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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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

Arnold on Arnold

In today's Bee, I have extended excerpts from an hour-long conversation with Gov. Arnold Schwarzenegger about his first six months in office, his ideology, his decision-making, and other topics.

A sample:

"It is very important to not get stuck with certain principles, but to be able to be flexible, so that maybe when you make decisions that someone will think, 'Well, this was kind of an idea that maybe a Democrat would actually endorse and promote. Where does he come from with this idea?' But then on another day you come up with something, and someone says, 'Oh, man, the right-wing Republicans, they will be really happy with that decision.'

"So, it's a mixture of things, and so it's based on what is going on in the real world, the way I see it, rather than reading someone's book and sticking to that, and saying, 'This is the Bible, and I will never change from that point of view.' So, that's what I have learned. And when you learn that, you become more tolerant about the various different issues and situations, and you kind of back off from your original stand.

"And the key thing is to be able to back off, and to just say, you know, I was wrong on that, the way I thought. I don't care - I'd rather say that I'm wrong and correct myself than get stuck with that, and then make mistakes."

Read the whole thing here.

Posted by dweintraub at 9:49 AM



May 28, 2004

Garamendi: comp rates should drop 21 percent

Insurance Commissioner John Garamendi says workers comp costs should drop about 21 percent this summer because of overhauls passed at the end of the Davis Administration and in early April. The commissioner attributes more of the decline to the Davis reforms than to the changes brokered by Schwarzenegger, but says more reductions should come after the latest package is fully implemented. Garamendi's advisory is not binding on insurance companies but is often used as a benchmark in setting rates. Here is an AP story from sacbee.com.

Posted by dweintraub at 2:50 PM



Burton to stay through elections

Senate Democrats have decided to delay choosing their next leader until late August and to keep their current leader, John Burton, in office through the elections. In a letter signed by 20 members of the caucus, senators committed to choosing Burton's successor on Aug. 24 in a closed caucus, and taking that decision to a vote in the full Senate two days later. Burton, the letter says, should serve until Nov. 15. The calendar is seen by some as a setback for Sen. Martha Escutia, who had been pushing for an earlier decision. Her chief rival for the pro tem job is Sen. Don Perata. In any case, the letter is a sign that most Senate Democrats believe Burton would be better than either of his aspiring successors at steering the caucus through the budget negotiations and the upcoming elections.

Posted by dweintraub at 11:22 AM



Boxer 55, Jones 32

The Field Poll has Barbara Boxer widening her lead to 55-32 over Bill Jones in the U.S. Senate race. The full poll isn't posted online yet but should be here later today. Meanwhile, here is a story from the Bee.

Posted by dweintraub at 9:05 AM



May 27, 2004

Volunteers

The state seems to be coming to its senses on the volunteer issue I have written about in two recent columns. The Assembly on Wednesday passed AB 2690, by Loni Hancock, which appears to be a good, clean fix for the problem without any of the qualifications that had been discussed earlier.

The problem arose after the state determined that the prevailing wage laws that apply to public works projects prohibited, in almost all cases, the use of volunteers on those projects. Anyone who worked on any project involving public money had to be paid, and had to be paid the state-set prevailing wage. This immediately threatened projects up and down the state that relied on a mix of public funds and volunteer labor, most notably efforts to clear brush-choked streambeds.

The new bill states simply that the prevailing wage requirement does not apply to volunteers. The only caveat, a reasonable one, is that a volunteer can't be someone who has been paid to work on the same project, or who has been coerced to volunteer. That provision is aimed at preventing a contractor from using employees who are paid one day and told to volunteer the next in order to evade the prevailing wage law. The prevailing wage law itself deserves to be debated again, but that is a longstanding controversy that needn't be resolved before the volunteer problem is fixed.

Kudos to the Assembly for passing this bill, and to Hancock for drafting the fix in the clearest, broadest manner possible.

Here is the Assembly floor analysis of the bill, which now heads to the Senate.

Posted by dweintraub at 6:45 AM



Still rising

Today's column:

A little more than six months after taking office following a bitter and partisan recall election, Gov. Arnold Schwarzenegger has broadened and consolidated his support across party lines and throughout the state, according to two new opinion polls. Schwarzenegger already has exceeded the highest approval rating ever reached by his predecessor, Democrat Gray Davis, and his numbers are approaching the record highs given to former Govs. George Deukmejian and Jerry Brown.

If you like, there's more here.

Here is the Field Poll.

And here is the PPIC poll.

Posted by dweintraub at 6:02 AM



May 26, 2004

Pension bonds and Prop. 58

Treasurer Phil Angelides has sent a letter to the governor and legislative leaders opining that the pension bonds Schwarzenegger is proposing violate the spirit, if not the letter, of Proposition 58, the governor's balanced budget amendment approved by voters March 2.

