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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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« December 2005 | | February 2006 »
January 31, 2006

Child care fraud

Prosecutors estimate that perhaps half of the money the state spends to subsidize child care -- about $1.5 billion -- is wasted on fraud, according to this article in the Daily News. In one case, relatives of an Ohio prison inmate set up an account in his name and told a local child care agency that he was caring for their children. Checks for $116,000 were sent to his account before the fraud was uncovered.

Posted by dweintraub at 8:53 AM



January 30, 2006

Public financing

On a party-line vote, the Assembly today passed AB 583, which would create a public financing system for state campaigns in California. Candidates who raised a specified number of $5 contributions and did not take money from other sources would qualify for the subsidy. The partisan nature of the vote was not a surprise, and this bill has problems. But I'm still wondering if some Republicans at some point might consider the idea of public financing as a way for the public to "buy back" its politicians, and its Legislature, from the interest groups that control it now. A well-designed program might even give a chance to Democrats who dare to run in the primaries without the endorsement of the public employee unions.

Posted by dweintraub at 3:55 PM



Costigan: false alarm

The California blogosphere was running hot and heavy over the weekend with a rumor that another Republican -- legislative secretary Richard Costigan -- was leaving the inner circle of Gov. Arnold Schwarzenegger, and that Costigan was going to work for Ameriquest, a mortgage finance company whose policies have been criticized as unfair to the poor. Bill Bradley reported here that Costigan appeared to be "headed out the door." And Jon Fleischman reported here that he had six sources confirming the news.

It turns out that neither talked to Costigan first. He tells me flatly he is not going to work for Ameriquest. And he has no plans to leave at this time. He is, however, juggling some difficult personal responsibilities with the infamous demands on the time of anyone working for a governor of California, and no one should be shocked if he leaves the job some time this year.

Note: Fleischman later corrected his item with this posting.

Posted by dweintraub at 2:37 PM



Westly: waive fees for community colleges

Controller Steve Westly today proposed making community college free for all students who complete their course of study. He estimated this would cost between $100 million and $200 million annually. If he were governor, he said, he would shift this money to community colleges from K-12 education by giving the community colleges a bigger share of the Prop. 98 money.

This is an intriguing idea, and, given community college demographics, certainly more appealing than expanding the subsidy for UC students, many of whom are wealthy or come from wealthy families. Rather than taking the money from K-12, another way to fund it would be by not freezing fees at the UC and CSU, which the governor has proposed for the coming year.

Westly's proposal is a bit convoluted, however. In order to pursue the goal of demanding "responsibility" in return for the fee waiver, he has proposed loaning the money to all students upfront and then forgiving the loan for those students who obtain a two-year degree or transfer to a four-year institution. Students who drop out would be charged retroactively for the fees. So the state would be in the position of going after the bank accounts of a mostly poor population that, having dropped out of community college, probably doesn't have a lot going for it. That seems a bit awkward.

The California Community Colleges, by the way, have the lowest fees in the nation and already have a policy waiving even those fees for the needy. In 2003, that waiver covered 23 percent of the students and about 37 percent of the units taken.

Posted by dweintraub at 2:31 PM



Unimpressed

Michael Der Manouel Jr. -- chairman of Lincoln Club of Fresno County -- doesn't think the gov's recent uptick in the polls means much.

Posted by dweintraub at 1:44 PM



The crisis in recreation spending

This short piece by John Merline helps support the point often made here that the biggest problem in health care isn't so much the total cost but the issue of access to care for everyone who needs it.

Posted by dweintraub at 11:19 AM



Robust debate?

Conservative Republican Activist Stephen Frank wonders why conservative Republican Sen. Tom McClintock is asking fellow conservatives not to withdraw the party's endorsment of Schwarzenegger or go on record opposing his agenda.

Posted by dweintraub at 11:06 AM



January 28, 2006

Sheehan considers run against DiFi

Cindy Sheehan, meanwhile, says she is considering running against Feinstein this year.

Posted by dweintraub at 8:46 AM



Feinstein to join filibuster

Sen. Dianne Feinstein says she will join the Democratic filibuster aimed at blocking an up or down vote in the full Senate on the appointment of Samuel Alito to the Supreme Court. She hasn't issued a detailed statement explaining her decision. But here is her statement on why she opposed Alito in the Judiciary Committee.

Posted by dweintraub at 8:43 AM



January 27, 2006

Housing starts dip

The number of housing starts fell in California in 2005 for the first time in 10 years. Builders say the reason is a combination of slackening of demand and local laws and regulations that inhibit construction -- or make it more expensive. Either way, it's a giant red flag for state budget writers, given the degree to which housing construction and sales have contributed to the state's economy, and tax receipts, in recent years.

