The San Diego Union reports here that the Schwarzenegger Administration and a group of Indian tribes are nearing a deal that could produce $1 billion or more for the state in the first year while opening the door to a major expansion of tribal gaming in California. The big early payment would be generated by a private bond measure the Indians would float, which they would then repay from their future earnings.
Posted by dweintraub at 1:49 PM
Jason Kinney, a former chief speechwriter for Gov. Gray Davis, has joined Burson-Marsteller as a director and head of public affairs in the company's Sacramento office. Kinney, 33, is also the former communications director for Sen. Don Perata and had formed his own public affairs firm after leaving the Davis Administration.
Posted by dweintraub at 1:24 PM
As the final debate nears in Congress over the new transportation funding bill, your best source for how it all affects California is the California Institute, which has reports, spreadsheets, analysis and more on every possible angle. In addition to the ultimate size of the transportation bill, the big debate in DC this year is over whether states should be guaranteed the current 90 percent return on their gas tax paid or if that should be raised to 95 percent. It's always seemed to me that that whole debate ignores the more fundamental question, which is why should the states be sending all this gas tax money to Washington so that Congress and the transportation bureaucracy can then send it back, with restrictions and after taking their cut. Wouldn't it make a lot more sense to lower the gas tax to whatever level is needed to finish and maintain the interstate highways, then let the individual states decide whether they want to use their own money to build light rail or add an extra lane to the highway from the suburbs to downtown?
Posted by dweintraub at 1:04 PM
Last week I ordered a new laptop over the Internet, and I watched online as its progress was recorded. I knew when the kit was prepared, when the machine was tested, boxed and shipped. But the real fun started when it was shipped. I saw when the package reached Sparks, Nevada, outside Reno, and when it got to West Sacramento. On Tuesday, it was sent out for delivery, and at 2:20 p.m., the driver reported that no one was home when the first attempt was made to deliver the computer. I noted that a second attempt would be made today, and I knew no one would be home for that one, either. Then I saw that there was a way for me to go online and change the delivery instructions. I was able to request that the box be pulled from the truck and held at the warehouse for me to pick up that same night. Although the shipper closes at 6 p.m. for normal business, they re-open at 9:30 p.m. for folks who want to come in late and pick up their packages. A few minutes after I made the request online, a woman from the shipping company called to confirm, and at 9:30 p.m. I showed up at the security booth outside the warehouse. I was ushered inside. They asked for my picture ID and had me sign my name on one of those electronic recorders. Then they handed me the box, and I was home by 10 p.m. No fuss, no muss. It's amazing that they can provide this kind of personal service, given that they move thousands of packages into and out of Sacramento every day. The technology is what makes it possible, letting them track packages in real time and posting it online so the customer can do most of the work. You can imagine how the same tools that made my life a little bit easier have become absolutely crucial in the business world, where shipping and receiving products efficiently can make the difference between a profit and a loss.
Posted by dweintraub at 9:01 AM
Gov. Schwarzenegger did a round of interviews with the print media Tuesday, his first since taking office. He told the Bee he thought a deal on workers comp was near. And he told both the Bee and The Los Angeles Times that he might have to reconsider his opposition to tax increases at some point, suggesting to the Los Angeles paper that his position against raising revenues might represent "wishful thinking." He told the Chronicle, meanwhile, that he had taken the state's sexual harrassment sensitivity course after becoming governor.
Posted by dweintraub at 6:47 AM
The leadership didn't meet today and no further meetings are scheduled at this point. The staff is still meeting daily in search of possible agreement. A deal could pop up any day, or this could drag on until mid-April, when Gov. Schwarzenegger and his allies face a deadline for submitting the signatures to qualify their initiative for the ballot.
Posted by dweintraub at 4:48 PM
San Diego continues to lead the state in local pension problems, or at least in disclosing them. Here is the latest update on the county's growing retirement fund deficit, from the San Diego Union.
Posted by dweintraub at 6:53 AM
On Sunday my column was about the state's electricity industry, and the fact that shortages and possibly blackouts are still a looming threat. Today the operators of the state's power grid declared a Stage One emergency. Here is the story.
Posted by dweintraub at 8:41 PM
Leave it to Arnold Schwarzenegger to make a spectacle out of a press conference to announce his selection of the California quarter. Today's ceremony was a love-fest among the governor, his wife and state Librarian Kevin Starr. Here is a PDF file containing the transcript.
