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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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« March 2004 | | May 2004 »
April 30, 2004

Shelley acts against touchscreen voting systems

Secretary of State Kevin Shelley has banned Diebold's touchscreen voting systems in four counties and decertified electronic voting machines in 10 other counties until they provide either a voter-verified paper trail or meet 23 security measures his office now requires. The actions come after problems in the March 2 election and Diebold's installation of machines and software that was not pre-cleared by the state. Shelley also asked Atty. Gen. Bill Lockyer to investigate Diebold's conduct. A pdf file of his press release is here.

Posted by dweintraub at 3:55 PM

Final April numbers show $1.5 bil gain

April tax collections are complete at the Franchise Tax Board. The personal income tax generated $6.57 billion, or about $1.1 billion more than forecast after refunds are figured in. The corporate tax brought in $1.9 billion, or about $460 million more than projected. Most of the the amount above forecast is due to a one-time boost from a tax amnesty program in effect this year. Of additional note is that withholding from current wages continues to exceed forecasts, by more than $100 million this month, and that is a bullish sign for the econony. Schwarzenegger is due to release his revised budget by May 14, reflecting these numbers and other changes due to cost overruns and the fiscal effect of the Legislature's refusal to adopt most of the mid-year budget cuts he recommended.

Posted by dweintraub at 3:52 PM

Talking Heads

TheSmokingGun.Com has a copy of a letter Schwarzenegger's lawyers have sent to an Ohio firm that's selling an Arnold bobblehead doll. This is part of the gov's ongoing effort to protect commercial use of his name and likeness. The company says now that Schwarzenegger is a public official, he is fair game.

Posted by dweintraub at 10:32 AM

Brulte stepping down

Jim Brulte plans to relinquish his leadership post in two weeks. He will be replaced by Dick Ackerman of Orange County. Here is a story from the Daily Bulletin.

Posted by dweintraub at 7:30 AM

First rate cuts for comp will be small

The first report out of the workers comp implementation hearings is that any rate cuts this summer are likely to be small, in the single-digit range. Bigger reductions, if any, won't come until after regulators rewrite the rules for permanent disability to conform with the major changes spelled out in the bill. And that won't happen until the end of the year, at the earliest. Here is a report from the Bee.

Posted by dweintraub at 6:51 AM

April 29, 2004

Audit faults work comp fraud fighting

The state auditor is out this morning with a scathing report on the state program for fighting fraud in workers compensation. The state collects $30 million a year in surcharges on employers for fighting fraud but does a terrible job managing those resources, the audit says. You can find the full report here.

Posted by dweintraub at 9:56 AM

April 28, 2004

Another day, another $800 million

Wow. The Franchise Tax Board today reports its third straight day of $800 million-plus returns from the personal income tax. That kind of daily take is three or four times what has come in at this point in the month in recent years. For comparison, April 28 and 29 of last year, which were reported together, produced just $403 million. And the year before, April 28 was a Sunday, but April 29 yielded $293 million, including all the returns from the weekend mail.

The recent returns now put April a full $1 billion ahead of the PIT projections made in January, with two days of counting yet to go. Corporate returns are winding down, with just $8.5 million reported today, for a monthly total of $1.9 billion, which is $500 million more than expected for the month. Most of this is due to the phenomenal success of the amnesty program for tax shelters, and it should be noted that all of it reflects economic activity that took place before Jan. 1, and largely before this governor took office.

But with taxes withheld on current earnings also exceeding projections, I feel safe in predicting that Schwarzenegger will make it through his first budget cycle without a tax increase. Between the current-year returns and what should be a small bump up for next year's projections, he should have enough money now to avoid making the health and welfare cuts that the Democrats were going to take their stand on. If he can satisfy John Burton by avoiding cuts in grants to the elderly and the poor, and reductions in services to the disabled, the governor can get a budget without a tax increase, and probably pretty close to on time as well.

Posted by dweintraub at 3:00 PM

April 27, 2004

The cities at the table

The League of Cities is scrambling to respond to fallout from disclosures that the league and the California State Association of Counties are negotiating with the governor, seeking his support for constitutional protection of their revenues in the long run in exchange for budget cuts in the short-term. In an e-mail to city officials in the Sacramento Valley, regional representative Bryan Barr gloats about the league’s success in qualifying its ballot initiative, which, he says, has prompted the Legislature and the governor to “finally believe we are a political player.” Barr says the league has done two polls, one that shows Schwarzenegger’s opposition would not doom their measure, the other saying that it would. “That is something, politically, we all have to keep in the back of our minds,” he says. But he adds: “We (local governments) definitely have the upperhand in the negotiation front, but for right now, we want to see where things go and what they offer for the long term, and what cost to us in the short term. But one thing is for certain: we are finally at the BIG table – somewhere the League has not been in over 20 years.” Barr and Chris McKenize, the league’s executive director, both say no deal has been cut with Schwarzenegger and insist that the league will agree to nothing that leaves the cities worse off in the long term than they would be if their ballot initiative passes.

I think all this chest-puffing by the league is misguided, if it is sincere. If Schwarzenegger and, as rumored, the California Teachers Assn., oppose the local government ballot measure, it's toast. The proposal's achilles heel is that it is retroactive, meaning any tax shift the Legislature and the governor might enact this year would be nullified if the measure passes. But any such shift would benefit the schools, so undoing it would hurt the schools. And the voters aren't going to pass anything that can credibly be described as taking money away from the public education.