Posted by dweintraub at 8:12 AM



Income gap

Here is a story about the latest study on the income gap in the US and individual states. I have a basic question about these numbers. Since the income of the people in the bottom 20th percent always starts at zero, and always includes some people just starting out who are at or near zero, is it even possible to significantly reduce the gap without actually capping or cutting the incomes of those in the top 20 percent? It seems as if the gap is destined by mathematics, if not economics, to constantly widen. In other words, 10 years from now, no matter what we do, there will still be some people who are earning no income or very little. But the people who are today earning $100,000 a year are pretty likely to be earning maybe $120,000 or so by then. Thus the gap widens further, and so on forever.

Maybe I am missing something, but I think we should be more concerned with the absolute incomes and living conditions of those at the bottom, which may indeed be a problem, and less concerned with how they compare to those at the top. To illustrate, look at the chart that goes with the story. Income inequality was "worse" in Tennessee than in Louisiana. Does that mean a poor person would be better off in Louisiana? No. The average income of the bottom 20 percent in Louisiana was $13,347. In Tennessee it was $14,303. So if I were poor, I think I would rather be poor in Tennessee, even if the people at the top were making more than they were making in Louisiana. Not to mention that with a progressive income tax, like we have in California, the government actually collects more money when the incomes at the top rise higher, giving it more to spend on those at the bottom.

There's a lot more here than meets the eye.


Posted by dweintraub at 7:46 AM



Preschool value questioned

A new UC study says most of the positive effects of preschool wear off by third grade, when those who attended preschool and those who did not perform about the same.

Posted by dweintraub at 7:35 AM



'A different kind of governor'

You can see Steve Westly's first ad in the governor's race here. It emphasizes his e-Bay roots and the Internet.

Posted by dweintraub at 6:00 AM



January 25, 2006

Pay-as-you-go

Here is Assembly Republican Leader Kevin McCarthy's explanation of his proposal for a pay-as-you-go plan to build California infrastructure, which he says would complement, not replace, the governor's plan to borrow money for the same purpose. I've long been a fan of regularly setting aside money for infrastructure, since it's typically the last thing funded when it probably should be the first. I'd prefer to do it as a super-reserve, setting aside extra money when revenues surge. McCarthy's plan does that, but it also sets aside funds in bad times, although the amount reserved would only grow in good times.

Posted by dweintraub at 3:50 PM



Another step back

The Schwarzenegger Administration agreed to rewrite a union contract with the state's lawyers that would have allowed new attorneys to opt out of the CalPERS retirement system. The rewrite came after opposition from legislators and other union leaders who did not want to see a precedent set letting any state workers opt out of the pension system and establish their own individual retirement account. The story is in the Bee.

Posted by dweintraub at 7:29 AM



January 24, 2006

From stinger to stingee

Gary Delsohn, who has been covering the governor for the Bee's Capitol Bureau, is quitting to go to work for Schwarzenegger, as a speechwriter.

Posted by dweintraub at 11:24 AM



Lungren on the "Abramoff mess"

Congressman Dan Lungren explains in this piece why he thinks the Republicans should have new elections for all of their leadership positions, not just majority leader.

Posted by dweintraub at 8:48 AM



Poll: governor trending up

Another poll shows the governor with a modest uptick in January but with still a long way to go to win back the hearts and minds of the voters.

Posted by dweintraub at 8:22 AM



January 23, 2006

Missing Bear?

Someone took out an ad in the business section of today's Bee and claimed this web site for MissingBear.com -- a campaign that hits both the state's business climate and, indirectly, the man who says he's trying to fix it. Seems like an odd mix for a potential political candidate, at least in California. Based on the fact that the web site is registered to a Reno, NV public relations firm that has done campaigns for that state in the past, I am guessing it is the leading edge of a move by the Nevada government to try to lure businesses to relocate east. Anybody got a better theory?

Posted by dweintraub at 1:54 PM



The green economy

Here is a link to the UC study that says Schwarzenegger's greenhouse gas reduction goals for 2020 can probably be achieved while growing the economy and creating thousands of new jobs.

Posted by dweintraub at 8:17 AM



Welcome to the club

Years after analysts first started warning about unaffordable public employee pensions and 24 months after Gov. Arnold Schwarzenegger took up the cause, the LA Times' Steve Lopez belatedly discovers that the issue is real, and blames Schwarzenegger for not using enough finesse to persuade the public of that fact last year. Maybe the gov should have tried the Lopez approach. An excerpt:

Look, I'm the son of a Teamster, and I've been a union member most of my working life. But at the very least, the unions are going to have to give some ground on early exits. I like firefighters. I think they deserve comfortable retirements. But should we pay them as much to sit on a park bench for 30 years as we did for the 30 they fought fires?

Funny how when some people say this stuff, they are being mean-spirited and vindictive, but when others say it, they're just facing an unpleasant reality. Oh well. Read the whole thing. And weep.