Posted by dweintraub at 7:29 PM
No visible progress in Sunday's leadership talks on workers comp. It looks like the parties are still circling around each other, with the Democrats forcing Schwarzenegger and his allies to spend their million-plus gathering signatures and the Republican legislative leaders pondering the potential advantages of using workers comp as a political wedge come November. This could go on for another week or two before we finally know whether there will be a deal or a ballot measure fight. Here is the Bee's report on the Big Five leadership meeting Sunday.
Posted by dweintraub at 7:29 AM
The leadership talks on workers comp broke up today with no deal and, according to some sources, no deal in sight. It’s beginning to look as if the recent comments from Democratic Assembly Speaker Fabian Nunez and state Sen. Richard Alarcon about a deal being imminent were either unrealistically optimistic or part of a strategy to try to set the Republicans up as fall guys if a deal isn’t done. Senate Democratic Leader John Burton, who reportedly left the meeting in a huff, declined requests for interviews, leaving behind this statement to be read by a secretary:
“Please be advised I have no comment to make on workers comp because at this point there is nothing to comment on, so don’t ask me. If there is something to comment on. I am sure you would be made aware of it.”
It is common in the Capitol, of course, for negotiations on major legislation to break down and appear doomed at some point, and then resume with a final rush toward an agreement. That could be what stage we are entering here. It is widely assumed that the absolute drop-dead time for getting a deal is mid-April, when the governor and his allies must submit signatures to qualify their initiative for the ballot.
The governor and legislative leaders are scheduled to meet again on Sunday.
Posted by dweintraub at 3:54 PM
Controller Steve Westly on Thursday released this chart from a survey of non-profit groups on what they pay for workers compensation. It shows a number of groups that are paying two times -- or more -- what they were paying two years ago.
Posted by dweintraub at 9:58 AM
Light blogging today. I am on the road.
Posted by dweintraub at 6:47 AM
NOTE: An earlier version of this item quoted Speaker Nunez saying Gov. Schwarzenegger had proposed regulating insurance rates as part of the private negotiations on workers comp. After the item appeared here, an aide to Nunez called and said the speaker "misspoke" and that the governor had not, after all, proposed any such thing.
"There is no specific proposal from the governor," said Gabe Sanchez, the speaker's press secretary. "He was referring to one of the many proposals out there on how to handle the insurance piece. But it's not the governor's proposal. He misspoke."
I have edited the item below to reflect that change.
Assembly Speaker Fabian Nunez says he expects a workers comp agreement to emerge in “the next few days” and to go to a vote in the Legisalture by next week.
“This is one that is such a complex issue that the devil’s in the details in a lot of this language,” he said. “I think it’s going to take us three or four days to go through the language line by line and make sure that there are no unintended consequences in that language as it’s being drafted.
“There are decision points. There’s accord on some of these. But we haven’t gone to our respective caucuses (to) sell it to our legislators. And so, once we come to an agreement, we’ve got to go back and make sure we sell it to the legislators because certainly they’re not going to have total faith and confidence that the Big Five is going to solve this without consulting with our own respective members.”
Nunez told reporters that Gov. Arnold Schwarzenegger had offered a proposal that would regulate insurance rates. But a spokesman for the speaker said later that Nunez "misspoke" and that Schwarzenegger had not offered such a plan.
Posted by dweintraub at 2:26 PM
There’s no perfect way to negotiate a big legislative package on a major issue, but the workers compensation negotiations headed by Gov. Arnold Schwarzenegger this month leave a lot to be desired. Schwarzenegger as a candidate pledged to be the people’s governor, to let the sun shine on the public’s business and stand up to special interests. But the talks so far look a lot like business as usual. They are being held behind closed doors, with invited guests only, and very little of what is being discussed has been released to the public, or even to lawmakers who have played a major role in oversight of the workers comp system. Democrats keep saying that the negotiators have agreed on “90 percent” or more of a comprehensive package, but refuse to give details on what it is that has been agreed to. Republicans and business groups counter the Democrats’ optimism with an equal dose of pessimism. If a deal among the interest groups does emerge this week, it will almost certainly be an all-or-nothing matter, rushed to a quick vote in the Legislature, with very little chance for amendments or for the public to review what could be huge changes in the way California compensates workers who are injured on the job.
How else could it be done? Perhaps with daily legislative hearings at which proposals and counter-proposals are discussed in public, with analysis of their effects and possible unintended consequences. Schwarzenegger could be represented by his appointees. Behind-the-scenes talks would continue, of course, but anything that emerged from them would be vetted in the open rather than being jammed through with most lawmakers voting on something they do not understand. Even that kind of public scrutiny does not guarantee success. Something similar produced the electricity deregulation bill in 1996. But the flaw then was not in the process, it was in the analysis brought to bear on the problem and the overwhelming drive to have all the major interest groups sign off on the plan. Those flaws also exist here, but with the added risk that comes from it all being being done in secret.