Posted by dweintraub at 3:36 PM

Tax receipts ending month with a surge

Tuesday’s revenue numbers from the Franchise Tax Board provided a bolt of good news for the Schwarzenegger Administration. For the second straight day, the envelopes opened at the FTB produced a personal income tax take exceeding $800 million, at a time when the daily numbers have usually peaked and are beginning to dwindle. Now, with three days remaining in the month, receipts to date from the PIT have already exceeded projections by about $200 million. Receipts from corporate taxes are also exceeding projections, by about $500 million for the month. It’s not entirely clear how much of this is due to the tax shelter amnesty program I wrote about last week, and how much of that amnesty money the Department of Finance was already counting on. But for budget writers, it’s a lot more pleasant trying to account for surplus than trying to explain a shortfall. It looks like the month will end with a combined boost of about $1 billion above projections, more than making up for the $200 million shortfall heading into the month and the $300 million accounting error on the sales tax by the Board of Equalization.

Posted by dweintraub at 2:40 PM

Energy policy, redux

With the Schwarzenegger Administration preparing to announce the details of its energy policy any day, I am hearing that it will rely largely on a plan to get the PUC to move more quickly to fully implement AB 57, a bill passed in the summer of 2002. That bill was supposed to set up a system allowing the investor-owned utilities to contract for electricity as long as those contracts fit into procurement plans drafted by the utilities and approved by the PUC. The idea was to avoid the situation that helped lead to the electricity crisis, when the utilities risked being penalized if they contracted for power and the price on the spot market later dropped. The new system is supposed to give them the go-ahead on contracts at the front end with the promise that regulators won’t come back and ding them later. Schwarzenegger, legislative sources tell me, wants to implement that plan and couple it with a more aggressive posture allowing big consumers to contract for their own electricity – as long as they pay a fee reimbursing the rest of us for their share of the costs still on the books from the electricity crisis.

Posted by dweintraub at 1:24 PM

April 26, 2004

Schwarzenegger and the media

Here is the latest story on media complaints about lack of access to Gov. Schwarzenegger. I think this is a phony issue, for a couple of reasons. First, I'm not sure Schwarzenegger is really less accessible than his predecessors. Yes, he has public events where reporters are penned behind metal barriers, not always able to ask questions or hear what the governor is saying when he wades into a crowd. But Schwarzenegger has had a number of press conferences since becoming governor, often takes impromptu questions at public events, and recently completed a round of one-on-one newspaper interviews with nearly every paper in the state.

But the bigger fallacy here is that reporter contact with the governor is what allows the media, and by extension the public, to understand what he is doing. That's simply not true. The best way to evaluate what he is doing is to talk to people around him, people who work for him, legislators, lobbyists and others who keep an eye on state government. Interviews and press conferences with the governor can round out that picture, add color and sometimes detail. (I have a standing interview request in with the governor's office for just that reason.) But interviews and press conferences are not a necessary component of good coverage. Sometimes they can even be a distraction.

The funny thing is that despite the alleged controls on the media, and all the grousing that has resulted, the coverage of Schwarzenegger's policies, proposals and actions to date has been far more exhaustive than that of any recent governor, probably any governor in history. From the bond measure proposal to the early budget ideas and workers compensation, reporters have been dissecting everything this guy does, and how he does it.

Here is a story from Saturday's Mercury News, which tells us in significant detail about Schwarzenegger's emerging plan for reorganizing state government. The story wasn't based on an interview with the governor or a press conference. Just good old fashioned reporting. (Registration required)

Posted by dweintraub at 9:31 AM

Gov names work comp director

Gov. Schwarzenegger has named a new administrative director of the Division of Workers' Compensation. She is Andrea Hoch, a lawyer who has been working in the state Justice Department since 1992. She has been chief assistant attorney general for the Civil Law division since 2002.

The rest of Hoch's bio, according to the governor's office:

Hoch was previously senior assistant attorney general in the Government Law section in 2002, supervising deputy attorney general of the Energy Task Force from 2001 to 2002, and supervising deputy attorney general in the Government Law Section from 1999 to 2001. She served in the Government Law Section, Tobacco Litigation Section, and Health, Education and Welfare Section between 1992 and 1999. Before joining the Department of Justice, Hoch was legal advisor to the Public Employment Relations Board from 1988 to 1992 and staff counsel to the Agricultural Relations Board from 1987 to 1988. She was in private practice from 1985 to 1987. Hoch is a member of the California State Bar and received her juris doctorate from University of the Pacific's McGeorge School of Law. She received her bachelor's degree from Stanford University.

Posted by dweintraub at 9:29 AM

April 23, 2004

Fiscal tea leaves

Usually, by this point in April, the state’s receipts from income tax returns are starting to come into focus, and experienced observers have a pretty good sense of whether it is going to be a good year or a bad year for the government, which in turn might influence projections for the year ahead. Recent Aprils have produced billions in surplus revenue or come short of projections by the same amount, leading to deficits, and going into the final week of the month, those trends were pretty clear.