Posted by dweintraub at 5:35 AM



January 20, 2006

Unemployment down in December

California unemployment dropped from a revised 5.3 percent in November to 5.1 percent in December, down from 6.0 percent in December 2004. Employers added about 24,000 jobs in December, according to the state survey of employers. About 115,000 more people reported themselves working in the separate survey of households. The news release is here.

Posted by dweintraub at 5:05 PM



Cuts in federal aid

The pending federal deficit reduction bill would cost state government about $360 million annually when fully implemented, according to the Legislative Analyst. California university students could lose another $360 million in student aid over time.

Posted by dweintraub at 10:29 AM



Highway to nowhere

Even as Gov. Schwarzenegger is trying to launch his ambitious infrastructure plan, his administration is tied in knots over a proposed toll road in Orange County that is being fought by his brother-in-law, Bobby Shriver. The FlashReport blog is all over the story.

Posted by dweintraub at 9:51 AM



January 19, 2006

Death penalty hold on hold

The push for a moratorium on California executions fell short in an Assembly committee today.

Posted by dweintraub at 1:32 PM



(Clinton+Bush)/2 = Schwarzenegger

The Chronicle reports as a done deal today what our buddy Bill Bradley was hearing last week: Bush strategist and former Democrat Matthew Dowd will run the governor's re-elect campaign. A Texas Democrat who once helped Bill Clinton get elected before falling in with Bush and Rove. Seems like a logical addition to the Schwarzenegger stew.

Posted by dweintraub at 9:59 AM



Transportation boom

I love the way the legislative analyst boils things down to their essence. This report on the new federal transportation bill says that California will get 40 percent more money for roads and transit than it did under the last program. I don't remember reading that in the press when the bill was passed and signed. Maybe it was there, but it didn't jump out at me. Combined with the now all-but-certain lockdown of the Prop. 42 money, that means transportation construction in California is headed for a mini-boom even before you consider the governor's bond proposals.

Posted by dweintraub at 9:52 AM



January 18, 2006

Ideological samplers

For some reason, Hillary Clinton's "plantation" comment on MLK Day has pundits talking again about her ideological soul, or lack thereof. Michael Goodwin in the NY Daily News:

All this zigzagging from left to right and back again on abortion, health care and national defense is supposed to make her look like a centrist.

It's just making her look confused.

At worse, it suggests she's having trouble figuring out who she is. And if she doesn't know who she is, how are the rest of us supposed to?

Sound familiar? Almost exactly what many Democrats and their pundit allies have been saying about Schwarzenegger here. In both cases, the problem isn't so much with the politician as it is with the pundits. Any politician who doesn't share every core value with his or her political party is accused of not having core values, or not knowing who they really are. But why is that the case? Why can't a politician have 7 positions that are in line with the Democrats and 3 that are more in sync with Republicans, or the other way around?

Clinton is (generally) for big government (Dems) but also for the war in Iraq (Republican). There is nothing inherently confusing about that. Schwarzenegger is for gay rights (Dem) and against raising taxes (Republican). Is there anything about these two stands that says they can't go together?

Why is it that these pols and the few others like them are the ones who take so much heat, when supposedly, the public (and the press) wants more leaders who are problem solvers, not partisans?

It's one thing to waffle, straddle or flip-flop, and both Clinton and Schwarzenegger have done some of that at times. But that is not the same thing as being an ideological sampler, picking and choosing positions from across the partisan spectrum. The critics would do well to note the difference.

Posted by dweintraub at 3:15 PM



Keep on truckin'

Here is an interesting article on the kind of truck-only lanes that the governor has proposed in his infrastructure package, by an Iowa State professor and an analyst from the Federal Highway Administration.

Posted by dweintraub at 9:08 AM



State to unveil bird flu plan

The state is scheduled to release a draft of its plan for fighting bird flu today at 10 a.m. The plan is supposed to be posted here.

Posted by dweintraub at 7:38 AM



January 13, 2006

The aging of California

Readers,

The next piece in my ongoing series on the future of California -- California on the Cusp -- will be on the aging of our our state's population, and the problems and possiblities that will bring. I want to look at that from an institutional as well as personal point of view, and I'd like your help.

Please email me with your thoughts and ideas and where we're headed and what we need to do now to prepare for dealing with a population with a much higher share of retired people and ailing elderly.

Also, if you are willing to share anecdotes about how you or your loved ones are handling this transition personally, I'd love to hear from you.

Thanks,

Dan Weintraub

Email me at
dweintraub@sacbee.com

Posted by dweintraub at 11:53 AM



A modest proposal

It hasn't received a huge amount of attention since no one is screaming about it, but the increase in education spending in the governor's budget proposal comes to a cool $600 per student in K-12, or an 8 percent increase over the current year. I offer a modest proposal here for how that money might be best spent.