Posted by dweintraub at 11:27 AM
The American Electronics Assn., which bills itself as the nation's largest high-tech trade group, releases a report asserting that offshore outsourcing is likely to benefit the US, the economy and individuals in the long run. Here is a link to the report.
Posted by dweintraub at 9:05 AM
Rate regulation -- or some method to guarantee that any savings wrung out of workers, lawyers or doctors in the workers comp system are passed along to employers -- is the hot topic these days among those watching the unfolding negotiations aimed at overhaulding the system. Here is my column on the subject today, in which I suggest that Republicans might have boxed themselves into a corner by pushing for rate cuts that they can't be sure of delivering. And here is a Chronicle story on Insurance Commissioner John Garamendi's proposal for rate regulation.
Posted by dweintraub at 7:56 AM
With the millionaire's tax for mental health all but qualified for the November ballot, the phone tax for emergency rooms is next. Organizers say they have enough signatures to place the measure ont he ballot but will continue to collect more to ensure that they have enough to create the necessary cushion. This one expands the 911 surcharge -- originally created to pay for the emergency response network -- to finance emergency room care. The theory: what good is a 911 system if when you call an ambulance, there's no place to take you. The tax would raise more than $500 million a year, hitting wireless phone and business users the hardest. Here is an update from the North County Times.
Posted by dweintraub at 7:43 AM
When Assembly Speaker Fabian Nunez took office, he promised to shrink the size of Assembly committees, whose huge membership rolls now force lawmakers onto so many overlapping panels that none of them have time to attend them all. Today, Nunez announced the changes. They are not all dramatic, but they do reverse years of steadily expanding committee rosters. The Transportation Committee, for example, is down from 20 to 14 members, and Higher Ed shrinks from 11 to 7. Appropriations goes from 25 to 21. But Government Organization, long a favorite of members because of its reputation as a good place to raise money from campaign donors, shrinks by just two, from 26 to 24 members, still more than one-fourth of the entire house. Here is the complete list, along with which members were removed from which committees.
Posted by dweintraub at 2:03 PM
With California's unemployment insurance fund nearly bankrupt, the business community is pushing a series of changes to reduce costs, at least until employer tax payments catch up with benefits. Among the measures is AB 2320, which would delay a benefit increase scheduled for Jan. 1 2005 until the UI trust fund is healthy again. The California Chamber of Commerce is also backing several other bill still taking shape that would limit eligiblity by raising the income threshold and requiring a minimum number of hours on the job before employees can qualify for jobless benefits. For more background on the issue, here is a piece from the LA Times today.
Posted by dweintraub at 11:13 AM
In this piece, my colleague Clea Benson takes a comprehensive look at the in-home care program, the fastest-growing social service in the state budget. The article examines why the costs are rising so fast, and what, if anything, can be done about it. The story uses the experiences of one Contra Costa County family to illustrate what the program means to families of people with disabilities.
Posted by dweintraub at 11:03 AM
This is the archive for California on the Cusp, my ongoing series on the future of California. Here you'll find links to the columns in the series, back-up documentation for those pieces, blog items and other resources of interest on the topic.
Immigration. Even as California struggles to absorb a huge wave of recent immigrants, trends suggest that as these newcomers have children and then grandchildren, their descendants will be far better equipped to move into the economic and cultural mainstream.
The story and graphics are here.
California Counts, a project of the Public Policy Institute of California.
California Department of Finance, Demographics Unit
Posted by dweintraub at 9:55 AM
Secretary of State Kevin Shelley has posted draft standards for adding a voter-verifiable paper trail to electronic voting machines. He is soliciting comments from the public. You can find the standards here.
Posted by dweintraub at 10:04 AM
Schwarzenegger continues to struggle over his definition of "special interests" and when he will or will not take money from them. The latest twist: he's suspending the acceptance of contributions from the insurance industry while he negotiates a workers comp deal with the Legislature. This after taking nearly $1 million from insurers to help pass his two ballot measures March 2. Look, either the guy is influenced by big donations or he isn't. Does anybody really believe that he would ignore all the money given before the talks got hot and heavy, yet respond to money given during the heat of the battle? If Schwarzenegger really cares about how all this looks, he needs to sit down and develop a comprehensive, consistent policy governing his own fundraising, perhaps even refusing to accept contributions from anyone with a stake in public policy in the Capitol, i.e., anyone who pays a lobbyist to influence legislation or executive action in state government. Anything short of that is simply window dressing. I'm not recommending it. I personally think campaign finance limits are a joke. But that applies to limits in the law. If someone wants to prove that they "don't need anybody else's money," this is the way to do it. Here is a story in the Bee about the insurance money.