But this April is different. The numbers so far from tax returns filed on and around April 15 are inconclusive, and there are so many contradictory variables flying around that no one will really be able to say what is happening until the end of the month, at the earliest.

To date, the Franchise Tax Board has reported $3.89 billion in receipts this month from personal income tax returns. With five days to go, the state needs to take in another $1.5 billion or so to reach the projection for the month, which was $5.4 billion. That’s an average of about $300 million per day needed in the final week of the month. By comparison, last year the state took in just over $1 billion in the final week, or $200 million a day, and the year before that, it was $1.5 billion. So they are in the ballpark. A big April windfall looks unlikely, but it is certainly possible that the state will meet or slightly exceed its projection for the month.

But this year’s numbers are padded by hundreds of millions of dollars in collections from a tax shelter amnesty program enacted last year. According to numbers from Controller Steve Westly, the program has netted about $600 million from individual taxpayers who wanted to come clean rather than risk being pursued for taking advantage of questionable shelters. And that’s far more than state officials expected from this program. If you include those numbers in the calculations, the take from your every day run-of-the-mill returns seems to be on the low side.

Then there are the corporate returns. Projections made in January estimated that the bank and corporation tax would yield $1.4 billion in April. But as of today, those returns have already produced $1.8 billion. So they are clearly headed for a monthly surplus of significant proportions. On the other hand, these returns were on the low side in March, so some of the April windfall is simply making up ground lost a month ago.

Unless the final week is a real barnburner, it looks like when all of this washes out, the numbers for April and for the year to date (since January) will be pretty close to projections, with the caveat that the PIT numbers have been helped significantly by the tax-shelter boon. Don’t look for Schwarzenegger to be helped or hurt much by the April 15 returns in his quest to balance the budget without a tax increase.

One final note: sources at the Board of Equalization report that a computation error led the board to overstate March sales tax revenue for the state by about $300 million. The Department of Finance is still scratching its head over that one.

Posted by dweintraub at 2:46 PM

Bush battered but not out in California

The main thrust of the LA Times Poll story today on Bush in California is that the president is increasingly unpopular here, securing his worst-ever approval rating. Voters are down on the war in Iraq and don't like his performance on the economy. Interestingly, though, the president trails Kerry by the same 12 points by which Al Gore defeated Bush four years ago. And fewer than one-third of Kerry's supporters say they are backing him because they like him; 65 percent say they are supporting Kerry because they oppose Bush. This suggests that if Bush can gain any kind of traction from the Iraq sovereignty handover scheduled for June 30 and the economy keeps its recent momentum on jobs, he might have a chance to be at least competitive in California. He's still a big underdog, but I wouldn't delcare it over just yet.

Posted by dweintraub at 9:50 AM

There's always paper

A few months ago, the California recall election was almost postponed so that counties could replace punchcard voting systems with the new electronic polls. Now e-voting is under so much criticism that Secretary of State Shelley has been told by an advisory panel to scrap it in four counties.

Posted by dweintraub at 9:40 AM

April 22, 2004

Action (continued)

Several important developments on the Arnold front this morning:

Schwarzenegger advisers are sending signals that he might withdraw his proposal to eliminate a big piece of the state's In-Home Supportive Services program, which is designed to help the disabled and elderly stay out of nursing homes. The governor had suggested eliminating the part of the program that pays family members to care for their loved ones. Now the administration thinks it might be able to get federal funding for that piece, which unlike the rest of the program, gets no matching funds now. Here is a story from the Bee.

Another Bee article details the governor's emerging plans for a truly independent watchdog over the prison agency. This would be a complete turnaround from his proposal earlier this year to fold the inspector general into the agency bureaucracy and cut its budget.

Yet another piece from the Bee explores the negotiations underway between Schwarzenegger and local government honchos over a permanent resolution to the state-local funding fights that seem to occur every year. In this iteration, the locals would give up $1.3 billion over each of the next two years in exchange for the governor's support for a constitutional amendment protecting them from future raids.

Finally, this piece from the Orange County Register provides a few new details on Schwarzenegger's plan to reorganize the executive branch. The story says the plan might involve closing entire departments and up to 200 boards and commissions while eliminating 1,500 political appointments.

Posted by dweintraub at 9:30 AM

April 21, 2004

Bobby Jackson: injured worker

What would happen if Bobby Jackson were a workers compensation case?

The injured guard for the NBA’s Sacramento Kings – winner of last year’s Sixth Man of the Year Award for his stellar play as a substitute – played just one game down the stretch of the season and has missed the first round of the playoffs because of an injury to muscles in his abdomen. Jackson can walk, even run, and he can shoot. He drops in dozens of jumpers at practice every day. But when he tries to play at full-speed, the abdomen hurts, and he is afraid if he does play he will make the injury worse and perhaps endanger his career.

“It’s the type of injury where you can’t see anything on an X-ray, but it hurts like heck,” Kings coach Rick Adelman told the Sacramento Bee, noting that a similar injury kept him out of action for 11 months when he was a player. “I know very well that if Bobby could play, he’d play. And if he says he can’t, then there is nothing anybody can do about it.”

Jackson isn’t applying for workers comp, as far as I know. Unlike most workers, his contract pays him in full even if he is injured and cannot perform. But isn’t this exactly the kind of case that Republicans, led by Gov. Arnold Schwarzenegger, were trying to eliminate from the workers compensation system? If a longshoreman or a drywall hanger suffered from the same kind of ailment, should he be compensated for his workplace injury?

