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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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

The other compact proposal

The Morongo Band of Mission Indians has released the details of the proposed compact it and four other tribes offered to Schwarzenegger in May. According to the tribe, the deal would have given the state $1 billion cash up front -- no bond to worry about -- and guaranteed to the state 10 percent of the net win on all new slot machines. That is just about the same as the governor got from the tribes he settled with, except that being a percentage, the Morongo proposal would have led to increased payments as earnings climbed, while the state's deal is a set dollar amount that will be worth less over time as it is eroded by inflation. The Morongo proposal also included steps to protect patrons and resolve other disputes, but they were not as far-reaching as those negotiated by the governor. Here is a side-by-side comparison provided by the tribe.

Posted by dweintraub at 4:31 PM

'Don't forget us'

As Schwarzenegger wheels and deals with Democrats to add spending to his budget plan, he is starting to get pushback from Republicans who think he is going too far. According to an AP story that's moving on the wire now, Republican lawmakers are asking the governor to remove about $200 million in fee increases that are included in his plan.

Says AP:

Republican unhappiness with the fees could hamper the governor’s attempts to build the necessary two-thirds majority to pass a budget. Although Schwarzenegger promised during the recall campaign that he would slash spending and balance the state budget, the spending plan emerging from the last weeks of negotiations is filled with borrowing, one-time savings and accounting gimmicks.

Posted by dweintraub at 1:11 PM

June 29, 2004

SF to vote on anti-war resolution

In November, San Francisco voters will get a chance to vote on a resolution condemning the war in Iraq.

"Today, we speak of Vietnam with regret," said Geraldine Earp of the Senior Action Network, one of several groups supporting the resolution introduced by Supervsior Chris Daly. "What will we say to the next generation that we have done the same thing again?"

Here is an AP story on the resolution.

Posted by dweintraub at 7:15 PM

Gov's staff comes clean on TP

Contrary to recent reports in the nation’s Paper of Record, the toilet paper in California’s Capitol has not been downgraded in a money-saving move by the cost-conscious Arnold Schwarzenegger.

A colorful front-page New York Times story last week based on an interview with the governor concluded with these lines:

On fiscal matters, Mr. Schwarzenegger considers himself an old-school Republican determined to ferret out waste. No item is too minor to escape his attention.

For instance, since Mr. Schwarzenegger took office on Nov. 17, the toilet paper in the Capitol has been switched from two-ply to one-ply, a saving of thousands of dollars over the years. "It's not anymore the two-ply," he said. "Because you know what? We're trimming. We're living within our means."

But after inquiries by this reporter, the governor’s communications director, Rob Stutzman, acknowledged that the claim was untrue. It was, Stutzman said, part of a running joke between Schwarzenegger and Times reporter Charlie LeDuff, dating back to last fall’s recall campaign.

During the campaign, LeDuff repeatedly challenged Schwarzenegger to name something, anything, in the state budget that he was willing to cut . Schwarzenegger repeatedly refused to be specific. Finally, LeDuff asked him if he would be willing to change the paper in the Capitol bathrooms from two-ply to one. And when the two met again last week, LeDuff arrived with a roll he’d swiped from one of the Capitol restrooms. Thus the Schwarzenegger quote.

LeDuff could not be reached for comment. Stutzman said he hasn’t sought to clarify the governor's comments.

“We’ve been kind of busy around here,” he said.

Thanks to reader VM for the tip.

UPDATE. After talking to Charlie LeDuff, some clarification: LeDuff says he only asked the governor once during the campaign about reducing costs, and toilet paper. And he says he did not take any toilet tissue from a Capitol bathroom into the governor's tent. And I should note that the error here was not in The Times' telling of the story but in Schwarzenegger taking credit for something, no matter how small, that he did not do.

Posted by dweintraub at 5:04 PM

The story behind the story

In what will likely be a string of such stories around the state, the Chronicle today reports on the adoption of the budget for Contra Costa County, where supervisors are warning about deep cuts in health and social service programs in the year ahead.


The budget cuts a variety of health and social services and could affect everything from how many drug addicts can get into county rehabilitation centers to how quickly the mentally ill see a doctor. Smaller programs, such as one that provides free bicycle helmets to 1,400 poor children, face elimination.

What the story doesn't report is that the general fund cost of employee salaries and benefits in that county has grown by 25 percent in the past three years, from $466 million in 01-02 to $586 million for 04-05. Salaries and benefits as a share of the county's budget, meanwhile, have grown from 38 percent to 53 percent. Much of that has to do with Contra Costa's increasing pension costs, which are a leading indicator for the rest of the state. The numbers for Contra Costa County can be found in this budget document.