Posted by dweintraub at 6:49 AM
The latest in a series of Assembly Budget Committee hearings on waste in government zeroed in on the Department of Corrections. Lawmakers were told what many already suspected: the prisons budget is out of control, with little to no accountability for how much money each prison spends. But one reason wardens consistently overspend their budgets, the Department of Finance told legislators, is that those budgets have been set at an artificially low level that did not reflect policy changes and pay raises for employees. The goal: set a realistic budget this year, then stick to it. Wardens who overspend, says a prison agency official, will be fired. Here is a link to the Bee's story on the hearing.
Posted by dweintraub at 6:40 AM
Gov. Schwarzenegger named his health services director and public health officer today.
Heading Health Services will be Sandra Shewry, who has been director of the health division of the National Governor’s Association Center for Best Practices. She is also the former executive director of the California Managed Risk Medical Insurance Board and was the assistant secretary of the California Health and Welfare Agency.
The Public Health Officer will be Dr. Richard Jackson, senior adviser to the director of the Centers for Disease Control and Prevention. He was previously director of the National Center for Environmental Health and was an epidemiologist with the World Health Organization.
Posted by dweintraub at 4:32 PM
Assemblyman Darrell Steinberg and allies backing a ballot measure that would raise taxes on million-dollar earners to pay for expanded mental health care say they have collected nearly twice as many signatures as they need to qualify the initiative for the November ballot.
The campaign for Mental Health plans a press conference at the Capitol tomorrow to make the official announcement. If approved, the measure would raise an estimated $600 million in its first full year, with most of that distributed to counties to expand mental health services. The money would come from a 1 percent surcharge on earnings over $1 million, with that surcharge applied on top of whatever tax rate is applied through the normal tax system. In other words, it would be separate and in addition to any tax increase levied on the wealthy to help balance the budget. The mental health tax would effectively increase taxes by about 10 percent on about 25,000 taxpayers at the top of California's income heap.
Posted by dweintraub at 4:23 PM
The RAND Institute has a new policy brief out on the possibility of regulating health insurance premiums, and the report’s conclusions seem to depend on the eye of the beholder. The California HealthCare Foundation, which commissioned the report, says rate regulation is likely to produce unintended consequences, including scrimping on care and a lack of investment in new technologies. That's definitely the major conclusion of the report. But the Foundation for Taxpayer and Consumer Rights, which is sponsoring a bill to impose regulation, notes that the study also concludes that regulation, at least in the short term, could hold down rates. And FTCR says regulation would work even better with limits on hospital and pharmaceutical profits. Here is a link to the HealthCare Foundation and the RAND study. And here is the FTCR rebuttal.
Posted by dweintraub at 12:08 PM
There's been increasing talk around the Capitol lately about the possibility of some sort of tax amnesty in California. Gov. Schwarzenegger mentioned it on his recent appearance on NBC's Meet the Press. And this week, Assemblywoman Judy Chu, the new chairwoman of the Appropriations Committee, and Controller Steve Westly both started pushing the idea. Chu disclosed amendments to AB 2203 that would provide a "limited window for individuals to pay delinquent taxes" with graduated and increased penalties for failure to pay during the amnesty period. She noted that other states have raised hundreds of millions of dollars in one-time funds using this method. Westly, meanwhile, said an amnesty enacted in 2003 for abusive tax shelters might net the state about $200 million when implemented. Look for some version of this idea to pop up in the governor's May revision of the budget or soon after.
Posted by dweintraub at 4:55 PM
Gov. Schwarzenegger has appointed former Assemblywoman Charlene Zettel as director of the Department of Consumer Afffairs. Zettel, of Poway, was the first Latina Republican elected to the Legislature. She was elected in 1998 and gave up her seat in 2002 to run for the state Senate. She lost in the Republican primary.
Posted by dweintraub at 7:47 PM
Tom Fuentes, for 20 years the leader of the Orange County Republican Party, is stepping down and will be replaced by Scott Baugh, the former Assembly Republican Leader from Huntington Beach. The story is in the LA Times, which says the shift comes under pressure from the party's increasingly strong moderate wing.