I say we give half of it to the districts to cover general cost increases and give the rest to the teachers to decide how to spend. Really. Why not authorize each classroom teacher to spend $300 per student more in whatever way they think would best improve the education of those children? Even better, I'd take that money and give it all to the teachers who are teaching kids in the bottom half of the socioeconomic spectrum, where the achievement gap is the largest. Since half of the total increase would be going to half the kids, that would bump the amount back up to $600 for each of those kids.

If we did that, a teacher with 30 such kids in say, inner city Los Angeles, would get a chit worth $18,000. I say let them decide how to spend it. They could hire a fully credentialed teacher to work in their classroom for half the day doing small groups and one-on-ones with the toughest kids. Or they could hire a couple of aides to help out. Or they could hire someone to do intensive after-school tutoring. Or they could use it for the finest supplies, new computers, better books. You name it. I'd even be willing to let the teachers pocket some or all of the money as a salary bonus for working with tough-to-teach kids. My only rule would be they would have to write a report detailing how they spent the money and post it it on their classroom door for all the parents to see.

Does anybody doubt that this would be more effective than what the governor is proposing to do, which is give about two-thirds of the money in a general cost-of-living increase and divvy up the rest among targeted initiatives like his after-school program, teacher recruitment and training, arts and music programs and physical education?

After we empower the teachers, my next step would be to audit the results and find out whose decisions brought the greatest gain in achievement. Then publish a list of best practices for teachers to consider the following year.

Posted by dweintraub at 11:31 AM



Finance corrects bad data

On budget day I posted this item noting that buried in one of the appendices was the news that the state's total tax collections had hit an all-time high as a share of personal income. A sharp-eyed reader went to the chart I referenced and noticed an unusually large surge in tax collections reported for 2004-05 that did not seem to track with what we know to be the case. I inquired about it with the Department of Finance, and they have now sent me a revised chart (known as schedule 2) that has different numbers. The original erroneously listed all revenues and transfers, instead of just tax collections. I'm guessing that the big surge that didn't make sense was from the sale of the deficit bond approved by voters in March 2004.

Anyway, total tax collections per $100 of personal income are now shown to be $7.45 in the current year, still high by historical standards but not quite at the level reached at the height of the dot-com boom in 1999-00: $8.18.

Strangely, the old, incorrect chart was still here this morning on the department web site.

Posted by dweintraub at 8:23 AM



Former GOP chair: dump Arnold

Former California Republican Party chairman Michael Schroeder says Schwarzenegger should not run again, and if he does, the Republican Party should withdraw its endorsement. He was, Schroeder says, a "longshot who failed to work out."

Posted by dweintraub at 8:12 AM



January 12, 2006

'Wrong direction'

Here's the quick bottom line from the LAO's overnight assessment of the governor's budget:

The 2006-07 Governor’s Budget now projects that the state will be able to fund much more than a current-law budget and still maintain fiscal balance in 2006-07. The plan, however, moves the state in the wrong direction in terms of reaching its longer-term goal of getting its fiscal house in order. Given the state’s current structural budget shortfall, we believe that the 2006-07 budget should focus more on paying down existing debt before making expansive new commitments.

Indeed. Read the whole thing here.

Posted by dweintraub at 9:39 AM



Signs of life

The Survey and Policy Research Institute at San Jose State has a new poll out that shows an uptick in Schwarzenegger's approval ratings since his State-of-the-State speech. The improvement comes on the strength of better ratings from Democrats and independents. He's sinking among Republicans.

The governor's statewide approval rating was 40-51, compared to 36-53 in September.

The poll also found that Schwarzenegger's two Democratic opponents, Steve Westly and Phil Angelides, would both lose to the governor in hypothetical match-ups.

Posted by dweintraub at 7:37 AM



Angelides snags firefighter endorsement

The California Professional Firefighters, the group that led the opposition to the Davis recall and helped spearhead the defeat of Schwarzenegger's reform agenda last year, will announce today that it is endorsing Phil Angelides for governor.

Posted by dweintraub at 7:33 AM



January 11, 2006

Are bonds delayed bonds denied?

As John Myers reports here, Senate Leader Don Perata signalled this morning that any package of bonds approved this year will be scheduled for the November ballot, not June. Now the question is, what is the political impact on the governor? He had hoped to have the proposals on the June ballot, and have them approved by the voters, to show progress on his plan by the time of his re-election vote in November. So in that sense the timing is a setback. Also, if he is running for re-election at the same time that the bonds are on the ballot, there is a decent chance that many Democrats will reflexively vote no on the bonds because of the connection with the governor and their distaste for his policies. It's hard to see much of an upside for Schwarzenegger in the delay. Other than he gets to run for a second term while looking like something of a visionary in scoping out a long-term plan for the state's future.

UPDATE: A Republican friend offers a twisted but compelling analysis for how the delay on the bonds could help the governor. If you assume he was going to lose in June, his grand vision for the state gone down the tubes, then such a failure would have made him look even more feckless and contributed to his downward slide toward November. Now he gets to look like a visionary without the downside of possibly losing until it's too late to affect his prospects. Like I said, twisted analsysis, but smart.