Angelides is half right. The bonds definitely violate the spirit of the law, which Schwarzenegger sold to voters as a way to prevent deficit spending, a way to keep lawmakers and the governor from spending more money than they are taking in. But while Angelides suggests that the bonds also might violate the letter of Proposition 58, I think that's a stretch. The measure outlaws borrowing to repay accumulated deficits. It does not outlaw borrowing designed to prevent the emergence of a deficit, which is what the pension bonds would do. That, in fact, was the major loophole in the law.

Writes Angelides:

"If Proposition 58 were found to permit the use of the proposed pension obligation bonds, it would seemingly permit future long-term deficit borrowing for any purpose to fill a hole in a state budget -- so long as the deficit borrowing is proposed before a fiscal year end, rather than after. This would turn the intent of Proposition 58 on its head."

Exactly.

This is what I wrote here the day after Schwarzenegger signed the bill placing Prop. 58 on the ballot:

"The balanced budget provision isn't mischief-proof. The only future borrowing explicitly outlawed is the kind of deficit bond the Legislature and Gray Davis approved last year and hoped to sell without a vote of the people. But the measure is silent about borrowing from special funds, local government subventions and all the other tricks and gimmicks lawmakers use to artificially increase revenues to hide a deficit. And while the bill appears to ban other forms of long-term borrowing, say pension obligation bonds or tobacco litigation bonds, it does so only if they are used “to fund a year-end budget deficit.” I don’t see anything that bans such borrowing if the loans are justified as needed to prevent a year-end deficit."

To read all of Angelides' comments, download his letter here.

Posted by dweintraub at 10:25 AM



Made to meter

Sacramento and other Northern California towns that don't have water meters would have to install them, at an estimated cost of $200 million, under a measure that is moving briskly through the Legislature. The proposal has widespread support, especially from Southern California lawmakers. But is it really necessary? Virtually all of the water used indoors in Sacramento is treated and returned to the Sacramento River for the trip south. Whether I take a two-minute or two-hour shower hardly affects the supply of H20 that eventually reaches Los Angeles. It's true that conserving water here will also save the energy needed to treat and transport it, and that's a good thing. But it doesn't seem worth the cost and the mess involved to dig up neighborhoods and backyards all over the city for what is likely to be a small marginal benefit.

Posted by dweintraub at 6:59 AM



May 25, 2004

Guns and butter not enough

Interesting Field Poll out this morning on how Californians view Bush and Kerry. On the headline numbers, not much has changed since the last one, with Kerry holding a 12-point lead (51-39) and nearly two-thirds of his supporters saying their position is more anti-Bush than pro-Kerry.

What’s more intriguing is the list of traits voters say apply to one candidate more than the other. Of the 20 questions asked, Kerry came out ahead on 17, and Bush on only three.

But the three on which Bush prevailed are the ones his campaign considers to be the crucial, defining issues in the race. California voters said Bush was more likely, by a 60-27 margin, to keep the United States strong militarily. They also rated him higher than Kerry (51-37) on the related issue of who would do the better job fighting terrorism. And the president came out ahead 54-25 when voters were asked which candidate would be the best at keeping taxes down.

What are the issues on which Kerry prevails? I am going to list all 17 here, in descending order of Kerry’s lead: the environment, health care, Social Security and Medicare, minorities, women, the “country’s future,” abortion, advisers the public can trust, lead the country in the right direction, honest and trustworthy, improve the economy, “resolve the situation” in Iraq, kind of leader the country needs, Supreme Court justices, shares my values and beliefs, same-sex marriage, friendly and likable person.

Bottom line: Californians, by a landslide, are saying they think Bush would keep the nation stronger militarily and do a better job fighting terrorism, while keeping taxes low. But by a wide margin, the same people say they would still rather see Kerry be president.

Next to nobody expects Bush to win in California at this point. But I would guess that Karl Rove would be fairly pleased to have those numbers on defense, terrorism and taxes in the rest of the country on the day before the election, let alone after weeks of unrelenting bad news.

See the whole thing here.

Posted by dweintraub at 12:10 PM



Field: 60 percent say war not worth cost

By a two-to-one margin, Californians do not believe the war in Iraq is worth the toll it is taking in American lives and other costs.

Six in ten of the state’s adults and registered voters also disapprove of George Bush’s handling of the war, and a majority disapproves of his overall job performance as well.

The proportion of Californians who feel the nation is seriously off on the wrong track is larger than at any time since 1992.

From the latest Field Poll.

See the whole thing here.