Posted by dweintraub at 11:44 AM

Props 59 through 72

Secretary of State Kevin Shelley has numbered the 14 propositions that will appear on the November ballot. They are:

59. SCA 1, a proposal to broaden access to government information.

60. SCA 18, the legislative constitutional amendment to counter the open primary initiative, which is Proposition 62.

61. $750 million bond measure for children’s hospitals.

62. Open primary initiative.

63. New tax on million-dollar earners to pay for expansion of mental health care.

64. New limits on lawsuits filed under Unfair Business Competition laws.

65. Initiative to protect local funds from state tax shifts.

66. Softening of three-strikes law; specifies violent and/or serious felonies that trigger third strike.

67. Telephone tax to pay for emergency room care.

68. Card room and race track initiative to expand casino gambling beyond tribal reservations and send 25 percent of revenues to the state.

69. DNA initiative to require collection of samples from all felony arrestees.

70. Initiative to expand tribal casinos and apply fee equivalent to corporate tax.

71. Authorizes up to $3 billion in bonds to pay for expanded stem cell research.

72. Referendum on SB 2, the health care mandate.

Posted by dweintraub at 7:24 AM

June 28, 2004

20,000 phone calls

In any negotiation, of course, each side has its own take on the outcome. But this estatic message from the California State Employees Assn. president to his members suggests that maybe Schwarzenegger didn't get all that much out of his weekend negotiations with the union. Note that the "compromise" mentioned at the bottom -- the centerpiece of the deal, according to the governor -- has no effect on any current state employee and only affects future employees who choose to keep their own money rather than participate in the pension system during their first two years on the job:

Congratulations!!! You Won the Pension Fight!

YOU DID IT!!! You made some 20,000 phone calls to your legislators. You
made countless visits to their offices at the Capitol and their districts.
All your work has paid off !

At the end of long and difficult negotiations with Gov. Schwarzenegger and
legislative leaders, we have achieved an excellent agreement.

1. You WILL receive your 5 percent salary restoration, effective October 1!

2. You will NOT have to pay one percent more for your pension!

3. We will NOT go back to mandatory Tier 2 pensions!

4. The state will fund increases in health insurance premiums.

5. The governor has pledged to sign SB 126, the rural health subsidy legislation which is critically important to our members who live in rural areas without access to HMOs.

6. The governor has agreed to a 5 percent salary increase for nurses in
Bargaining Unit 17 (over and above anything agreed to in contract
negotiations) and has promised a good faith effort to get state nurses to
parity with those in the private sector.

7. Teachers in Bargaining Unit 3 will receive a 2 percent salary increase
(over and above contract negotiations).

You told the governor and your legislators to "Say NO to a 7 Percent Cut!"
THEY HEARD YOU LOUD AND CLEAR! Congratulations on a great victory for the
members of CSEA!

Any successful negotiation requires compromise. Under this agreement,
newly hired state employees will pay 5 percent of their salaries into an
interest-bearing savings account administered by the state. The state will
not pay anything toward these contributions.

After two years, employees can deposit the money in the account with
CalPERS, in which case they will receive pension services credit for those
two years. At that point the state also will pay back its share as if the
workers had begun contributing to the plan from the beginning. Other
options are for the worker to keep the money in the savings account or
cash it out.

Most important, new state workers will remain in the Tier 1 system with
complete vesting after five years from the day they start state service.
This means they will NOT have to go into a mandatory, second-rate Tier 2
system that the governor originally proposed.

Thanks and congratulations to all of you who made this victory possible.

Jim Hard, President
SEIU Local 1000, CSEA

Posted by dweintraub at 12:41 PM

States rights?

The US Supreme Court will hear a case on California's voter-approved medical marijuana law. The Bush Administration is appealing a 2-1 federal court ruling that said the feds couldn't prosecute Californians who get their pot legally under state law.

Posted by dweintraub at 12:32 PM

Gov to name CPR commission

When Schwarzenegger kicked off his California Performance Review in January, he said the review of state government would be guided by a volunteer commission. But he never appointed the commission and the review proceeded without its board of overseers. Now that the study is complete and about to be made public in the next day or two, Schwarzenegger is set to appoint the commission, which will now be charged with holding hearings to get public input on the recommendations as Schwarzenegger mulls over which to accept and which to ignore. The co-chairs will be William Hauck, a longtime Sacramento hand and would-be reformer, and Joanne Kozberg, a former Wilson Administration official and UC Regent.

Posted by dweintraub at 11:52 AM

Rincon band sues to block compacts

The Rincon Luiseno Band of Indians, near Escondido in San Diego County, has sued in federal district court to block Schwarzenegger's compacts with five casino tribes. The Rincon suit references an economic study prepared for the tribe that says lifting the limit on slots, as Schwarzenegger's compacts would do, would lead to a consolidation of the Indian gambling industry, with a few large, successful casinos closest to metropolitan areas. Tribes in more rural or remote areas, which can now stay in business because the more accessible casinos have limits on the number of slots, will go out of business, Rincon asserts. Whether this is a good or a bad thing depends on your point of view. It might not be so bad to allow the market to weed out this industry and consolidate the business in a few areas where the public services can handle it. But as the Rincon suit argues, that kind of consolidation also would mean an end to gaming as a way for all, or at least most, of California's tribes to transition toward self-sufficiency and economic vitality.