Posted by dweintraub at 12:19 PM



January 10, 2006

As far as the eye can see...

Finance Director Michael Genest got back to me and said he misspoke when he said the operating deficit would be $5.5 billion in 2007-08. He now says it would be bigger. And he's provided the chart that shows the projection for the annual operating deficits for several years going forward. The numbers:

2005-06 $2.6 billion
2006-07 $6.4 billion
2007-08 $6.6 billion
2008-09 $9.7 billion
2009-10 $8.6 billion

And this in good economic times. Wow.

Posted by dweintraub at 5:04 PM



Revenues versus spending

revenuespending.gif

Posted by dweintraub at 3:43 PM



The revenue trend

calbudrevenues.gif

Posted by dweintraub at 3:27 PM



Tax collections hit new high

Buried in a budget appendix is this fact: total state tax collections as a percentage of personal income are expected to reach an all-time high this year (05-06) of $8.39 per $100 of personal income. That would surpass the $8.18 at the height of the tech boom in 1999-00, when the state was running a multibillion-dollar surplus. Hmmm.

Posted by dweintraub at 3:05 PM



Prop. 42 cave-in

The most disappointing proposal in this budget to me, personally, is the governor's plan to "pre-pay" $920 million supposedly owed to the transportation fund. This is money from the sales tax on gas that was earmarked by voters for transportation with the proviso that it could be kept in the general fund and used for higher priorities - health care, education, public safety - in bad budget years. That's exactly what was done, and for good reason. It is not owed to anybody or anything. The Legislature and the governor followed the law and set priorities. It is not a loan that needs to be repaid, now, next year, or ever.

Especially, especially, considering the broader context. The governor is proposing to pass a ballot measure that forever more protects the Prop. 42 money from being used for general purposes. And he is proposing billions in bonds to pay for new transportation spending.

You would think he could go to the transportation lobby and say look, you guys are going to be sitting pretty for years to come. This money needs to stay in the general fund. And then use the money to prepay some true debt - his deficit bond that is money borrowed from private lenders and must, by law, be repaid. Doing so would improve the state's budget position rather than worsening it and would make it easier to balance the budget in the years ahead. And given all the money that is going to be flowing to transportation pretty soon, they'd never miss it.


Posted by dweintraub at 2:48 PM



No fat lip. Just fat

The other day the governor fell off his motorcycle. Today he fell off the wagon. The budget-balancing wagon, that is.

Schwarzenegger had been making slow if not spectacular progress in balancing the state budget since he took office in the fall of 2003. The structural gap between spending and revenues estimated for the coming year shrank from about $16 billion when he took office to less than $4 billion, and a balanced budget was actually in sight. But his proposal today would spend $7 billion more next year, while the state’s revenues are expected to increase by just $4 billion. He has stopped making progress. Now he is going backwards.

The governor is proposing to spend about $98 billion next year while revenues are expected to total $91.5 billion. He would cover that gap with money left in the budget by what is believed to have been a one-time windfall of tax payments. Then he would run for re-election, roll the dice and hope for the best.

Now there are some caveats on the governor’s side. The gap described here is inflated by the inclusion of $460 million he is by law required to set aside for early repayment of a portion of the deficit bond voters approved in March 2004 at his urging. It also includes $920 million he would use to repay a transportation fund created by voters which he earlier used for general purposes.

But the bottom line is that this budget would begin with a positive balance of $7 billion (thanks to a one-time surge in tax revenues) and end, if all goes well, with a balance of about $700 million. Then, next January, most of the spending in this plan would continue, and grow, according to law, while revenues will almost certainly not keep pace.

Mike Genest, the governor’s director of finance, estimates that whoever is governor one year from today will be looking at a structural gap of about $5.5 billion, including about $2 billion the law requires be put into the state’s long-term reserve. And the surpluses that have papered over the past two years’ operating shortfalls would be gone. That means the governor in January 2007 would have to propose $5.5 billion in spending cuts, tax hikes or a combination of the two to balance the budget.

Schwarzenegger, to his credit, did acknowledge that he could have erased the state’s structural deficit by now if not for policy decisions he made and stands by. He listed four big ones:

1. Repealing the car tax increase put in place by Gov. Gray Davis just before he was recalled from office. This costs the state an additional $4 billion a year to reimburse local governments for the money they lost. In Schwarzenegger’s defense, he and his advisers believed that the Davis increase was illegal and likely to be overturned by the courts if not repealed by the voters. It might have disappeared anyway. But he took the initiative and repealed it by executive order on his first day in office.


2. Protecting local governments from raids on their treasuries. Schwarzenegger shifted $1.3 billion from cities and counties to the state in his first two years in office, and the Legislature probably would have gone along with a permanent shift of that money. Schwarzenegger endorsed a ballot measure to prevent that and swore off that method of balancing the state’s budget.