Posted by dweintraub at 6:20 AM



May 24, 2004

Hill: local government plan is flawed

For a masterful dissection of the governor's local government finance plan, its strengths and (significant) shortcomings, see this just-published report from Legislative Analyst Elizabeth Hill.

Posted by dweintraub at 10:42 AM



$100,000 a day

"When Arnold Schwarzenegger steps outside of Brentwood or Beverly Hills or Bel Air, and shows up in Stockton or Poway, there are going to be a lot of people who will want to meet him, not because of his politics or because he's the governor, but because he's Arnold Schwarzenegger, the famous person."

--Democratic consultant Darry Sragow, discussing the gov's fundraising prowess, in the San Francisco Chronicle.

The same article says Common Cause calculates that Schwarzenegger raised $18 million for his own political causes in the first six months of his term. That's $3 million a month, or $100,000 a day. And that is three times the pace set by Gray Davis in his first six months in office.

Posted by dweintraub at 10:28 AM



May 23, 2004

Fixing California

Darrell Issa considers getting behind redistricting reform, a part-time Legislature and, possibly, repealing term limits. Paul Jacob, a mover and shaker behind the term limits movement, not surprisingly endorses the first two but not the third.

Posted by dweintraub at 9:28 AM



May 21, 2004

Moody's upgrades state credit rating

Moody's Investor's Service has upgraded California's general obligation bond rating, to A3 from Baa1, citing an improving economy and a positive outlook on the governor's budget proposals. But Moody's notes that Schwarzenegger's budget, even if approved by the Legislature, would still not come close to wiping out the state's structural deficit.

"The budget's structural imbalance situation represents a significant ongoing fiscal challenge for California, and is a primary reason for the still quite low bond rating relative to other states," the report says.

Read the whole thing here.

Posted by dweintraub at 12:19 PM



Blowing up boxes

"At least 20 percent of all the employees in every department are dedicated to preserving that department. So maybe the true core functions of the organizations are self-preservation."

--Chon Gutierrez, co-director of the governor's California Performance Review.

Gutierrez also noted that the state has about one car for every four employees, and two or three agencies have 50 or 60 people working in communications and press relations. All of this and more, Gutierrez promises, will be the subject of the review when it is formally transmitted to the governor June 30 and, presumably, released to the public.

Here is a story from the Bee.

Posted by dweintraub at 10:29 AM



May 20, 2004

Arnold and Tom

As the recall election raced to a close last fall, the conventional wisdom was that if Republican Tom McClintock didn't abandon the race, Arnold Schwarzenegger, if he still managed to win, would never forgive him, that McClintock's career would be over, he would be frozen out of political money and sent to Siberia. Well, McClintock didn't get out. He stayed in and took 13 percent of the vote, and his presence on the ballot probably helped propel the recall to victory. Next week, Schwarzenegger will be the guest of honor at a fundraiser for McClintock's campaign committee in Santa Barbara County.

Posted by dweintraub at 9:36 AM



May 19, 2004

Nunez backs gay marriage bill--next year

Assembly Speaker Fabian Nunez says he will work next year to pass legislation seeking to legalize gay marriage in California despite a voter-approved measure that was intended to prohibit it. The bill, by Assemblyman Mark Leno of San Francisco, is stalled for the rest of this session. But Leno has promised to revive it next year, and Nunez pledged Wednesday to help him.

"California has been, and will continue to be, a leader in the struggle for equal rights," Nunez said. "AB 1967 would be a step toward ensuring those
rights for every Californian.

"I will continue to work with Assemblyman Leno on this issue. In fact, next
year I will sign onto this important measure as a joint author. I understand
this is a contentious issue, but we must find the courage within ourselves
to persevere for a cause as just as this."

Posted by dweintraub at 1:20 PM



17 Senate Dems pledge to block guard raises

The move to suspend the planned raises for state prison guards is gaining steam, and seems to have moved beyond a threat to become a real possibility. Seventeen Senate Democrats pledged Tuesday to block the raises in the budget this year, and Republicans, while not committing on paper, have generally indicated they support the governor's attempt to renegotiate the contract. A budget subcommittee vote today will be the first real test, but even if the raise stays in the budget, it could come out later at the full committee or in conference with the Assembly. Here is a story on the issue from today's Bee.