Posted by dweintraub at 6:39 AM
About 5,000 protestors, half what organizers expected, marched on the Capitol Monday to condemn Gov. Arnold Schwarzenegger's proposal to raise community college fees. The governor's proposal would increase the cost of a two-year community college education from $1,080 to $1,560, but would also make students eligible for more federal financial aid. Here is a story from the Bee.
Posted by dweintraub at 6:20 AM
From the weekend: The cost of salaries and benefits for state and local public employees has risen far faster than inflation in the last five years -- three times as fast in the case of the Los Angeles Unified School District, according to a study by the Los Angeles Daily News. Here is the story.
Posted by dweintraub at 7:03 AM
As many as 10,000 community college students and their supporters are expected for a march on the Capitol today. It should be one of biggest demonstrations on the Capitol grounds this year. The marchers are seeking to prevent spending cuts and fee increases in the two-year colleges.
Posted by dweintraub at 6:51 AM
California's sales tax receipts picked up in February, but personal income tax returns took an unexpected dip below projections, according to numbers released today by the Department of Finance. Sales tax revenues came in $427 million above forecast, but most of that was simply making up for payments that had been expected at the end of January. The personal income tax numbers, meanwhile, were more troubling. Revenues were down $142 million, or more than 10 percent below the $1.2 billion forecast. The drop was due to higher than expected refunds, which at $280 million for the month were more than 20 percent above the forecast. On the other side of the ledger, withholding, which is a sign of current economic activity, was $71 million above projections. The report is not yet posted on the web. But you can check here to see it when it arrives.
Posted by dweintraub at 3:14 PM
California's unemployment rate was 6.2 percent in February, unchanged from the revised January figure, the Employment Development Department reports. The state's employers created about 22,000 new jobs during the month and cut about 13,000, leaving a net gain of about 9,000 new positions. Here is the EDD press release.
Click on the graph below for a full-sized image.
Posted by dweintraub at 12:50 PM
While the insurance industry is disputing the meaning of this week's change in the estimated size of the state's workers compensation industry, Gov. Schwarzenegger says the new numbers might make it easier to cut a deal. And he's more willing now to compromise. Here is a story from the Bee. Still, look for this one to have lots more ups and down before any deal is reached, if one is at all.
Posted by dweintraub at 8:03 AM
Michael Mattoch, the lobbyist hired recently by the firm of Schwarzenegger political adviser Mike Murphy, is leaving the company to join with John Norwood in a new, Sacramento-based full-service lobbying firm. After Mattoch joined Navigators and Murphy started touting the firm's access to Schwarzenegger, the governor stepped in and called a halt to the proceedings. Murphy soon announced that the firm wouldn't lobby the administration after all. Which left Mattoch with a major hole in his portfolio. So he's now off the another partnership, witht the freedom, presumably, to lobby whomever he likes.
Posted by dweintraub at 4:04 PM
Walter Zelman, former head of California Common Cause, aide to Bill Clinton and most recently director of the California Assn. of Health Plans, is joining USC to open a new policy institute in Sacramento. Known as the USC Institute and affiliated with the School of Policy, Planning and Development, Zelman's shop hopes to serve as a "broker" or translator between California's research and policy communities. The institute won't do the research but will try to connect researchers with policymakers, the media and the public.
Posted by dweintraub at 4:00 PM
The California Supreme Court has ordered an immediate halt to gay marriages in San Francisco and scheduled arguments for later this spring to hear the case. Here is an AP story from SacBee.com.
Posted by dweintraub at 3:40 PM
A new, downward estimate of the total cost of the workers' comp system is giving Democrats, particularly in the Senate, a weapon to argue for rate regulation rather than cost-saving reforms in the system. Assembly Speaker Fabian Nunez, meanwhile, says he thinks negotiators are making good progress and others should stop the "grandstanding." Look for all the parties to keep circling each other for another week or so before they get serious about seeing whether or not they can cut a deal to avoid a massive ballot battle in the fall. Here is the latest report from the Bee.
Posted by dweintraub at 6:39 AM
Some people think that the reason we have so many problems in society today is that too many adults act like adolescents, demanding instant gratification and refusing to consider the long-term consequences of their actions. Now a California state senator -- 71-year-old John Vasconcellos -- wants to give the vote to 14 year-olds. Go figure. Here is the story in the Bee.
Posted by dweintraub at 7:24 AM
More problems with electronic voting. An LA Times investigation estimates that 7,000 Orange County voters were given the wrong ballots. Officials say any errors are unlikely to affect results.
Posted by dweintraub at 6:45 AM
Assemblywoman Jackie Goldberg, a leader in the gay rights movement, married her partner Monday at San Francisco City Hall. Sen. Sheila Kuehl performed the ceremony.