Posted by dweintraub at 9:50 AM

June 27, 2004

Ready for prime time?

Republican Party honchos have come to their senses and given Schwarzenegger a prime-time slot at their presidential convention. Others getting the same honor: McCain, Pataki and Giuliani. So says the NY Times.

Posted by dweintraub at 7:51 AM

Still time, but barely

The budget talks are teetering at the point where getting a spending plan in place by Thursday, July 1, might no longer be possible. This suggests one thing to me: Schwarzenegger is sending a message to Democrats that the deadline, which he as made much of, is not as important as his budget priorities on the final items still being contested. This morning's papers are filled with analysis of whether a late budget (late by maybe a day or two) will hurt Schwarzenegger politically. I doubt it. Whenever it comes, he will trumpet the lack of new taxes and the (supposed) balance, and maybe mention that it was done far earlier than other budgets in the recent past. And he'll move on.

Posted by dweintraub at 7:47 AM

June 25, 2004

Big 5: Saturday at 3 pm

Schwarzenegger says negotiations on the budget will continue over the weekend, and he has scheduled a meeting with legislative leaders for 3 pm Saturday. But he doesn't necessarily expect that to be the deal-closing session.

Posted by dweintraub at 4:41 PM

Dog days

Alerted by his daughter to a growing controversy over the handling of lost pets, Gov. Schwarzenegger announced this afternoon that he has withdrawn a proposal that would have allowed shelters to put lost animals to death sooner. In a move to give cities and counties more flexibility to handle their own budgets and save money, Schwarzenegger had proposed repealing a state mandate that requires shelters to hold animals for six days before putting them to death. But animal rights activists protested the move, and now Schwarzenegger has relented.

“I realized last night there was a mistake I made,” Schwarzenegger told reporters in a hallway outside his office. “Animals will be kept in animal shelters for six days. Everything will be kept exactly the same.”

Posted by dweintraub at 4:37 PM

Big change in campaign finance rules

The Fair Political Practices Commission has today applied the state's campaign contribution limits to ballot measure committees controlled by politicians, closing a loophole in the law that has allowed Gov. Arnold Schwarzenegger and other elected officials to raise money in unlimited amounts as long as they spend it promoting ballot initiatives.

I'm a free speech zealot on this issue, favoring no limits on contributions coupled with full and immediate disclosure of all donations. I subscribe to the theory that, like water finding its way downhill, political money will always find its way to politicians. All these rules simply making it harder for the media, and the public, to track.

If this rule sticks, the likely effect will be more independent expenditure committees for ballot measures, and more coalitions of committees pooling their money for a particular cause. Also: the committees backed by elected officials will officially be controlled by others, limiting accountability.

UPDATE: Reader DR notes that the new rules don't take effect until after the November elections. An example I used in an earlier version of this item citing the Indian gaming initiatives thus wouldn't apply.

Posted by dweintraub at 3:31 PM

Pension games

Unless I am missing something, the Democrats are offering Schwarzenegger another fig leaf in exchange for a bond measure, much as they did with Propositions 57 (the bond) and 58 (the leaf). This time it’s in talks over Schwarzenegger’s pension bond, one of the final issues holding up passage of the state budget. The governor earlier proposed borrowing about $1 billion to pay the state’s obligation to the pension system in the coming year, and then paying that money back with savings from a rollback in pension benefits. The bond as the governor laid it out was really just one more form of deficit spending. But it at least it had the virtue of being linked to real changes in the retirement system that would save the taxpayers money over the long run. What the governor was doing was trying to capture (and spend) those savings all in one year to avoid deeper cuts in state programs or tax increases.

But Democrats say a roll back of pension benefits is not on the table. Instead, they are discussing two ways to generate “savings” that could be used to repay the governor’s bond. Both are questionable.

One would simply exempt new employees from the pension system, and exempt the state from paying into the fund on their behalf, for a certain number of months or years. This could conceivably save some money by reducing the number of working years for which retirees are paid. Instead of retiring at age 55 with 30 years of service, for example, a worker might get credit for just 28 years. But the savings from such a change are so distant, and so marginal, that it’s hard to believe they could really be enough to finance a $1 billion bond. More likely, the bean counters would be relying on the money the state would “save” by not paying into the fund for workers who quit before they become vested in the pension plan. But this savings is entirely phantom. The costs in the system, after all, are at the back end, when people actually retire. You can’t save money there unless you reduce real benefits. Reducing what you pay in for people who never do retire doesn’t save money. It just defers the day on which you have to pay it.