Early drafts of the Republican bills would have required that disability benefits be based on “objective evidence” of an injury. They wanted to compensate only those injuries that were “measurable, reproducible and verifiable.” The old system, lawmakers complained, was too fuzzy, allowing workers to be compensated based on their word alone that pain was preventing them from doing their job. Advocates for injured workers, meanwhile, complained that this would also eliminate compensation for many legitimately injured workers who suffered from painful injuries that don't show up on an X-ray or MRI.

The final version of the bill, SB 899, didn’t go that far. But it does require the state to use American Medical Association guidelines to develop new ratings system for permanent disability. And its authors have declared that this would make the system more objective.

I wonder if it would disqualify the blue-collar Bobby Jacksons of the world.

Posted by dweintraub at 12:16 PM

April 20, 2004

Jolly Green Giant

Fresh off signing the workers comp bill, Gov. Schwarzenegger today took the first stab at fulfilling another campaign promise: to begin building a “hydrogen highway” of fuel cell refilling stations that could ease the transition to hydrogen-fueled vehicle transportation. Although many experts question whether the technology is ready, Schwarzenegger is committed to seeing the network of stations built by 2010. He said today that he thinks the project will cost just $90 million, with most of it paid by private sources. This is really our first glimpse of the Bobby Kennedy Jr. – Terry Tamminen influence on Schwarzenegger, whose environmental policies are generally far to the left of the typical Republican, even in green-conscious California.

Posted by dweintraub at 1:25 PM

HOT lanes

A bill that would allow solo drivers to pay for the privilege of driving in car pool lanes has cleared the Assembly Transportation Committee and is on its way to the floor. The measure, AB 2032 by Assemblyman John Dutra, would allow the use of so-called High-Occupancy Toll (HOT) lanes on highways in Alameda, Santa Clara and San Diego counties. The tolls would fluctuate with the traffic, rising during high-congestion times and dropping when the roads were relatively clear. The money collected would be dedicated to help improve car pool lanes and public transit.

Already in use on I-15 in San Diego County, congestion pricing in some form is probably the wave of the future, as freeway capacity fills up and the roads come to a halt at peak hours.

Though critics call them "Lexus lanes" because they allow the affluent to pay their way into lanes reserved for car poolers, the concept is actually a boon to all drivers, because it clears space in the free lanes while using untapped capacity in the car pool lanes. The idea makes more sense if you look at it the other way around: we should be building new lanes financed by tolls and allowing car-poolers to use them for free.

Posted by dweintraub at 7:08 AM

April 19, 2004

For better or worse

Schwarzenegger has just signed the workers comp bill (Sb 899), and his statement at the press conference now gives him full ownership of this issue. By proclaiming his promise fulfilled, and by saying that workers comp will "no longer be the poison of our economy," he puts himself out on a limb. If these reforms reduce costs in the system, he will get much of the credit. If not, it will be up to him to explain why. His statement:

"Today I delivered on my promise to create real workers' compensation reform. This bill completes a process that brought together Republicans and Democrats, business and labor, and all the affected parties to produce billions of dollars in savings, protect workers, and root out fraud and waste in the system. No longer will workers' compensation be the poison of our economy. Our message to the rest of the country and the world, is that California is open for business. We are making our state once again a powerful, job-creating machine."

Posted by dweintraub at 2:46 PM

April 16, 2004

Mmm Mmm Good

Senate Leader John Burton, on his negotiations with Gov. Schwarzenegger over workers compensation:

"I was fighting to make something that I didn’t like palatable. It’s like somebody gives you a s--- sandwich. So you put the ketchup on, and you put the mustard on it, you put the Worcester on it, and a couple onions, and I was trying to make this thing palatable. And that’s not what really life’s about to me. It’s making stuff that’s already good really good, it’s not making bad stuff palatable."

Posted by dweintraub at 4:03 PM

'I like the idea of using the stick'

Gov. Schwarzenegger held a press conference Friday afternoon to celebrate the passage of the workers compensation bill. Among other things, he was asked about his continued use of the threat of going to the ballot, and if he might start using a little "more carrot" and a little "less stick" in his negotiations with legislators. His response:

"You always have to understand their point of view, and they have to understand my point of view. If we understand each other, and we understand we have to do things, what is best for the state, then we can make decisions together.

"It's never exactly what I want, never exactly what they want, but we find a middle of the road kind of decision. But I like the idea of using the stick. I like the idea of using deadlines. Why would we hang here for the next two years and negotiate and debate over this issue?"

On his threat to sponsor a workers comp ballot issue, Schwarzenegger said his forces had collected 1.2 million signatures, and he was ready to go. And he said he will use that tactic again, if need be.

"The people are my partner," he said. "I always said, I am the people's governor. I want the people to help me. I want to do things together with them.

"In the end, the people were there, ready to go, if we didn't solve the problem here. And this was great to know. This is the way I will go, down the road. If I need something, I will go to the people if I don't get my way here."