Posted by dweintraub at 6:41 AM
A key Senate budget committee has rejected Gov. Schwarzenegger's proposal to cap enrollment in several state-subsidized health care programs. The defeat is one of the first tangible signs of where the Democrats in the Legislature will draw the line on Schwarzenegger's cuts.
Posted by dweintraub at 6:37 AM
I am getting a lot of questions from readers about the Prop. 57 bonds -- and why anyone would buy them. The short answer is, because they are backed by the full faith and credit of the state of California. No jokes, please. Seriously, even in a state as bad off as this one, such a guarantee is rock-solid. It means that these are general obligation bonds, and the debt service, about $1.3 billion a year, will be among the first calls on the treasury. When you remember that even with all our problems, the state still expects to bring in about $76 billion to the general fund next year, it looks as if a timely bond repayment is a pretty good bet. If the fiscal picture darkens, a whole lot of other stuff would go by the wayside before the state's creditors went hungry.
Posted by dweintraub at 11:38 AM
Schwarzenegger reveals that he's going to be moonlighting as executive editor of two bodybuilding magazines, Flex and Muscle and Fitness. Though he'll mainly act as an adviser with no day-to-day duties, the announcement raises eyebrows, and some criticism from folks who think Schwarzenegger probably has enough to do trying to govern the biggest state in the nation. Here is the story from the Bee.
Posted by dweintraub at 9:42 AM
Gov. Schwarzenegger has just appointed former Gov. George Deukmejian to chair his commission to investigate possible prison reforms. The lead staff person for the panel will be Joseph Gunn, the former executive director of the Los Angeles Board of Police Commissioners and the c-chair of the independent review panel that investigated that city's Rampart scandal.
Posted by dweintraub at 9:20 AM
Thursday's hearing on the prison guards contract produced a number of interesting developments. A legislative counsel opinion suggested that the state might have the power to force a renegotiation of the contract simply by refusing to fund the multi-year raises it contains. Also, the current president of the Correctional Peace Officers Assn. acknowledged in testimony that he agitated for the removal of the state's lead negotiator during collective bargaining. Eventually, that negotiator volunteered to remove himself because of bad blood with the union, and his successor testified that she was at a disadvantage because of a lack of institutional memory. Finally, a top union official told reporters outside the hearing that the guards might be willing to take pay cuts to help balance the budget, but only if significant reductions are also made in the prison department bureaucracy. Here is the Bee story on the possibility of a pay cut. Here is the Mercury News story on the machinations that led to the contract. And here is an LA Times story that focuses on the new legal opinion that could give legislators room to void the contract.
Posted by dweintraub at 8:44 AM
The hot event in the Capitol today is a Senate hearing on the expensive contract for state prison guards that runs through 2006. The contract was negotiated by former Gov. Gray Davis and approved without much debate by the Legislature in early, 2002. Now some lawmakers are having buyer's remorse, and new Gov. Arnold Schwarzenegger is trying to renegotiate the pact. Sens. Jackie Speier and Gloria Romero, who both voted for the contract and now say they regret doing so, are leading an all-day review of the contract and its financial and management implications. Opening the hearing, Speier promised an "emotional" day. When the contract was bargained, she said, the state's negotiators were "outgunned, outstaffed and outfoxed" and the Legislature simply rubber-stamped what Davis presented them.
Posted by dweintraub at 10:04 AM
With party primaries now deciding in most cases who serves in the Legislature, interest groups increasingly fight their battles there, rather than waiting for the general election. In that vein, the California Labor Federation is taking credit this week or sweeping elections in six Assembly districts that it targeted. The six winners: Dave Jones in Assembly District 9, in Sacramento; Alberto Torrico in District 20, in Fremont; Karen Bass in District 47 in Los Angeles; Hector De La Torre, in District 50; Tom Umberg in District 69, in Orange County; and Ira Ruskin, District 21 in San Mateo County. (Ruskin and Umberg have narrow leads while absentee votes are counted).