Posted by dweintraub at 9:53 AM



May 18, 2004

Guards' raises in peril

Sen. Jackie Speier, who has become a persistent critic of the prison guards contract that she and other lawmakers approved in 2002, says she has pledges from at least a dozen Democrats to block funding for the next round of raises called for by the pact. Gov. Schwarzenegger listed the pay raise as a separate item in his budget and called on lawmakers to refuse to fund it as a way to give him leverage at the bargaining table. A provision in the five-year deal says that each year's raise is contingent upon legislators determining that the state has sufficient money to pay for it. On a separate front, lawmakers are also moving to delete a provision that Atty. Gen. Bill Lockyer complains has hindered investigations of wrongdoing by correctional officers. Here is an AP story from the Union-Tribune.

Posted by dweintraub at 6:57 AM



May 17, 2004

LAO: structural deficit still there

The legislative analyst looks at the May Revision and concludes that while the budget would balance in the next fiscal year and come close in year 2, the structural gap would re-appear in 2006-07 at about $8 billion and persist indefinitely in the $6.5 billion range without additional tax increases or budget cuts. Bottom line: there are not enough permanent, deficit-cutting solutions in the governor's budget. Here is a link to the report.

Posted by dweintraub at 10:50 AM



May 16, 2004

A long slog

After taking a closer look at the governor’s revised budget, I am still convinced that, if the Legislature gave him everything he is asking for, the plan would balance the books in the coming fiscal year and allow Schwarzenegger to present another balanced budget next January without raising taxes or cutting programs further.

But that balance, of course, depends on the use of $2 billion in the coming year from the March 2 bond measure and another $3 billion in the fiscal year that begins July 1, 2005. That second budget would also rely on the final year of Schwarzenegger’s property tax shift, the after-effects of the one-time Indian gaming revenue surge he is anticipating, and perhaps one more year of shifts from the Proposition 42 transportation fund. All of those measures would disappear in 2006-07, leaving Schwarzenegger with the prospect of a re-emerging structural gap, somewhere, from this vantage point, in the neighborhood of $3 billion to $5 billion (in an $86 billion general fund). He thinks his proposals to reform spending in prisons, Medi-Cal, procurement and various social programs will generate enough savings by then to keep the budget balanced. But this is clearly a long slog. Without additional revenues and absent an unanticipated economic boom, Schwarzenegger, the Legislature, and the state are in for years of belt-tightening.

Is it doable? Probably. Over the three-year period from 2003-04 through 2006-07, general fund spending could grow from $75.6 billion to about $86 billion, or an increase of about 15 percent. Much of that new spending would not really be “new” but actually the resumption of ongoing spending that has been temporarily suspended through these tough fiscal times. An example: the end of the two-year property tax shift would require the state to spend an additional $1.3 billion on the schools in 06-07, but the schools wouldn’t see any net increase; they would simply be getting that money from the state rather than from local property taxes. Cities and counties, meanwhile, would see a return at that point of revenues they gave up for two years.

When you account for the property tax shift and other temporary measures that will expire, you’re probably left with an adjusted annual growth rate of about 3 percent or so over the three-year period. That might not be enough to keep pace with population growth and inflation. It might not be enough to restore state services to the level many believe is appropriate for California. But it’s not exactly a decimation of government as we know it.

Posted by dweintraub at 8:31 AM



Arnold's first six months

Here is my Sunday column, a special, longer edition that reviews and assesses Schwarzenegger's first six months as governor. My verdict: probably a B for substance, but an A-plus for marketing.

Posted by dweintraub at 6:57 AM



May 14, 2004

Tough choices

The chorus in the morning papers today seems to be that Schwarzenegger is ducking the "tough choices" needed to balance the budget. Huh? The guy is proposing to suspend Proposition 98, the school funding measure that was supposed to be sacred. He is whacking local government for $1.3 billion a year for two years. He is proposing deep cuts in higher education. He is trying to de-fund employee pay raises given by his predecessor, which would be unprecedented. He did restore in his revision many of the deepest cuts from his January budget in health and welfare that Democrats and advocates said were untenable. But I think that for a lot of people, "ducking tough choices" is another way of saying he won't raise taxes. It's fine if some people think the state needs more revenue to fund more programs. But they should have the guts to say so, and make their case for it, not hide behind the idea that this budget proposal ducks the deficit. It's far from perfect, but from a bookkeeping perspective, it looks more responsible than his January proposal, not less.

Posted by dweintraub at 8:32 AM



Structural deficit

The governor and his finance director, Donna Arduin, insist that their latest budget proposal would erase the structural gap between state spending and revenues by the end of the 2005-06 budget year. The May Revise doesn’t provide sufficient detail to test that claim, but there are plenty of hints. And it does look as if this plan moves them further in that direction than the January proposal.

They start with an estimated $15 billion gap between revenues and expenditures. If they did nothing, in other words, revenues would be about $75.4 billion next year while spending would soar to about $90.5 billion. That’s the structural gap.