The other potential savings being discussed, apparently, is a reduction in the state’s contribution to the retirement fund, to be repaid, with interest, over time. Such a move would abandon all pretense of reform and would simply be one more form of deficit spending.

Posted by dweintraub at 2:53 PM

June 24, 2004

Gov moves to use state purchasing clout

Gov. Schwarzenegger today rolled out a major recommendation from his soon-to-be released California Performance Review, a plan to consolidate purchasing of the $4 billion in goods and services the state buys each year. Schwarzenegger said the Department of General Services has contracted with a management firm -- American Management Services -- to streamline procurement and use the state's power as a huge customer to cut better deals with suppliers. The company will be paid based on the savings it produces, which the governor estimates will eventually be in the hundreds of millions of dollars annually.

Posted by dweintraub at 2:18 PM

From two-ply to one

Schwarzenegger discusses the thickness of the Capitol's toilet paper, Hollywood-style secret deals, and his political style in an interview with the New York Times.

Posted by dweintraub at 7:38 AM

June 23, 2004

Budget talks getting serious

The budget combatants have been quiet this week, which is probably the best sign that a deal is near. Insiders say Schwarzenegger has given some ground on higher education budget cuts and aid to counties to pay the wages for home care workers. Lawmakers and the governor are still at odds over pension reform and local government finance. But all sides are looking toward a tentative agreement by week's end that would allow a vote in the Legislature early next week. More details in this article from the Bee.

Posted by dweintraub at 7:13 AM

June 22, 2004

Bond bull

I think on balance the gaming compacts are a pretty good deal for the state, compared to the status quo. But I’m bugged by this $1 billion bond measure for transportation, or more precisely by the way it’s being portrayed. I’ve got nothing against building new roads and transit, but there is no real connection between that goal and Indian gaming. The gov’s people keep trying to say this is “one-time” money and thus is appropriately dedicated to infrastructure. But that’s a crock. The bond would be repaid by a revenue stream of $100 million a year for 18 years. And after that, the $100 million would flow straight into the general fund. So there is no reason it couldn’t have gone into the general fund for the first 18 years along with the other money from these deals, estimated at $150 million a year. The idea of diverting a share to transportation is simply a policy choice made by the governor, completely unrelated to the gaming question. Except that it gets him support from organized labor and from the contractors who build new roads. And by linking the bond to the gaming revenues, the governor seems to be trying to further protect the tribes’ monopoly by claiming that they have a contract with the state to pay off that bond, a contract that can’t be violated by an initiative that would change the gaming laws and open up the industry to competitors.

Posted by dweintraub at 2:30 PM

Single subjects

Re the dueling primary proposals, I've seen a June 14, 2004 legislative counsel opinion on another matter that says flatly the single-subject rule for ballot measures does not apply to legislative constitutional amendments. To quote:

"A constitutional amendment proposed by the Legislature...has never been subject to the a single subject requirement. As such a proposal is not a statute or initiative measure, the single subject requirements set forth in the California Constitution are not applicable."

That opinion, however, does not address whether what are essentially two separate constitutional amendments can be linked in a single measure. On this point, the constitution says that "each amendment shall be so prepared and submitted that it can be voted on separately." (Hat tip: BoifromTroy).

It seems as if supporters of the Voter Choice initiative would have a case there...

Posted by dweintraub at 2:12 PM

June 21, 2004

Open primary battles

Pending in the Senate, newly amended SCA 18, a proposed constitutional amendment that would block implementation of the open, non-partisan primary measure that is headed for the November ballot. Opposed by both major parties, the open primary would allow voters to choose among all the candidates on the ballot regardless of party affiliation. The two top finishers, even if they are from the same party, would then move on to the general election, which would be closed to all other candidates. SCA 18, which would also have to go on the ballot and be approved by voters to take effect, would allow any party that had a candidate on the primary ballot to place the winner of that race on the general election ballot.

The two measures together, if they were both approved, would leave the state with something like the system briefly in place in the 1990s, an open primary in which any voter could choose from among the candidates, and the top finisher in each party advanced to the general election. That system was struck down by the US Supreme Court as an intrusion into the rights of the political parties to set their own election rules.

SCA 18 needs a two-thirds vote in each house of the Legislature to get on the ballot. It was approved on a bipartsian 5-0 vote in its first Senate committee test.

UPDATE: The bill passed the full house today on a vote of 28-3.

UPDATE 2: The other thing worth noting about SCA 18 is that it also includes an entirely unrelated provision calling on the state to sell surplus property and use the money to pay down debt. Apparently, for reasons I don't completely understand, the usual ban on two-subject ballot measures doesn't apply to legislative constitutional amendments. So this measure would go to the ballot with the added advantage of proposing something the voters will love, a provision the competing measure does not have and could not have.