3. He has stopped shifting the state’s sales tax on gasoline to the general fund. In 2002, voters approved Prop. 42 to dedicate that money to transportation and transit construction, but Davis and then Schwarzenegger used a provision in the measure to keep the money in the general fund, to the tune of about $1.3 billion a year. Now Schwarzenegger says it is time to keep faith with the voters, spend that money on transportation and he supports a ballot measure to wall that money off forever more.

4. He is proposing to spend $4.3 billion more on education, including $1.7 billion more than the constitution requires. Schwarzenegger has been hammered for not spending enough on the schools. This year he is trying to get ahead of that debate, though already, the education lobby says that’s not enough.

If you total all of that money -- $4 billion for the car tax, $1.3 billion from local government, $1.3 billion from transportation, perhaps $1.7 billion from education – you come up with $8.3 billion. That’s more than enough to balance the budget with a little bit left over. Then the one-time tax revenues in this year’s budget could be used for one-time expenditures, starting with the governor’s proposed infrastructure plan.

Schwarzenegger also acknowledged Tuesday that balancing the budget has turned out to be more difficult than he imagined as a private citizen and candidate. That’s obvious enough. But even as governor, he roughly outlined a plan to bring the budget into balance over three years. He laid out that strategy, and persuaded the voters to restructure the state’s debt to accommodate it. Then revenues grew far faster than just about anybody expected. That should have made it easier for him to stick to his plan. But now, rather than finishing the job, the governor is proposing a budget that would deliberately expand the shortfall again. And he is doing so at a time in the economic cycle when state revenues would normally begin to level off.

This is not a responsible budget. It is possible that Schwarzenegger will get very lucky, the economy will get a second wind, revenues will increase by even more than expected, and he will creep close to balancing the budget. But just as likely, the economy will flatten, revenues will fall short and the gap between spending and revenues will grow even larger. If that happens, what he is proposing to do now will make the job of balancing the budget later much more difficult than it otherwise would need to be. It will make the spending cuts bigger and the tax increases more likely.

I have no doubt that if this budget passes and the economy performs as expected, Schwarzenegger, if he is re-elected, will propose a tax increase a year from now to help close the gap. It will be interesting to see if he admits that during the coming campaign, tries to dodge the issue or, against all reason, re-ups on his pledge to not raise taxes.

Schwarzenegger isn’t quite doing exactly what he accused Gray Davis of doing in 2003. But he’s getting closer every day.

Posted by dweintraub at 2:39 PM



January 9, 2006

Angelides rips infrastructure plan

Treasurer Phil Angelides today blasted Gov. Arnold Schwarzenegger's infrastructure plan, saying it was barely more of a commitment than the state was already making and relied on bad numbers and political gimmicks.

"It's business as usual," Angelides said. "It's what we were going to do anyway wrapped in a nice bow."

He noted that $100 billion of the $222 billion represented existing money or money already programmed to come into state and local treasuries. He also said the plan didn't do enough to push water conservation, mass transit or incentives for smart growth.

"I don't believe it's a 21st Century plan," he said. "I believe it's a regurgitation of 20th Century thinking."

Angelides would not say whether he would propose an even larger infrastructure plan, saying he could only make such a judgment after a "comprehensive needs assessment," which the law requires and the governor's administration has not done. On the numbers, Angelides said the governor was being dishonest while calling for a 6 percent limit on debt service but not counting within that figure the cost of retiring the state's existing deficit bonds.

A report the treasurer issued on the governor's plan is here.

As a side note, Angelides also said repeatedly that he believed the Legislature was likely to pass an infrastructure plan this year and he said he looked forward to working with legislative leaders on such a plan. To me that signals that the treasurer has talked to his Democratic allies in the Legislature and been told that the leaders want to move forward rather than stonewalling the governor and waiting until after the election to deal with the issue.

Posted by dweintraub at 2:34 PM



15 stiches for gov

Gov. Arnold Schwarzenegger and his 12-yer-old son were injured in a motorcycle accident near their Los Angeles home on Sunday.

Posted by dweintraub at 7:13 AM



January 6, 2006

Standing firm

Good for school Supt. Jack O'Connell, who announced today that he is standing by the state's high school exit exam, requiring students in the class of 2006 to pass the test in order to receive a diploma. O'Connell, a Democrat, came under intense pressure from his usual friends and allies who wanted him to water down the requirement. But he did the right thing and stood firm. Independent studies have documented that the exit exam is a fair and reasonable requirement. More important, it's been shown that the exam has motivated the schools to do much more to reach out, assist, and tutor students who are at risk of failing. In the past, those students were shuffled along and given a meaningless diploma, then shoved out into a world in which they were unprepared to work or compete. Now they are getting help. O'Connell recognizes this. And he has the guts to say so, even to people who don't want to hear it.