Posted by dweintraub at 9:58 AM
A confrontation between Schwarzenegger and the Democrats in the Legislature over spending cuts versus tax increases is all but inevitable this spring. Schwarzenegger would be smart to call the Democrats’ bluff sooner rather than later. How? He could offer to get together with them and produce a budget that includes most of his proposed spending cuts but sets aside $3 billion worth of the most objectionable reductions. Then he would offer to sign a bill that puts their favorite tax increase - probably higher rates for the wealthy - on the November ballot. He wouldn’t have to endorse the tax increase, just stand aside and allow the Democrats to make their case for it. The two packages would be offered as a choice to the people: pass the tax increase or implement the governor’s cuts immediately. Schwarzenegger would be meeting the Democrats half way. He would be keeping faith with his pledge not to raise taxes to balance this budget. And he would be triggering a serious and healthy public discussion about the trade-offs at the heart of his budget plan. A cop-out? Perhaps, but also a way to avoid the kind of partisan stalemate that the public hates, and a way to head off the kind of mushy compromise that neither cuts spending nor raises revenue and leaves the state even deeper in debt. As an added twist, Schwarzenegger could give the Democrats carte blanche to match any selection of his spending cuts with their choice of tax increases to put into the ballot measure. That way, they would have to decide where the break point was: the higher the total value of spending cuts they chose to defer, the more difficult it would be to pass the tax hike.
Posted by dweintraub at 4:55 PM
Perhaps not surprisingly, Wall Street is pleased with the result on Prop. 57. Moody’s and Standard and Poors, two major credit rating agencies, issued statements today upgrading their outlook on California’s fiscal situation but warning that the state still needs to take real and tough measures to bring its budget back into balance.
In light of the bond approval, Moody's has affirmed the state's Baa1 general obligation bond rating, and changed the rating outlook to stable, from negative. The outlook change affects more than $33 billion of outstanding G.O. bonds, and also affects nearly $8 billion of General Fund-supported lease revenue bonds and General Fund-enhanced tobacco bonds. The rating action takes into account the large increase in long-term state debt that is planned, which we note will result in an above-average, but still moderate, degree of indebtedness relative to other states.
While the deficit bond approval is certainly a positive development, the prospect for recovery of the state's bond rating to the A category will still be dependent on further steps by the state to improve its budget and financial position. A significant reduction in the state's structural budget gap, establishment of a moderate reserve, and evidence of stronger financial management would be needed. The time horizon for such improvement would be very much up to the state's elected officials and, to a lesser extent, the pace of state economic recovery. Noting yesterday's simultaneous defeat of Proposition 56 (lower legislative taxing/budget approval threshold) and approval of Proposition 58 (new balanced budget and reserve requirements), it remains unclear whether the state will now be able to make the kind of difficult and recurring budget adjustments that have been avoided in recent years. The size of the annual budget gap in FY'05, before enactment of any budget adjustments, is estimated to exceed $14 billion or close to 20% of expected revenue for the year.
From Standard and Poor’s:
Near-term liquidity pressures have eased due to the state's ability to refinance $14 billion of existing notes due in June 2004 with long-term bond obligations. In addition, the new GO debt authorization gives the state the ability to use bond proceeds to fund approximately $6.4 billion of operating deficits in fiscal years 2004 and beyond.
"Standard & Poor's GO debt rating on California will improve to the extent the state uses the time provided by the new bond proceeds to reduce its structural deficit," said Standard & Poor's credit analyst David Hitchcock. "The magnitude of any near-term rating improvement will depend on the degree the enacted 2005 budget might reduce the state's large projected fiscal 2005 structural deficit of approximately 9% to 19% of the governor's proposed fiscal 2005 expenditures," he added. The range is dependant on the status of Gov. Arnold Schwarzenegger's currently proposed budget adjustments.
The state's increased ability to sell bonds to fund current operations merely postpones difficult taxation or expenditure reduction decisions. Similar liquidity pressures may again arise absent true reform, which would bring ongoing revenues and expenditures into balance. The state's structural deficit has not appreciably improved compared with the same period last year, despite recent economic improvement.
Read the whole thing here.
Posted by dweintraub at 1:15 PM
With all but the late absentees counted, the governor's bond was leading in 53 of the 58 counties and statewide was headed toward a huge, 63-37 victory. It trailed only in San Francisco (barely), Humboldt, and by a few votes in Tehama, Shasta and Modoc counties. It's best showing: 72 percent in San Diego. Here's the county by county map. Click here for the full version from the Secretary of State.
Posted by dweintraub at 6:23 AM
It looks as if you can add Proposition 56 to the long list of ballot measures on which the state’s Democratic establishment and its voters haven’t seen eye to eye. It really is amazing when you think about the record over the past 10 to 15 years, during which Democrats have repeatedly won majorities in the Legislature even as their views on major policy matters clash with a majority of those who vote in statewide elections. Going back to term limits in 1990, immigration and crime in 1994, affirmative action in 1996, bilingual education in 1998 and gay marriage in 2000, plus taxing the rich, regulating health care and several other issues along the way. Prop. 56 was a creation of the public employee labor unions and their Democratic allies, designed to make it easier to pass a budget and raise taxes, which now require a two-thirds majority vote in the Assembly and Senate. The measure was dressed up with a populist-sounding provision to withhold the pay of legislators and the governor when a budget was late, and that part of the initiative at first polled well with voters. But once opponents dubbed it the “blank check” initiative and put out the word that it would make it easier for the Legislature to raise taxes, it dropped like a stone. Early returns have it trailing badly tonight. The defeat could backfire on Democrats since in a way the debate was a referendum on the tax issue. And it’s hard to argue that voters are saying anything but a very loud “no.”