To balance the budget in the fiscal year that begins July 1, the governor starts with about $3 billion in trims to K-14 education, a $1.3 billion cut in local government, nearly $1 billion in reductions to higher education, a $1 billion reduction in transportation funding and about $500 million in cuts to employee salaries. The rest of the gap he closes with a variety of measures, including revenue from tax amnesty, a pension bond, a new proposal to give the state a share of punitive damages in legal cases, additional federal funds and revenue still to be negotiated from Indian casinos. In the end, the governor says his budget would have revenues and other resources of $79.5 billion and expenditures of $77.6 billion.

The question for the long term is whether that balanced budget can be sustained, or whether it falls apart again in year 2 because of the extensive use of borrowing, shifts and one-time measures.

The legislative analyst scored the governor’s January proposal and concluded that the state would be facing a new, $7 billion gap next year. In other words, she said his budget proposal sliced the structural deficit in half, but did not eliminate it. Arduin never confronted that estimate head-on but suggested that she believed the new gap would be closer to $3 billion. Now, without providing documentation, she says that gap will be eliminated.

There are a couple of big pieces that point in that direction.

First, revenues are up. Most of the recent surge was due to a one-time tax amnesty program, but withholding from current wages is also up considerably from January forecasts, and that might be a signal of sustainable revenue growth. Finance has goosed its ongoing revenue estimate by about $1 billion for 04-05, and Arduin probably assumes that growth carries over into 05-06.

Next, the deal the governor made with local government officials to shift a share of their property tax to the schools for two years helps in 05-06, giving him another $1.3 billion toward the elimination of any new gap.

Arduin probably also assumes that the annual shift of the sales tax on gasoline from transportation to the general fund could continue for one more year. That’s another $1 billion.

Those two measures plus the new revenues give Schwarzenegger a potential $3 billion cushion going into 05-06. But he also has two other things going for him in this plan. One is that the 04-05 budget would end with a positive balance of nearly $2 billion that would carry over into the next year. And this plan uses $1 billion less from the March 2 bond measure for 04-05 than Schwarzenegger contemplated in January, leaving $3 billion in the bank from that source for 05-06 if he needs it.

Together, all of this gives the governor something like $8 billion in wiggle room going into 05-06, assuming he gets everything he has asked for in this plan. That doesn’t mean he would have an $8 billion surplus. It only means that he can survive the expiration of that much in one-time measures, or the falloff of revenues below projections, to that extent.

Legislative Analyst Liz Hill won’t score anything that isn’t already nailed down, and might also quibble with the revenue projections here. But I expect her assessment to confirm that this revision moves the state closer to wiping out the structural deficit. And if she counts the availability of the recovery bonds in 05-06, she might agree that the governor is very close to getting this thing balanced for at least two years, if not for the indefinite future.


Posted by dweintraub at 8:02 AM



May 12, 2004

Side deals

A rapidly developing conventional wisdom seems to be that Schwarzenegger is postponing dealing with the budget problem through all these side deals with narrow stakeholders. He may yet postpone seriously attacking the deficit. But the side deals are not evidence of such a strategy.

The latest, today’s agreement with local government officials, is a case in point. It cuts cities, counties, special districts and redevelopment agencies a combined $1.3 billion next year and the year after. In the third year, they go back to getting what they get now, with a different mix of tax sources and protection against future raids. So while the deal only extends for two years, it doesn’t put the state on the hook for any kind of payback. In year three, when revenues are anticipated to be significantly higher than they are today, the state simply has to go back to living without the shift from the locals.

The other agreements are similar. The deal with the education lobby gets Schwarzenegger $2 billion closer to balancing next year’s budget. That money is never repaid, per se, but in the out years the school budget would grow as if the money were part of their budget base. After many years, they eventually catch up to where they would have been without the cut. But all of that only happens if the economy continues to grow and generate more revenue for the state.

The deal with higher education, meanwhile, commits Schwarzenegger to increasing their budgets to pay for enrollment and a small expansion in future years. But he also has indicated that student fees will probably increase about 10 percent a year. The fees would pay for much of the growth the governor is promising. (See update below) And if he gets the reforms the universities are promising, the state could save money by graduating more students in four years, reducing the taxpayer subsidy required to keep them in school for a fifth or sixth year.

In his agreement with the judiciary, the gov gives the courts more money up front, but the state gets a seat at the bargaining table with courthouse workers, through which Schwarzenegger hopes to end the cycle of each county union one-upping the next, pushing salaries and benefits ever higher. Since the state pays court costs, it could come out ahead on this one in the long run.