Posted by dweintraub at 3:56 PM

If you can't beat em...

The tribal gaming compacts the governor officially unveiled today are classic Schwarzenegger deals: something for just about everybody. The governor who ran for office on a pledge to rid the Capitol of special interests is growing more adept every day at dealing with them.

For the Indians, the compacts lift the state cap on slot machines, extend the tribes’ monopoly over casino gambling and stretch the existing, amended deals from 20 years to 25 years.

For the state, which was getting virtually no money from Indian gaming before, the new deals promise a $1 billion up-front infusion of borrowed money plus an estimated $150 million a year into the future. Both numbers will rise if more tribes agree to these or similar compacts.

Local governments and environmentalists get new assurances that expanded gaming operations won’t happen without consultation over the potential adverse effects on the tribes’ neighbors and surrounding lands. The compacts spell out some of the new requirements and then call for binding arbitration to settle disputes that can’t be resolved among the parties.

Consumers who go to the casinos and are injured also get new relief where now they have very little recourse. The state’s civil justice laws will apply, and binding arbitration will be the forum for resolving disputes.

Hotel and restaurant unions get the freedom to organize casino workers without interference from the casinos. And the trade unions are pleased that Schwarzeneggger is promising to direct the $1 billion in bond money to transportation projects, which will mean jobs for their members. The contractors who will build those roads are also happy.

The only real losers are the existing card clubs and horse tracks, who are pushing a ballot measure for November that would let them build casinos to compete with the Indians. The compacts have provisions that seek to help the Indians fight that competition in court if the initiative is approved, and Schwarzenegger has agreed to put his political muscle to work defeating the measure. He will also oppose a second ballot measure that would subject the Indian casinos to the state’s corporate income tax – which would mean less money for the state than these deals are expected to produce – without any of the protections for local residents, the environment and labor that these agreements promise.

The deal as described today might pinch Schwarzenegger’s budget a bit in the short term. He had planned on having $500 million a year for the general fund from these agreements and has budgeted accordingly. But the most he now hopes to get from these five deals for the general fund is $150 million in the first year, and it could be a lot less. It could also be more if many more tribes rush to sign up for these agreements, but it’s almost certain that he won’t reach $500 million. The $1 billion he hopes to net from the bond measure backed by a portion of the gaming revenues would all go to transportation. So while the state gets more roads and transit, the programs that were depending on the $500 million in general fund revenue come up short. Or, more likely, next year's deficit grows.

The governor didn’t say Monday how he will bridge that gap. In fact, Schwarzenegger didn’t answer any questions at all. He presided over a ceremony with the five tribes and all the interest groups who like the deals, with his allies and appointees applauding from the invitation-only audience. Then he departed, leaving his lawyers to take questions from the media.

Posted by dweintraub at 3:25 PM

First gaming compacts complete

The gov is scheduled to hold a 1 p.m. press conference in Sacramento to unveil the first of his new Indian gaming compacts. But as this article from the Bee makes clear, Schwarzenegger's deals with a handful of tribes don't guarantee peace on this issue.

Posted by dweintraub at 7:18 AM

June 18, 2004


Now the governor has the casino tribe factions in a bidding war to see who can offer the state the best deal. Here is a story from the San Diego Union-Tribune.

Posted by dweintraub at 7:58 AM

June 17, 2004

Rally man

Two days after denying that he had any plans to launch a grass roots campaign to promote his budget proposals, Gov. Arnold Schwarzenegger is in Chico today, rallying voters to support his spending plan in the Legislature. Past efforts by the governor to generate phone calls and letters to lawmakers have met with mixed results. But I think his rallies might have another, slightly more subtle intent. Their value, I think, is not in putting direct pressure on legislators but instead as a marketing campaign to educate voters about what Schwarzenegger is doing in Sacramento. People normally pay so little attention to what is happening in the Capitol, even in the Arnold era, that he needs to get out, get on television and in peoples’ faces to let them know about his agenda. Whether it was his bond measure or workers comp or the budget, his rallies lay the public relations groundwork for whatever action that follows. People who heard about the rallies, or simply heard that Schwarzenegger was pushing hard for his budget, then give him more credit when the budget passes, without necessarily thinking too much about what’s in it. This is one way that the governor keeps building the impression that he is rolling over the opposition when in fact he is compromising at every turn. Maybe I am giving him and his PR team too much credit. But I think the rallies make more sense when viewed in that light.

Posted by dweintraub at 11:22 AM

June 16, 2004

May revenues slip

State revenues for May were $257 million below the forecast, which was just a month old. Much of that drop, according to the Department of Finance, was due to one-time factors. Personal income tax revenues were $79 billow the forecast of $1.6 billion, with withholding, the best measure of current economic activity, falling $26 million below estimates. Sales tax was down $54 million from a $2.1 billion forecast, but it was actually up before subtracting a $266 million accounting change. Corporate taxes were also down $67 million from a forecast of $239 million, but Finance says much of that was due to a single, unexpected refund to one company. Still, all in all, not good news for the governor just one month into his new forecast. Here is the full report.