Posted by dweintraub at 2:52 PM

Comp bill approved

SB 899, the workers comp bill, has passed both houses of the Legislature and is on its way to the governor's desk. The Assembly vote was 77-3 with Democrats Goldberg, Hancock and Jackson voting no. The Senate vote was 33-3. Democrats Alarcon, Dunn and Escutia were opposed.

Posted by dweintraub at 12:46 PM

Bring it on

I'm not the biggest fan of the Foundation for Taxpayer and Consumer Rights, a holier-than-thou watchdog group that questions everyone's motives but refuses to reveal the source of its own financing. But the publicity gimmick the foundation is floating today is precious. The group is holding an "I Read It and I Get It" challenge for lawmakers on the workers comp deal, offering to contribute $1,000 to the favorite charity of any legislator (other than the bill's author) who certifies that he or she has read the entire bill and can answer correctly the foundation's ten questions about the measure's contents. The event will be held this morning at 9:30 a.m in the Capitol rotunda. Don't expect a long line of contestants.

Posted by dweintraub at 8:17 AM

April 15, 2004

Big labor likes parts of comp deal

While plenty of Democrats and members of their interest-group coalition are grumbling about the work comp deal, the California Labor Federation was surprisingly muted in its response. Despite complaining that "the deck was stacked against workers from the beginning” by a governor taking money from the same special interests who want to “reduce injured workers’ benefits,” federation President Tom Rankin said workers “did fare better” in this agreement than they would have under the two previous Republican governors.

Added Rankin:

“Injured workers will be able to receive immediate medical treatment rather than experience delays that perpetuate suffering. Injured workers will also be able to pre-designate their physician within their group health plans so that they can go to their own doctor, not the company doctor. And unions will be able to negotiate for integrated health coverage for health insurance and disability coverage.”

Rankin did endorse rate regulation, which isn’t part of the package.

Posted by dweintraub at 4:20 PM

State of confusion

When Democratic Assemblyman Juan Vargas stepped to the lectern in a Capitol conference room this morning, he admitted that he wasn't sure if it was day or night. A few minutes later, the groggy lawmaker almost forgot the name of his host, Assembly Speaker Fabian Nunez. Vargas’ confusion was understandable, given that he had been up all night putting the finishing touches on the bipartisan workers comp deal that was approved by a two-house conference committee at about 3:30 am Thursday. But Vargas and several colleagues, including Nunez, also seemed disoriented about the California workers comp insurance market as they pushed for state regulation of comp rates, a feature not part of the package agreed to late Wednesday. The Democrats tried to argue that without state regulation of the private insurance industry, the cost-savings achieved in this package won’t ever reach employers. But 80 percent of employers are either self-insured or covered by the state workers compensation fund, which doesn’t earn a profit. So those employers should see immediate savings from any reforms that actually cut costs from the system. The Democrats’ proposal, which is almost certain to be vetoed by Gov. Arnold Schwarzenegger, would affect only a relative handful of policies, and it’s not clear it would help them all that much either. And it would probably kill any chance that more firms would start selling policies in California, where a lack of competition is the market's biggest problem. One especially odd feature of their regulatory plan: it expires automatically after two years. Why would a company not now selling workers comp insurance in California do so under those conditions, when they know they can simply wait two years and avoid the whole mess? The rate regulation proposal is best seen as an attempt by the Democrats to satisfy their constituents in organized labor and the legal community, who hold this concept dear, and to embarrass the governor by forcing him to veto a bill the Democrats claim is good for the business community.

Posted by dweintraub at 12:35 PM

Comp deal approved by moonlight

The workers comp deal was approved by an Assembly-Senate conference committee, literally in the dead of night. The measure, SB 899, was taken up at 2:34 a.m. and approved about one hour later. The 6-0 vote makes it all but certain that the bill will pass both houses of the Legislature, perhaps as soon as today, on bipartisan votes. Some Republicans are grumbling that the reforms don't go far enough, and Democrats are complaining about the lack of rate regulation, but with the support of the governor and the leaders of both parties in both houses, the fix is in.

Posted by dweintraub at 5:52 AM

April 14, 2004

Comp deal emerging

Sources in the Capitol say a workers comp deal is all but done. Lawmakers, lobbyists and reporters are circling the halls waiting for a conference committee of Assembly and Senate members to convene. But some last minute haggling is still ongoing, and rank and file legislators are just now getting their first briefings on the details of the package. Some say Assembly Democrats, having given up on rate regulation, are pushing for minor changes that would help them save face with their interest group constituents. An analysis shared with Assembly Republicans Wednesday morning says no one is yet sure how much the proposal would save from the estimated $20 billion system, and one source outside the Legislature says participants in the negotiations have taken a pledge not to speculate about the level of savings. The bill, like any dealing with workers compensation, is highly technical, and the change of a few words here or there could mean hundreds of millions of dollars in savings. The Assembly Republican analysis, for instance, cites a new definition of what it means to “cure and relieve” an injured worker, a phrase that doctors and lawyers have used to demand more procedures and treatments that drive costs higher. The proposal also modifies the procedure used to apportion costs when a worker with a previous injury is re-injured at work, placing much more of the burden on the employee. In another section, the proposal would repeal the presumption that the worker’s personal physician or chiropractor is correct, when an additional comprehensive medical exam is obtained. Finally, the proposal would repeal the provision that all workers comp laws be “liberally construed” by the courts to favor the employee. Instead, all parties would be “equal before the law.” These are just a handful of dozens of changes in a 177-page draft of the agreement I obtained Wednesday afternoon, any one of which could save employers money, or conceivably add to costs if they result in unintended consequences. Yet it appears that the bill will be available to the public for only a few hours before it is brought to votes on the floor of the Assembly and Senate, because Friday is considered the deadline for Schwarzenegger and his allies to submit their signatures to qualify his initiative for the ballot.