Finally, there is talk that Schwarzenegger will promise to transportation projects any Indian gaming revenue above the $500 million he has already budgeted for general purposes. That makes sense, especially if the extra money is one-time rather than ongoing, which some descriptions of the still evolving negotiations say it might be.

So yes, budget hawks should watch to be sure Schwarzenegger keeps his commitment to move toward balance over the next two years. But it’s wrong to suggest that these deals keep him from doing that.

UPDATE: It turns out that the fine print of the higher ed deal states that the revenue from any future fee increases would be above and beyond the amounts Schwarzenegger has promised from the general fund. So that money would not be available to offset the increases called for.

Posted by dweintraub at 4:28 PM



Land, oh

Gov. Schwarzenegger has issued an executive order that seeks to streamline management of the state's real property and assets so that managers can keep better track of what the state owns, buys and sells. Here is a link to the order.

Posted by dweintraub at 4:13 PM



Comp rates might drop 15 percent

Workers compensation insurance rates should drop by an average of about 15 percent this summer if a recommendation from an insurer-funded advisory group is followed. The Workers Compensation Insurance Rating Bureau evaluated the latest reforms and suggested that they will cut costs by about $3 billion. That's only about half as large a cut as Gov. Schwarzenegger predicted when he signed the changes into law, but there could be more to come. Here is a story on the report from the Chronicle.

Posted by dweintraub at 6:40 AM



May 11, 2004

Political Science 101

"This is how we move forward. Everyone chips in a little bit, but does it happily rather than having anger and protests afterward."

This quote from Schwarzenegger, in the LA Times, was about his deal with higher education officials to cut university budgets this year in exchange for agreeing to increases later. I won't weigh in here on the higher ed deal, because I haven't seen the whole thing.

But the comment suggests that the governor is quickly falling into the same trap that has ensnared so many in the Capitol: confusing institutional negotiators for the "people" on whom he says he relies for support. Whatever the president of the University of California might say, I am quite confident that the students most affected by this deal will have some anger, and perhaps some protests, in the weeks ahead.

In the meantime, Democrats in the Legislature might also rebel, since they had made protecting higher education from deep cuts next year one of their top budget priorities.

Posted by dweintraub at 6:42 AM



Local-motion

The California Redevelopment Assn. staff is telling its member agencies that the local government deal with Schwarzenegger is done. According to the CRA, the agreement is basically the same as the outline sketched out a few weeks ago: cities, counties, special districts and redevelopment agencies lose a combined $1.3 billion this year and next. The cut ends after that; then the locals give up $4 billion in vehicle license fee money and get the same amount of property tax in return. If the voters approve, these agencies get constitutional protection against future tax shifts engineered by the state.

The deal also includes mandate relief, with local agencies getting the right to ignore state mandates if they are not funded, and prohibits future tax shifts, rather than merely requiring that such shifts be approved by the voters, as the local governments' own initiative would have done.

Purely from the perspective of local governments, this would be a major reform. They get the "protection" they crave and stability in future budgets. Trading car tax money for property tax makes sense, and would to some extent restore the fiscal incentive to approve industrial and residential developments that generate property tax rather than only sales-tax generating retail projects. But Schwarzenegger, unwilling to challenge the clout of city officials, ducked an opportunity for historic reform. He could have made this a truly good deal for local government and the economy by shifting more property tax their way in exchange for an identical amount of sales tax, say, a half-cent. Perhaps the Legislature will save him from his mistake, but probably not. Once complicated deals like this are blessed by the governor and the stakeholders, they become very difficult to undo.

You can download a PDF file here that lays out the entire deal from the perspective of the redevelopment agencies.

Posted by dweintraub at 6:23 AM



May 10, 2004

Blowing up boxes, not

The Schwarzenegger plan to "blow up the boxes" by reorganzing state government is on hold until at least January, sources say. Why? One reason I am hearing is that the plan as developed by his Performance Review Commission wasn't that great. It amounted to collapsing departments into super-agencies that looked a lot like the federal government, which isn't necessarily anybody's model of efficiency.

But politics also played a role. This Chronicle story paraphrases John Burton saying he "wasn't inclined" to consider a reorganization plan at the same time his house was struggling with the state budget. I heard Burton's actual language was a little coarser than that, and his message was: send that thing down here and we will kill it in a New York minute. It's pretty clear that the Legislature, after six months of being portrayed as Schwarzenegger's patsy, is looking for something to nail him on. If I were the governor I would have considered sending the re-org plan to them and calling Burton's bluff. The plan would have been portrayed in the media as a dramatic restructuring and pruning of the bureaucracy, exactly what Schwarzenegger promised when he ran last year. The Legislature would have looked silly slapping it down without due consideration. That's just the sort of "defeat" Schwarzenegger could use to his advantage with the people. Finally, rejecting his re-org plan would have given lawmakers the feeling that they had finally bested the governor on the political game board, getting that out of their system before the budget battle to come. After the budget is passed, the governor could always resurrect his plan, change a few details and send it for approval again.