Posted by dweintraub at 5:02 PM

June 15, 2004

Everything is beautiful

The governor was almost self-mockingly optimstic today, saying that he and lawmakers -- one big family -- will soon hammer out a budget deal. He's confident that all of his side deals with local government, higher ed, the courts and the teachers will be approved, more or less. He praised Democratic lawmakers for their negotiating skills and even had kind words for the head of the prison guards union. He was so kind to Senate Leader John Burton that Burton cancelled a press conference he had planned to respond to the governor. In his only brush with news, Schwarzenegger did say, for the first time, that he would consider some Democrat proposals to eliminate tax breaks. He also says he is "this close" to a deal with the casino tribes that will bring big money to the state and free him to vigorously oppose two measures heading for the November ballot that would expand gaming in California. Here is an AP story from

Posted by dweintraub at 4:51 PM


Today is the constitutional deadline for the Legislature to pass a budget. There is no indication that this deadline will be met. The last time lawmakers made the deadline was June, 1986. That was also the last year before I moved to Sacramento and started covering the budget. Hmm. Schwarzenegger plans an 11:30 a.m. press conference, presumably to put a little heat on the Legislature to get going.

Posted by dweintraub at 9:13 AM

June 14, 2004

23,600 new jobs, unemployment still at 6.2%

California's unemployment rate remained unchanged in May at 6.2 percent, even as payrolls grew by a net 23,600 new jobs. Compared to May, 2003, payrolls were up by 110,000. The biggest month-to-month gains were in leisure and hospitality and construction. Here is the full EDD report.

Posted by dweintraub at 10:28 AM

Happy Flag Day

An Elk Grove father doesn't have the right to sue over the reciting of the Pledge of Allegiance in his daughter's school because he doesn't have legal standing to represent her interests in court, the U.S. Supreme Court ruled this morning. Here is an early story from AP via

Posted by dweintraub at 9:17 AM

June 11, 2004

Report says few layoffs due to outsourcing

Don't expect this Bureau of Labor Statistics report on mass layoffs to end the debate over outsourcing and offshoring of American jobs, but it contains a couple of interesting nuggets:

--Of the 239,000 private sector non-farm workers laid off for more than 31 days in the first quarter of 2004, about 4,600 lost their jobs because work was shifted to another country. That's about 1.9 percent of all mass layoffs.

--Twice as many, 9,985, lost their jobs because work was shifted to another state.

The data are only from firms that laid off at least 50 people for at least five weeks. But they certainly suggest that the fear of the negative side of outsourcing, at least at large firms with large payrolls, has been overblown.

Posted by dweintraub at 2:11 PM

June 10, 2004

Gov names public defenders

Gov. Arnold Schwarzenegger has filled the top two jobs in the office of the state Public Defender, naming Michael Hersek to head the office and Donald Ayoob as his assistant. Hersek, 41, is currently a staff attorney at the state Supreme Court and was a deputy public defender for most of the 1990s. Ayoob, 49, has been with the public defender's office since 1988 and currently heads the San Francisco office. Both men are Democrats. The office manages appeals for indigent criminal defendants, spending much of its time representing condemned prisoners fighting to overturn their death sentences.

Posted by dweintraub at 5:21 PM

Locals reject compromise

Assemblyman Darrell Steinberg and a bipartisan group of lawmakers proposed a compromise on the local government finance issue today, suggesting that local government money be protected in the aggregate by a constitutional amendment while leaving open the possibility of future revenue shifts among cities and counties. Steinberg's hope was to give the locals the assurance they want that the state won't raid their revenue sources in the future, while still leaving the door open to structural reform that would fix some of the many problems that plague state and local finance today. The locals -- represented by the League of Cities and the Association of Counties -- flatly rejected the idea, saying they will settle for nothing less than a future guarantee of each city and each county's current revenue flows.

Posted by dweintraub at 1:25 PM

June 9, 2004

CPUC approves private power deal

San Diego Gas & Electric and San Jose-based Calpine won approval at the PUC today for a 10-year contract for 600 megawatts of electrical power capacity. Calpine says the deal is a model for the future and shows how a competitive procurement process can be a boon to consumers. The Utility Reform Network, TURN, a consumer group, says here
that it's a bad deal that sticks consumers with more power than they need at rates that are too high. Neither side cites much data.

Posted by dweintraub at 5:23 PM

Contra Costa voters pass tax for hospital

In a mail-in election, 84 percent of west Contra County residents voted for a $52-per-year parcel tax to raise $6 million annually to subsidize Doctors Medical Center San Pablo and keep its emergency room open. Here is a story from the Contra Costa Times, registration required.