Posted by dweintraub at 3:04 PM

April 13, 2004

Clock ticking, again

With the latest of many supposed deadlines approaching Friday, the word out of the Capitol is that the legislative language on the close-to-done workers comp bills will materialize sometime late tonight. Conference committee hearings could be held as early as Wednesday, with floor votes by Thursday. Many Republicans still fear that the Dems will try to jam the governor with bills that don’t fully reflect the terms of their deal, such as it is. But others say Schwarzenegger, having apparently gathered enough signatures to place his measure on the ballot, seems prepared to walk away if the final shape of the legislation doesn’t match what he thinks the parties have agreed to. It’s not clear that this deadline is any more real that previous ones. But the talk around the Capitol has the feel of reality this time around, a sense that this deal has to finally come together in the next couple of days or not at all.

Posted by dweintraub at 4:49 PM

DOF: March revenues up

The Finance Department report on March revenues is in, and it's got some dramatic news, in both directions. Income tax receipts were $314 million above forecast, and sales tax collections were also up, by $323 million. Corporate tax revenue, however, was way down, by $302 million, or 20 percent below the projection for the month. Overall, revenues in March were $406 million, or 9 percent, above forecast. Year to date, revenues are still $217 million less than was projected in January. Here is the full report.

Posted by dweintraub at 2:48 PM

April 12, 2004

Boxer's lead on Jones: $5.9 mil to $200,000

Barbara Boxer and Bill Jones will be reporting their fundraising progress in the US Senate race soon, and both jumped the gun today with press releases in advance of the official filing deadline. The news: Boxer has raised $11 million to date and has $5.9 million on hand for the race ahead. Jones reports raising $1.4 million since his campaign began, and has $200,000 on hand. That obviously won’t do it for the Republican rancher and former Secretary of State. Jones announced that Anne Dunsmore, a veteran Republican fundraiser who has been finance director for Bush-Cheney in California, will be his chief fund-raiser for the Senate race. She has her work cut out for her.

Posted by dweintraub at 3:45 PM

Revenue numbers inching upward

In advance of the April tax returns that will determine the state’s near-term fiscal fate, the treasury is getting a little bit of good news. Audits by the state Board of Equalization have turned up more than $200 million in sales tax payments from the third quarter of last year that hadn’t yet been counted in state coffers, and word is that a similar amount or maybe more will materialize from a review of fourth-quarter payments. And while the state’s tax receipts were running $600 million below forecast in January and February, March was more encouraging. Personal income tax receipts were $300 million above forecast for the month. While much of that might be offset by declines in other revenues, there’s at least a ray of hope from two straight months in which tax withholding has exceeded forecasts. In March, the growth in withholding compared to a year ago was nearly double what the Department of Finance had projected -- a sign that the economy is picking up. And tax refunds, which had been running higher than projections, slowed. These trends are too short to put much stock in. But if they continue through April and are accompanied by decent final payments at mid-month, the numbers might be sufficient to let the Schwarzenegger Administration goose their projections just a tad for the coming year with a straight face. Or at least not move them any lower.

Posted by dweintraub at 8:50 AM

Business flight

Do California companies really leave the state because of high costs and a poor business climate? That's a never-ending question for state policymakers, and one that can't be answered statistically. LA Times business writer Don Lee takes a look at it here, talking to business owners, relocation consultants and recruiters from other states. He concludes that there is evidence for the exodus charge, and his sources suggest that the trickle might become a flood in the years ahead.

Posted by dweintraub at 6:36 AM

April 9, 2004

State unemployment rate climbs

California's unemployment rate inched up to 6.5 percent in March from a revised 6.3 percent in February, as employers created a net of only 5,200 jobs. Here is the release from the Employment Development Department.

Posted by dweintraub at 9:53 AM

CTA drops tax increase measure

The California Teachers Assn. has dropped its efforts to amend Proposition 13 and raise taxes on commercial proprty with an initiative on the November ballot.

Here is the Bee's story on the matter.

And below is the text of a statement from CTA President Barbara Kerr and Rob Reiner, who was a co-sponsor of the measure:

“It is with regret that we announce today that we will discontinue our efforts to place a constitutional measure to substantially improve funding for K-12 and preschool education before California voters in November. Although it had collected more than enough signatures to qualify for the ballot and enjoyed strong public opinion support, we feel that the new and complicated circumstances of the November ballot make it necessary to pull back this worthy initiative.

“Our decision is the result of a realistic assessment of the complicated nature of the November ballot. Since we began this initiative drive, nearly a dozen substantive initiatives have emerged, creating an extraordinarily more confusing November ballot. That makes our job, and even the most attentive voter’s job, much more difficult. The fact that the Improving Classroom Education Act is now one of five initiatives on the ballot that raises revenues for a dedicated purpose has made it even more challenging for voters to sort through the clutter.

