the voters dont want one. If the voters change their mind at some point, Schwarzenegger said, he might, too.
The governor was scheduled to meet this morning with the Assembly Democratic Caucus and then fly to San Diego for a rally to promote his plans. Flying with him, apparently, will be San Diego Assemblywoman Christine Kehoe, a Democrat who took him up on his invitation to appear on the platform with him. As the governor and the assemblywoman jet south, Democrat Treasurer Phil Angelides will be kicking off his campaign to fight Schwarzeneggers bond measure.
And back at the Capitol, staff negotiators for Democratic lawmakers and the Republican governor are finally getting down to business on the details of a spending limit, which is probably a good thing, with a Friday deadline looming for approving measures to appear on the March 2 ballot.
Despite considerable confusion over details and strategy, Schwarzeneggers bottom line at the moment seems clear enough:
--He wants a bond measure in the $15 billion range to refinance the states debt. While $15 billion is more than needed to cover last years $11 billion carryover deficit, its less than the $25 billion Schwarzenegger aides say represents the total of deferred obligations pushed from the Davis years into this and future budgets. Schwarzeneggers bond, by gaining voter approval, would make last years borrowing legal and provide a bit of cash to ease the transition back to a balanced budget. Some Democrats seem to want a smaller bond, perhaps just enough to match the legally questionable borrowing in last years budget. Others might want to push the number up a bit, closer to $20 billion, to cover some of gap in next years budget. Im still betting that it will be higher rather than lower.
--He wants a spending cap that does two things: provide some measure of short-term discipline to guide the road back to a balanced budget over the next two years, and assure voters that California will never again descend into this kind of fiscal abyss. Those two goals need not be accomplished within a single formula. The strict spending limit for the near future could be accomplished by negotiators simply agreeing on a dollar cap for spending each year, or a method to reach such a number. The long-term problem can be attacked with a formula that sets aside some portion of future revenues in a rainy day fund to be drawn down in bad economic times.
One possible method Ive been exploring but havent seen mentioned anywhere: base each years spending on some kind of running average of past revenues, say, three years. Currently, lawmakers budget based on real-time projections of next years revenue, and when those projections prove overly optimistic, you get a deficit. Budgeting based on revenue averaging isnt foolproof but basically slows down the process, preventing budget-writers from spending a windfall for ongoing programs until its clear that the new money is here to stay. Such a device all but assures that you wont spend more than you take in for any one year, which would please Republicans. But it also allows legislators to eventually spend all that the state takes in, which would please Democrats. And for good-government types, revenue averaging would provide insurance against deficits while leaving the debate over the proper size of government to each new generation of policymakers.
--Schwarzeneggers other goals, for workers compensation reform and mid-year budget cuts, are urgent but not ballot-dependent, so dont look for action on them this week.
Posted by dweintraub at 7:46 AM
Now that SB 60, the illegal immigrants' drivers license bill, is about to be repealed, speculation shifts to exactly what Schwarzenegger envisions as the next move on this issue. He has said since the campaign that he was open to some sort of compromise. In an interview Monday with Univision 19 anchor Pablo Espinoza, the governor suggests that he will agree to legislation giving illegal immigrants licenses as long as they are able to show proof of insurance, undergo background checks and have their digital fingerprints recorded. Here is a transcript of the interview provided by the station:
"You did say that to me when we talked one on one (Sept. 6, 2003) that
you would consider a package deal that would have included a requirement of insurance for those people that are going to get the drivers license. That I know is something that you believe in. Do you also believe that all undocumented immigrants will be able to get a drivers license if they present insurance, if they have a background check, fingerprints?
"Absolutely...yes. This is what we are going to work on. This is what we are going to talk about, but right now the most important thing is to get this passed (the repeal of SB 60) so we can move to other issues. I think Senator Cedillo was extremely gracious and helpful with this whole thing. He is a great leader, he understood what would be the best thing for California; rather than just doing an immediate fix, but to make everybody happy. It doesn't make sense if the majority of Californians run around and hate the idea of undocumented immigrants having drivers licenses because there is no background check, because it doesn't solve the problem with insurance. Let's do it the right way, let's make every Californian happy and let's make the undocumented immigrants happy."
Posted by dweintraub at 7:01 AM
As Schwarzenegger heads to San Diego for the first leg of his political tour on behalf of his bond measure and spending cap proposal, Treasurer Phil Angelides plans a trip of his own to try to counter Schwarzenegger's package. Angelides will kick off his tour Tuesday morning at a Sacramento school, joined by school children, university students, a faculty union rep and a social program advocate.
Posted by dweintraub at 5:20 PM
The Assembly has voted to repeal SB 60, the measure giving illegal immigrants the right to obtain California drivers licenses. The vote was 64-9, with all nine "no" votes cast by Democrats. The bill now goes to the governor. Look for him to sign it by the end of the week.
Posted by dweintraub at 4:02 PM
Opponents of SB 2, the bill to require California businesses to provide health insurance for their workers, say theyve gathered 620,000 signatures to qualify a referendum on the measure for the March 2 ballot. The coalition, which includes the California Chamber of Commerce, the California Restaurant Association, the California Taxpayers Association, the California Retailers Association and the California Business Properties Association, among others, needs about 374,000 valid signatures to qualify the referendum for the ballot. If the referendum qualifies, the measure will be blocked from taking effect as scheduled Jan. 1 and will be put to a vote of the people on March 2.
Posted by dweintraub at 3:20 PM
Gov. Schwarzenegger plans a week of campaigning for his fiscal recovery plan in the districts of Democrats he thinks can be persuaded to vote with him. He is scheduled to appear at a San Diego rally on Tuesday (preceded by an appearance today on the Roger Hedgecock radio show) and will make stops later in the week in the Central Valley and the East Bay. It will be interesting to see how this plays out. The odd part about the strategy is that it puts the governor in the position of bashing the very people who are most likely to want to work with him: moderate Democrats. The true leftists arent going to respond to his rants and dont need to. Their districts are so overwhelmingly Democrat that they are probably safe from a challenge. Most of the Republicans will go along with most of what Schwarzenegger is proposing. That leaves the moderate Democrats, who represent a relative handful of members in the Legislature and are known for voting with the Republicans on occasion but rarely in numbers sufficient to change the outcome on a bill. Its possible that Schwarzeneggers strategists believe his appearances, if they generate local reaction, might give the mods the political cover they need to vote with him. These members can tell their Democratic colleagues that they were flooded by phone calls and need to respond to save their seats in next years elections. But its just as likely that a tough vote cast with Schwarzenegger, say, for his $15 billion bond measure, will be used by Republican opponents next year to try to defeat the people the governor is wooing now. Can he promise these members protection from a serious challenge if they become Schwarzenegger Democrats?
Posted by dweintraub at 9:03 AM