Posted by dweintraub at 11:21 AM

June 8, 2004

Health mandate leading, 50-28

A Field Poll on SB 2, the health insurance mandate that will be the subject of a referendum in November, finds the measure leading by 50-28 among likely voters. At first glance that might look like a healthy margin, but the poll contains some red flags for supporters. First, no initiative campaign likes to start out with only 50 percent support, because it's far easier to knock down a proposal than it is to build it up, especially one as far-reaching and complicated as SB 2. Also, the poll shows that Democrats already back the measure by a wide margin, 61-17, an edge that is not likely to increase much further. Among Republicans, meanwhile, the proposal is trialing by only 36-41, and that gap could widen significantly after opponents finish painting the proposal as the road to government-run health care. This measure is going to be the centerpiece issue of the fall campaign in California, with supporters and opponents expected to spend $50 million or more on television advertising. My gut instinct says the proposal is going to be defeated.

Posted by dweintraub at 7:37 AM

June 7, 2004

Schwarzenegger, Shriver, pay respects

According to the governor's office, this is what Arnold Schwarzenegger and Maria Shriver wrote in the Book of Remembrance in the Capitol after returning from paying their respects to the late President Reagan today in Simi Valley:


"On behalf of millions of Californians we thank you for your leadership - your service -- your patriotism -- your optimism. You will always live in the hearts of all Californians.

Arnold Schwarzenegger


To Nancy-

We love you and we pray for you at this difficult time-

To Patti- Ron and Michael -

Thank you for sharing your father with the country -

With Respect

Maria Shriver

Posted by dweintraub at 4:25 PM

Higher ed battle joined

Higher education is shaping up to be the most contentious issue in the budget deliberations, in no small part because the issue appeals to middle-class voters and not just the poor. The Senate budget subcommittee on higher ed plans another hearing on the issue today, to put the spotlight on Schwarzenegger's agreement with university officials to cut their budget next year and then increase it modestly thereafter. The Democrats alternative would give both the UC and the CSU 2.41 percent cost of living increases, provide $85 million for student outreach, and increase fees by less than the governor is proposing (10 percent for undergrads compared to Schwarzenegger's 14 percent.)

Posted by dweintraub at 9:16 AM

June 5, 2004

Ronald Reagan

Ronald Reagan will always be remembered as a conservative icon. But he was much more pragmatic than most people realize, especially as governor of California. Reagan’s first major act as governor was to sign a $1 billion tax increase, which amounted to more than 20 percent of the total state budget. By comparison, that would be $20 billion today. He later signed an abortion law, which, while sold as a limit on the procedure, essentially legalized abortion in California. He emptied the mental hospitals of most of their patients, which was then a liberal, civil rights cause. And though he derided “welfare queens,” he signed a welfare reform law that included automatic, annual cost of living increases that continued for decades. Despite these and other digressions from conservative dogma, it was in Reagan’s interest, and that of his friends and foes, to always portray him as a purist of the right. His conservative friends overlooked his many compromises because he was their best bet for winning the White House. And his liberal foes never wanted to acknowledge his pragmatism, because to do so would have made him an even more elusive target as the leader of what they called the far right.

Posted by dweintraub at 3:04 PM

June 4, 2004

Governor, Jarvis group, agree on pension bond

Gov. Schwarzenegger, as promised, has produced a legal settlement with the Howard Jarvis Taxpayers Assn. over the use of pension obligation bonds to pay the state’s share of contributions to the employees’ retirement fund. The association successfully sued last summer to block former Gov. Gray Davis from using bonds to pay the pension fund, and the state had appealed the case. Now Schwarzenegger has agreed to drop the appeal, and in exchange, the Jarvis group has agreed not to sue again if Schwarzenegger’s proposed bonds are linked to pension reform. The governor in his budget proposes to sell a $929 million bond, but says the bond would be repaid and then some by savings from changes he wants to make in the pension system. Schwarzenegger’s plan would roll back, for future hires only, the pension increases granted by Davis and the Legislature in a 1999 bill. He would also increase by 1 percent the pension fund contribution required of all employees. It’s not clear, however, that the legal agreement will help the governor much. So far, his proposal has been a non-starter with the Democrats in the Legislature, who have been reluctant to roll back benefits for their political allies in the public employee unions. The Assembly version of the budget, in fact, replaces Schwarzenegger’s pension bond with an identical payment from the economic recovery bond the voters passed March 2. That change has no effect on the 04-05 budget but would leave the governor with $1 billion less from his bond next year. One final note: the settlement agreed to today includes a payment of $120,000 in attorneys fees from the state to the Jarvis association.