“The complex nature and quantity of issues on the November ballot have also significantly raised the cost of running this initiative campaign effectively.

“When we began this initiative effort more than a year ago, the number one issue for voters of California was the desire to increase investments in public education. It still is today. Opponents of this measure may be content with tin cup budgets for California’s public schools and children, but parents, teachers and the majority of our fellow citizens are not.

“It is a scandal that California public schools continue to rank well below the national average in per-pupil funding. It is a scandal that public school funding has been cut by more than $4 billion over the past two years alone, resulting in larger class sizes, fewer textbooks and materials, and thousands of teacher layoffs. And it is a scandal that California ranks in the bottom half of the nation in providing preschool to our 3- and 4-year-olds.

“California teachers and Rob Reiner are committed to the goals of this initiative and will continue to fight for the children of California. We believe that great rewards will come to California’s children, families, communities and economy if we make better investments in public education.

“In the coming weeks and months, budget decisions critical to kids’ futures will be made by our elected leaders in Sacramento. We will be watching these debates closely. We will insist that further budget reductions not be made at the expense of children, and that schools, including preschools, receive their fair share of any new revenue.

“We will continue our fight to make education a real priority in California’s political and budget processes. We will pursue this goal with all means available, and we do not exclude mounting another ballot initiative in the future.”

Posted by dweintraub at 9:38 AM

April 8, 2004

Hospitals pull back from phone tax

Backers of a plan to raise taxes on telephone calls to pay for emergency room care say they still plan to turn in 900,000 signatures on Monday, despite the loss of a major financial sponsor: California's hospital association. A spokeswoman for the hospitals says early polling suggests voters will be in no mood to raise taxes this fall, a sentiment that would likely doom the ballot initiative. There's been speculation in the Capitol over the past several days that the phone tax proponents will pull back and leave their measure off the ballot. Here is a story on the issue from The Bee.

Posted by dweintraub at 7:18 AM

April 7, 2004

Foes start picking at split roll measure

Opponents of the split roll ballot initiative, which would raise taxes on commercial property by 55 percent to pay for universal pre-school, plan a press conference later this morning to highlight what they claim is a serious drafting error in the proposition. Based on their press release and my own reading of the text of the initiative, I am guessing that the alleged error is this: the measure specifically exempts owner-occupied homes from the tax increase, but not the property on which they sit. In California, land and the improvements on it are assessed separately. Here is the line exempting first homes:

“An owner-occupied single-family dwelling unit which is intended to be used and is used primarily as a permanent residence.”

Oddly, the next line of the measure, giving the same exemption to second homes, is much clearer, stating simply that the tax increase does not apply to:

“A second home and the land on which that dwelling unit is constructed.”

One could argue that the omission of any mention of the land on which first homes are built was probably unintended. It’s not certain that anyone would ever sue to press the point. And given that the campaign will state that the measure exempts owner-occupied homes and property from its provisions, a court might let it go anyway. But if nothing else this certainly seems likely to be fodder for campaign ads against the initiative.

UPDATE: They did hold the press conference as scheduled, and they did finger that provision. Keep your eye on this one.

SECOND UPDATE: The committee backing the initiative -- the Improving Classroom Education Act -- says the ballot measure would in no way affect property taxes paid by residential homeowners. The committee notes that the non-partisan legislative analyst concluded as much. But Jim Farrell, a spokesman for the committee, couldn't offer any reason why land wasn't specifically exempted for first-home owners in the initiative language the way it was for owners of second homes. "There's no need for it," Farrell told me. "When you talk about residential real property, it's perfectly clear you are talking about dwellings and land."

Posted by dweintraub at 9:30 AM

Gov to Legislature: get a life

The LA Times tracks down Schwarzenegger on vacation with his family in Hawaii, and in an interview the governor suggests the Legislature return to part-time status. They could get the big stuff done in less time, he says, and that way they wouldn't have time to pass so many "strange" bills. The story is here, registration required.

Posted by dweintraub at 6:29 AM

April 6, 2004

Governor names six to community college board

Gov. Arnold Schwarzenegger named six new members to the 17-member Community College governing board today, and they appear to be a rainbow coalition of partisan affiliation, gender, ethnicity, background and point of view. The six include four Democrats and two Republicans; four of them are women while two are men. They are: Anthony Alvarado of Coronado, Margaret Quinones of Santa Monica, Steven Rhodes of Los Angeles, Sara Martinez Tucker of San Francisco, Catherine Unger of Los Angeles, and Leslie Wang of Galt. Here is a link to the press release with more background on each of the appointees.

Posted by dweintraub at 4:24 PM

More bad news for Corrections

The Bureau of State Audits has just issued a pretty damning report on the Corrections Department's contracting for medical services, a cost that is now running at more than $200 million a year. The audit says the department is not following its own procedures for getting competitive bids, and other lapses are preventing the state from getting discounts that are included in the contracts. Read the executive summary here, with a link at the bottom to the full audit.