Posted by dweintraub at 12:11 PM



Catching up v. paving the way

Every time I hear Schwarzenegger talk about his infrastructure plans, I can't help thinking he is a bit tone deaf on one very important point. He seems to think that today's Californians have the same can-do spirit that Pat Brown tapped into, back in the day when some people were actually excited that we had passed New York as the most populous state in the union. But Californians today are much more leery of growth, and most are downright hostile to it. If he tries to sell his idea as a way to pave the way for the growth that's coming, even if that growth is inevitable, it might very well fall flat. And that's what he seems to be doing most of the time. He'd be far more successful selling the plan as a way to catch up with the growth we've already absorbed, improving the quality of life for those who are here now and are tired of dealing with overcrowded schools and roads and vulnerable levees and suspect water supplies. I don't think most voters are eager to spend money to make life easier for the those who will be here tomorrow.

Posted by dweintraub at 10:21 AM



January 5, 2006

Text of state of the state

A full text of the governor's speech is supposed to be posted here in a few minutes.

Posted by dweintraub at 5:35 PM



Democrat response

Here's a text of the Democrats response to the governor's state of the state speech:

Speaker Núñez:

“As we prepare to embark on the 2006 legislative year, there are some that are calling on us to bury the hatchet after the costly special election we all endured.

But rather than burying the hatchet, we believe we should mount it on the wall…as a vivid reminder of the divisiveness we’d all like to avoid in the coming year.

In the months past, we’ve heard the powerful judgment of you – the voters.

We’ve also heard what the Governor has said tonight.

And we agree: California suffers from debilitating partisan division.

That’s why we should do our part to forge consensus on the critical issues facing us.

Principled compromise is both necessary – and possible.

As long as we can uphold the central values we stand for – including justice, equity and opportunity – Democrats are prepared to meet the Governor half way.

Even in an election year, when rational voices will be more difficult to hear, we pledge to place the interests of all Californians above the interests of politics.

We expect the Governor to do the same.

The issues are clear. And public education is at the top of our list.

Unless we make adequate investments in education, we risk becoming the first generation of Californians to leave our children worse off than we were.

To do so would be unconscionable.

“We are encouraged by the Governor’s commitment to join us in freezing the cost of tuition at our state’s colleges, and his indication to begin to pay back schools for the funds he promised them.”

Senate President Pro Tem Perata:

“The Senate believes government needs to get back to basics.

Instead of promoting wedge issues or side issues, we need to attend to the issues that matter most.

Basics – like making sure every classroom has a qualified teacher in a safe learning environment...

…making sure our roads get better and less clogged and that our ports and flood protection levees are made secure…

…and making sure California can meet a public health emergency.

The Governor seems to agree with that back-to-basics message when he talked about rebuilding the state’s infrastructure.

That’s important.

I introduced the transportation bond almost a year ago.

Speaker Núñez has been pursuing an education infrastructure bond, and other legislators have had proposals for natural resources health infrastructure and court reconstruction.

It’s great to have the governor on board so we can get these overdue investments accomplished.

As long as the focus is on basic problems like that – ones that really affect our lives – this legislature will be able to work with this governor.

We all know this is an election year, but we still have a window to get some big stuff done before the usual bickering starts.

I look forward to working with Speaker Núñez and our colleagues that you elected to make that happen.”

Posted by dweintraub at 5:33 PM



Rebuilding California

It was ironic that Gov. Gray Davis was among those scheduled to be present during Schwarzenegger's state of the state speech tonight. If Davis had delivered a speech along these lines in January 2000, then delivered on its promises, he would probably still be governor today. Davis, in fact, did make moves toward rebuilding California’s failing infrastructure. But he never tied it all together into a plan that could be described as a vision for the state’s future, and certainly never tried to commit himself or the state to the kind of ambitious building program that Schwarzenegger is offering here. If he had, and if he had dedicated most of the state’s one-time revenue from the dot-com boom to that cause rather than spending it on ongoing programs, Davis would have largely avoided the budget crisis that later helped drive him from office.

In one sense, what really matters here for Schwarzenegger is the first year, the bonds he is proposing to put on the ballot by June 2006. He might not even be governor next year to follow through on the rest of his plan. Even if he is, the Legislature probably will not commit to scheduling all the bonds he has proposed for future ballots. And even if they do, future Legislatures and governors would still be free to postpone them or kill them altogether. Witness the state’s high speed rail bond, which has been delayed already and probably will be again.

But the rest of the plan, even if its details will surely change and be worked out later, provides the context for what he wants to do this year. It’s not just $25 billion in bonds in 2006 for transportation ($6 billion), education ($12.4 billion), flood control and water supply ($3 billion) and public safety, courts, and other public infrastructure ($3.8 billion).