Posted by dweintraub at 4:38 PM

Budget gap

As the budget negotiations heat up in the next week or two, it might be difficult to keep track of the differences between Gov. Arnold Schwarzenegger and the Democrats who control the Legislature. Remember that they basically agree on about $75 billion of the $80 billion general fund budget. The differences come down to about $5 billion, and even that overstates the gap, because a good chunk of that number represents differences in how to approach a $1.3 billion cut to local government, not whether or not such a cut is going to be part of the final budget, and how to handle next year’s $1 billion general fund obligation to the state employee pension fund.

According to a Department of Finance analysis of the Assembly version of the budget, here are the major reductions proposed by Schwarzenegger that have been rejected so far by the Democrats:

$1.3 billion local government cut (Democrats don’t want a constitutional amendment protecting local revenue sources).
$929 million pension reform and pension bond
$464 million reduction in state employee compensation
$450 million from shifting a share of punitive damages to the state
$216 million from the Department of Corrections
$175 million from California State University
$158 million from the University of California
$134 million from student aid, a shift from general fund to student loan operating fund
$134 million from county juvenile probation programs
$129 million from the In-Home-Supportive Service program
$108 million transfer of CalWorks federal funds to offset general fund costs in child welfare and foster care
$100 million cut in CalWorks employment services and administration
$147 million from elimination of a planned cost-of-living increase for SSI-SSP recipients
$53 million from elimination of a planned cost-of-living increase for welfare recipients
$300 million from a collection of smaller, miscellaneous proposals

Posted by dweintraub at 8:36 AM

June 2, 2004

Deal with casino tribes near, paper says

The LA Daily News had this interesting status report yesterday on the governor's negotiations with the casino tribes. It says the administration expects to get $1 billion up front from the tribes, then $250 million a year, perhaps more, going forward, in exchange for lifting the limit on the number of slot machines they can have. The paper says a deal is imminent.

Posted by dweintraub at 10:21 AM

'Room for improvement'

The state of California spends nearly $1 billion a year on medical care for prison inmates, about 20 percent of the prison budget. A legislative hearing Tuesday delved into those costs, pegged to a recent, critical report by the Bureau of State Audits. Among the issues explored was why male inmates are getting breast reduction surgery and why the department has a retainer agreement with a Beverly Hills dermatologist. The director of the Corrections Department said many of the costs are unavoidable but acknowledged that there is "room for improvement." Here is a story on the hearing from the Chronicle.

Posted by dweintraub at 10:09 AM

Home care coalition plans ads ripping budget

In the most dramatic sign yet that not everyone is thrilled with Gov. Schwarzenegger's budget proposal, a coalition of home-care providers and their patients and advocates is launching a television advertising campaign to protest the governor's proposed cuts. The ads will try to move public opinion to stop Schwarzenegger's proposals limiting the state's reimbursement for home-care workers to the minimum wage and leaving part of the program dependent for its survival on new federal funding.

It's not clear who will be paying to air the ads, but the contacts listed on the announcement of Wednesday's press conferences include a political organizer for the Service Employees International Union, which represents many of the home care workers, and a staff member of a foundation that supports the non-profit regional centers for the disabled.

Posted by dweintraub at 7:28 AM

June 1, 2004

His own private Idaho

Gov. Arnold Schwarzenegger has returned from a holiday weekend in a supposedly secure, undisclosed (until now) location. The governor's office kept the wraps on his destination to prevent a repeat of last month's family vacation to Hawaii, when an LA Times reporter tracked him down at his hotel and scored a provocative one-on-one interview. The staff's argument is that when Schwarzenegger is out of state, he no longer has any of the powers of his office, and Lt. Gov. Cruz Bustamante is acting governor. As a temporary private citizen, they say, Schwarzenegger deserves his privacy. So where was he? Sources close to the governor tell me that he spent the weekend at his retreat in Sun Valley, Idaho.

Posted by dweintraub at 9:18 AM

Is Wal-Mart a crime magnet, or not

Wal-Mart watchers will probably be seeing a lot of references to this AP story suggesting that the big-box stores are crime magnets. The piece uses a few anecdotal reports from small-town police departments to make that point. But toward the end of the story, the article all but knocks down its very thesis, belatedly quoting the mayor of the town used in the lead anecdote saying he loves the company:

But the problem is not felt everywhere. The majority of the more than 30 small to mid-sized agencies around the country interviewed said they were able to effectively handle the extra workload that Wal-Mart brought. Six reported no corresponding crime spike and only negligible increases in calls to police.

Overwhelmingly, police chiefs defended Wal-Mart as an asset that helped law enforcement. They said it provided full access and information for investigations and grants to fund police projects — to say nothing of the tax benefits to the city.

"Thank goodness for Wal-Mart, that's all I can say," Harrisville Mayor Fred Oates said. "Any mayor in the United States who had the opportunity would be glad to have a Wal-Mart."

Posted by dweintraub at 8:24 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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