Posted by dweintraub at 9:55 AM

Alarcon amends rate regulation bill

Sen. Richard Alarcon, the leading legislative advocate for state regulation of workers compensation rates, has amended his rate-regulation bill and scheduled a hearing for April 12 in anticipation, he says, of a “comprehensive workers’ compensation reform package.” Alarcon’s bill would create a three-member Commission on Workers Compensation Rate Regulation” that would include representatives of the Insurance Commissioner, the governor’s Division of Workers Compensation and the Attorney General. The commission would take testimony from insurers and the public and set maximum and minimum rates, plus limits on administrative costs and profits.

Posted by dweintraub at 8:30 AM

The governor and the prisons

Here is an update from the Bee on Schwarzenegger's talks with the prison guards. The guards union says they are willing to take pay cuts (or give up planned increases) -- if Schwarzenegger gives them more say in running the prisons.

And here is a story from the Mercury News raising questions about the people Schwarzenegger has called upon to reform the prisons.

Posted by dweintraub at 8:27 AM

April 5, 2004

Labor pressures tribes on worker rights

Labor activists plan a major demonstration in Palm Springs Thursday to draw attention to their fight to organize more workers in the tribal casinos. The protest, which will be led by former farm labor organizer (and former UC regent) Dolores Huerta, comes just as Gov. Arnold Schwarzenegger looks to be making progress in his negotiations with the tribes for an expansion of gaming that would provide a boost to the state general fund. The march is focused on Agua Caliente’s spa, resort and casino in Palm Springs. It is organized by the Hotel Employees and Restaurant Employees International Union.

Posted by dweintraub at 4:14 PM

LAT's Stall wins Pulitzer

The LA Times wins five Pulitzers, including one to Sacramento-based Bill Stall for his series of editorials last year on "Reinventing California" after the recall. Congrats, Bill.

Here is a complete list of all the prizes. The Times' won five.

Posted by dweintraub at 2:24 PM

April 3, 2004

Torlakson backs Escutia

Tom Torlakson has dropped out of the running in the race to succeed John Burton as Senate leader. The Contra Costa County Democrat now backs Martha Escutia for the job. The story is in the Contra Costa Times.

Posted by dweintraub at 7:39 AM

Comp deal near, governor not

The governor and legislative leaders have agreed on the framework for a workers comp deal, which now must be translated into bill form so that negotiators can give final sign-off and bring the package to a vote in the Legislature, reports the Los Angeles Times. Schwarzenegger, meanwhile, left town Friday for a week-long vacation with his family in Hawaii. Legislators left for their own spring break Thursday.

Posted by dweintraub at 6:51 AM

April 2, 2004

The pre-May Revise

Every year at the beginning of April, the Department of Finance notifies the Legislature of certain changes the governor intends to make in the budget he proposed in January. Usually, the really big changes – plus those driven by changes in caseload, enrollment and population – are in the May revision of the budget. But some sneak out in the April finance letters. This year, for instance, the governor has detailed how he proposes to spend funds from the Proposition 50 water bond. In all, this year’s finance letters detail a net of about $250,000 in cuts this year and next from the general fund, and about $1.7 billion in increases in spending from special funds, bond funds and federal funds. If you are a real glutton, you can read about every proposed change here.

Posted by dweintraub at 3:24 PM

Rough & Tumble down today

Jack Kavanaugh, who runs the indispensable Rough and Tumble website that tracks political news in California, has asked that I inform our joint readers that he is having computer trouble today and will be out of commission. He expects to be up again by Saturday morning.

Posted by dweintraub at 10:26 AM

Impact of payroll cuts detailed

After months of trying, the Bee finally was given access to documents showing the effect of recent cuts in state payrolls. The records show that fewer discrimination complaints are being investigated, the Health Department is slowing background checks on nursing home employees, and the CHP isn't inspecting as many trucks as it used to, among other things. The records also show that most of the more than 9,000 job cuts were accomplished through attrition. Fewer than 1,000 state workers have been laid off. Here is the story.

Posted by dweintraub at 8:07 AM

US job creation soars

US payrolls soared by more than 300,000 in March, the biggest gain in four years. Even if sustained for the rest of the year, that rate of job creation wouldn't erase the job loss since Bush took office. But it would likely have a big effect on the presidential campaign, and his prospects for reelection. Here is an early story from

Posted by dweintraub at 7:58 AM

April 1, 2004

Golf versus chess

Gray's favorite sport was golf. Arnold loves chess. Here's how the difference translates into governing.

Davis on his decision-making style at the height of the energy crisis, Jan. 10, 2001:

“In golf, they teach you to hit one shot -- and you don't think about anything but that shot. And then you go to the next shot, and hit that shot…My natural reaction is caution. I take life a step at a time.”

Schwarzenegger on his decision-making style, March 30, 2004, interview with the Orange County Register:

“In my head, everything is clear. You see, the thing you have to understand is, I have to look at it – to be smart about this – to look at the whole picture. Which means that you have to look at all the problems that are potentially coming up. And all the things that you’re negotiating with the legislators. You have to look at the whole thing. Workers’ comp is one thing. The budget is another thing. Then there’s energy...We have to look at the overall picture…Everything falls into place if you look at the overall picture. If you just piecemeal it, you just look at one at a time really close and you don’t look at the other things, with blinders on, that’s when you start making mistakes and start scrambling. And you don’t want to scramble.”

Posted by dweintraub at 6:26 AM



At Crossroads, a panel of experts and the public debate the future of health care in California. We'd like you to join the conversation.

Daniel Weintraub


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