Posted by dweintraub at 7:08 AM



The pension jackpot

The Bee today takes an in-depth look at another long-simmering problem made worse during the Gray Davis years: disability retirement for state public safety workers. Retiring with a disability gives such workers half-pay, tax-free, for life. The incentive to do so has always been intense. But Davis helped make it easier for workers to qualify for disability retirement by signing into law presumptions that certain injuries and illness were job related. Now the cost to the taxpayers for this benefit is climbing fast. Read the whole thing here. See also yesterday's installment, on the ever-widening group of employees who are considered public safety. Next to qualify: drivers' license examiners.

Posted by dweintraub at 6:56 AM



May 6, 2004

$6 bil in health and welfare savings?

Beating the governor’s performance review to the punch, the state’s Little Hoover Commission has recommended a comprehensive overhaul of the way the state provides health and human services, suggesting that as much as $6 billion annually might be saved by re-engineering state operations, redefining state-local relationships, improving how funding is allocated to local agencies and improving accountability.

Says the commission:

“The 13 major departments and five smaller entities within the Health and Human Services Agency are rife with duplication: Five departments license or certify facilities and personnel. Seven departments are involved with Medi-Cal, the state’s primary health insurance program for low-income Californians. More than 60 data systems gather, analyze or report information on people served, but data are not shared to improve services. The State has scores of oversight and advisory boards, many with overlapping missions.

“The disparate and duplicate nature of state operations drives up costs as local agencies are forced to work through the state’s complicated bureaucracy.”

Read the whole report here.

Posted by dweintraub at 2:43 PM



May 5, 2004

With profits like this....

Health Net Inc.announced Tuesday that it would cut 500 jobs after an 80 percent decline in first quarter profits. Meanwhile, in the Capitol today, legislators debated new regulations on health care premiums to stop what some see as rampant profiteering.

Posted by dweintraub at 3:31 PM



Fun with rent control

Here is an interesting story from the Chronicle about the distortions and contortions that come with local rent control laws. It's to the point in The City that people are protesting when landlords ask a tenant to leave so they can live in their own building.

Posted by dweintraub at 3:27 PM



Something wrong with this picture?

State public employee union members are using work time and state phones to jam the lines in the governor's office, leaving him messages telling him not to cut their jobs because they are vitally needed to provide public services.

Posted by dweintraub at 3:13 PM



Displacement

Here is the column I wrote Tuesday on the school employees' union attempt to derail the appointment of a Schwarzenegger pick for the state board of education who has led the fight to give schools back the right to contract with private firms to provide services. I've received a number of calls and letters from folks, many apparently in the union, who think that the law in question allows contracting out as long as the district can show that the deal would save the taxpayers money. This is not true. The law prohibits any private contract that "displaces" a single employee, and displacement is defined to include an unwanted transfer to a new job classification. So even if the contract saved money and preserved every public job, it couldn't be done if it forced even one school employee to change their classification. Here is the text:


(3) The contract does not cause the displacement of school
district employees. The term "displacement" includes layoff,
demotion, involuntary transfer to a new classification, involuntary
transfer to a new location requiring a change of residence, and time
base reductions. Displacement does not include changes in shifts or
days off, nor does it include reassignment to other positions within
the same classification and general location or employment with the
contractor, so long as wages and benefits are comparable to those
paid by the school district.

Posted by dweintraub at 2:29 PM



May 4, 2004

'That is for sure'

In a surprise appearance before the California Chamber of Commerce today with serious budget negotiations just about to start, Gov. Schwarzenegger reiterated his opposition to tax increases. Schwarzenegger, thinking he couldn’t return in time from his weekend trip to the Middle East, had sent a stand-in – actor Tom Arnold – to address the business leaders. But Schwarzenegger made it after all, and after telling a long anecdote he said he’d heard from the Israeli finance minister, Schwarzenegger turned to California’s fiscal problems:

“That’s what we are trying to do here: cut and cut and cut and make sure that we’re healthy as a state and that our public sector doesn’t go out of control. Because that’s what they want over there at the Capitol, some of those legislators. That’s what they want, to make it grow and grow so that the guy that carries it, which is the private sector, will stumble and stumble and he’ll never make it. But it will not happen under this leadership, let me tell you, because we will make the cuts. We will make the cuts and we will not increase the taxes, that is for sure. That is for sure.”


Posted by dweintraub at 4:21 PM



An open or Louisiana primary?