Posted by dweintraub at 9:41 PM
Propositions 57 and 58 -- Gov. Schwarzenegger’s bond measure and budget reserve plan – will pass tonight. The bond will stabilize the state’s fiscal situation by restructuring the debt accumulated over the past several years. That will give Schwarzenegger a chance to focus on the budget for the fiscal year that begins July 1, where he is facing a $15 billion projected gap between anticipated revenues and spending. Politically, the ballot victories will probably strengthen Schwarzenegger’s hand with the Legislature. Oddly, that will happen even though the Democrats helped him place the measures on the ballot and campaigned for them, even appearing in television ads paid for by Schwarzenegger’s campaign committee. In theory, then, the victories don’t tell us much at all about the governor’s ability to go over the heads of the Democrats with appeals to the people. But the result itself, and the fact that the measures were so closely identified with Schwarzenegger, will probably be seen by the public as evidence of his effectiveness and clout, and that perception will then feed on itself. So look for the governor to proclaim the vote as a sign of the public’s confidence in his plan to try to balance the budget without raising taxes. And then to quickly turn the result into momentum for his next big priority: reforming the state’s system for compensation injured workers.
Posted by dweintraub at 9:36 PM
Early returns show Schwarzenegger's bond and reserve plan with big leads. The governor's political team was saying this afternoon that late polling over the past few days showed the bond in the mid to high-fifties. A smaller, more Republican turnout could make that a reality. The early votes are absentees mailed to the counties before election day, which tend to trend Republican.
Posted by dweintraub at 8:21 PM
Posted by dweintraub at 10:12 AM
Atty. Gen. Bill Lockyer plans today to file felony charges against a former Gray Davis aide for altering documents related to the 2002 investigation of the state's contract with Oracle Corp., the Bee reports. Prosecutors believe policy director Kari Dohn altered her calendar to delete references to Oracle Chairman Larry Ellison.
Posted by dweintraub at 6:06 AM
The Field Poll projects that the turnout today will be just 39.8 percent -- even lower than Secretary of State Kevin Shelley’s prediction of 43 percent. If Field is correct, the turnout of registered voters would be the lowest ever in California for a presidential primary. Field also notes that the electorate’s historic demographic skew toward white voters, which had been fading for a few cycles, will be back. The poll projects that white voters will represent 74 percent of the electorate, compared to 13 percent for Latinos, 6 percent for blacks and 7 percent for Asians and others. Of those eligible to vote, whites make up 61 percent, Latinos 23 percent, blacks 6 percent and Asians and others 10 percent.
Posted by dweintraub at 6:01 AM
Gray Davis is scheduled to appear on the Tonight Show with Schwarzenegger tonight to help the new governor campaign for his $15 billion bond measure. Here is the AP story via the Chronicle.
Posted by dweintraub at 4:48 PM
The California Supreme Court has ruled that a Catholic charity must include birth control coverage in its health plan for workers. Here is an AP story via the Bee.
Posted by dweintraub at 1:52 PM
Today is the deadline Schwarzenegger set for the Legislature to act on workers comp reform. It is going to come and go without any action. Look for the governor to declare that significant progress has been made in negotiations and pledge to work with lawmakers to craft a plan later this month, beginning with another summit of the governor and legislative leaders shortly after Tuesday’s election. Schwarzenegger allies are expected to begin circulating petitions Wednesday to place a workers comp measure on the ballot. But those dogs can be called off at a moment’s notice if a deal takes shape. My sense is that passing an initiative in November would be a hugely expensive, complicated and risky political endeavor. For that reason I expect Schwarzenegger to be open to compromise with the Democrats on this. The only question is how much of a loaf he will demand, and whether, if he cuts a deal, he also agrees not to pursue a ballot measure to finish the job. The governor will face strong pressure from Republican lawmakers and the business community to insist on real reform, not the sort of fig leaf he accepted in December negotiations with the Democrats over his bond and spending limit proposal.
Posted by dweintraub at 1:02 PM