The latest open primary initiative has qualified for the November ballot, its sponsors say. The measure, backed by Controller Steve Westly and Education Secretary (and former LA Mayor) Richard Riordan, would allow voters to choose any candidate on the primary ballot, regardless of party affiliation. The top two finishers would then face off in the general election. For statewide races, this would likely still mean a Democrat and a Republican in most cases. But in legisaltive and congressional races, it is likely that many incumbents in lopsided districts could see a general election challenger from their own party, forcing them to have to appeal to more independents and members of the minority party, whichever it might be in their area. The sponsors hope this will lead to the election of more moderate lawmakers. It is similar to the system in place in Louisiana, which might be its weak point. Californians aren't in the habit of taking their election reforms from the deep south. If voters ultimately see this measure as the open primary initiative, they will pass it. If they see it as the Louisiana primary initiative, it might fail.

Posted by dweintraub at 1:45 PM



Self-fulfilling prophecy

The New York Times, once one of Arnold Schwarzenegger's biggest doubters, rings in with mid-course correction after seeing the early results of the gobernator's latest show.

An excerpt:

This page was among the vocal doubters, but nobody's laughing now. Since ousting Mr. Davis last October, Mr. Schwarzenegger has ended years of paralysis in the California Legislature and delivered on a string of campaign promises, like winning public approval for a $15 billion bond issue and reforming the state's hugely expensive workers' compensation system. Last week, in an announcement barely noticed outside the state, the governor offered a comprehensive energy plan that dealt the final blow to the unfettered deregulation that helped cause a series of blackouts in 2000, bankrupted a major utility and marked the beginning of the end for Mr. Davis. He then flew off to Israel, Jordan and the troops in Germany.

This is just the latest in a series of laudatory pieces on the new governor. I was bullish on him going in and I have been impressed with his approach to the job, but I feel now as if many observers are overreacting in the other direction. Schwarzenegger is not working political miracles. His first big accomplishment was a $15 billion bond to restructure state debt and a new budget reserve plan that fell far short of the spending limit he was seeking. His second major deal was a workers compensation agreement that passed only after it got a sign-off from organized labor. Meanwhile he has run into a brick wall with the public employee unions, is struggling to overhaul an out-of-control prison system, and has had to back away from a number of his most controversial budget proposals. He is not rolling over the Democrats in the Legislature so much as he is creating the appearance of doing so by declaring victory at just the right moment. But oddly, each time that happens he grows more powerful, and that makes it more likely that he will get his way in the future. He says he is succeeding, so he is. He is the ultimate self-fulfilling prophecy.

Posted by dweintraub at 9:37 AM



May 3, 2004

A wave from the queen

Sacramento Bee photographer John Decker was the lone journalist allowed on Schwarzenegger's quick helicopter trip today from Tel Aviv to Jordan for lunch with King Abdullah. His detailed pool report of the journey was released by the governor's office earlier this morning. If you're wondering about the logistics of this trip, and some details about the security, you might want to read it. Also: if you want to know what the King served the governor for lunch. You can download the full report here.

Posted by dweintraub at 11:55 AM



May 1, 2004

Care Not Cash

Before San Francisco Mayor Gavin Newsom became famous for allowing gay couples to marry, he was quietly building a record as a moderate Democrat willing to buck party dogma on important issues. On Friday, a state appeals court reinstated his Care Not Cash ballot measure, which voters passed a year before he was elected mayor. The program substitutes services for most of the cash given to the homeless in the city's general assistance welfare program. It was struck down earlier by a lower court. Here is a story from the Chronicle.

Posted by dweintraub at 8:06 AM



The local angle

The best coverage I have seen anywhere of the battle for Fallujah has come from the tiny North County Times, based in Oceanside in San Diego County. The closest paper to Camp Pendleton, the Times sent reporter Darrin Mortenson and photographer Hayne Palmour to Iraq embedded with forces from the nearby base. Mortenson has produced a string of detailed, intelligent accounts of the build-up around Fallujah, the operation in the city and this week's hook-up with the mysterious new force of Iraqi soldiers. If you are puzzled by what is going on there, read Mortenson. And for a little more context, much of it framed around Mortenson's battlefield accounts, read Belmont Club.

Posted by dweintraub at 7:32 AM



Off with their bobbleheads

Eugene Volokh argues here that Schwarzenegger should lose his "right of publicity" suit (if he files one) against the bobble-head company that's using his image. But Volokh also concedes that Schwarzenegger might win.

NOTE: An earlier version of this item referred to the governor's complaint as a copyright issue. The dispute is actually over the right of publicity.

Posted by dweintraub at 7:23 AM



 
 

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