Those projects fit into a plan that administration officials say will reduce traffic congestion over time even as more people drive more miles on our roads. One that will allow more goods to move faster out of our ports, with less pollution. One that will house the new students expected over the next decade in fast-growing areas while rehabbing the crumbling schools in our older inner cities and expanding universities to handle a coming increase in enrollments. And one that will improve flood protection throughout the state but especially in the highly vulnerable Sacramento Valley, which is one historic storm away from becoming the next New Orleans.

The Legislature will surely want to massage Schwarzenegger’s plan and add its vision to the mix. But I have a feeling lawmakers will find it hard to resist this bold call for rebuilding California for the 21st Century. Speaking here about the grand scheme and not necessarily the details, it’s good public policy and good politics. And long overdue.

Some interesting details:

--The governor is proposing a constitutional limit on debt service for general obligation bonds of 6 percent of the general fund. This will help him sell the plan as fiscally responsible even as it seems like a huge commitment.

--Only $68 billion of the $222 billion in the plan is supposed to come from general obligation bonds. And that’s over 10 years. So you’re talking about $7 billion per year. Not really that large of a number. The rest comes from the federal government, local governments, existing fees and taxes, and new revenue sources such as a fee on water users to pay for flood control and new water supply.

--One of the most ambitious ideas is to use public-private partnerships and tolls to pay for new roads to speed the movement of goods into and out of California’s ports. Picture a truck-only toll road leaving the ports of Los Angeles and Long Beach and heading to inland California and beyond, allowing those trucks to move faster while relieving congestion on existing freeways used by commuters. Seems like that idea would be popular with the trucking industry and commuters, both of whom would benefit.

--The governor is proposing $1 billion for new charter school construction this year and another $1.4 billion in the second five years of his plan. Probably no way he gets that through the Legislature, which is growing more hostile to charter schools, which are public schools formed by teachers, parents and the community free of most state and local regulations. But it would be great if he got a good portion of that amount.

--The governor wants to build a firewall around the Proposition 42 sales tax money so that future governors can’t do what he has done and divert that money to the general fund in bad times to pay for education, health care and other urgent needs. The proposal is bad public policy. But the labor and highway construction industry that put 42 on the ballot is already preparing a ballot measure to wall that money off from future policymakers, and if it makes the ballot, the measure will pass with 70 percent of the vote. So that's probably going to be the law next year whether the governor backs the change or not.



Posted by dweintraub at 5:04 PM



Schwarzenegger: 'Build it'

Almost all of Schwarzenegger's speech is dedicated to his "Strategic Growth Plan" for rebuilding California's infrastructure. He makes only brief mention of other policy ideas his staff has already leaked: minimum wage, tuition freeze, prescription drugs, and education funding. He also offers a call for legislators to work with him on a budget reform measure to replace the one he fashioned last year and was rejected by the voters.

Posted by dweintraub at 5:00 PM



Mea Culpa

Here's the "I made mistakes" portion of the governor's speech, right from the top:

What a difference a year makes. A year ago USC and I were number 1. What happened?"

People recently have said to me, "Arnold, I bet you wish you were back in the movie business?"

I say, "No, not for a minute."

This is still the best job I've ever had. It's an honor and a joy to serve the people of California and to stand here with you at the start of this new year.

I've thought a lot about the last year -- the mistakes I made, the lessons I learned. What I feel good about is that I led from my heart.

It's true I was in too much of a hurry. I didn't hear the majority of Californians when they were telling me they didn't like the special election. I barreled ahead anyway when I should have listened.

I have absorbed my defeat. I have learned my lesson. And the people, who always have the last word, sent a clear message -- cut the warfare, cool the rhetoric, find common ground and fix the problems together. To my fellow Californians, I say -- message received.

And I hope the members of the Legislature also heard the message that the people want us to work together. I have always felt that the people are my partners.

So I haven't for a moment doubted our fundamental agenda -- to regain California's fiscal integrity, to return government to the people and to prepare our state for the extraordinary changes to come.

So, as we begin the new year, I stand before you tonight happy, hopeful and wiser. And I'm confident California has the innovative spirit to address the challenges we face here at home and as part of a dynamic global economy.

Posted by dweintraub at 4:59 PM



Head of the class

Read Dan Schnur's interesting personal take on Steve Schmidt, the Dick Cheney aide who is expected to head Schwarzenegger's reelect campaign.

Posted by dweintraub at 9:00 AM



January 4, 2006

No clemency hearing for Allen

Gov. Schwarzenegger said today that he will not hold a clemency hearing for Clarence Allen, the 75-year-old condemened murderer who is the oldest person on California's death row.

Posted by dweintraub at 4:39 PM



Heavy lifting

LA Weekly columnist and sometimes-SacBee contributor Bill Bradley has formally joined the blogging world after feints in that direction during the 2003 recall and with his emailed newsletter. One of his first items tweaks the LA Times for its profile of disgraced lobbyist Jack Abramoff, fact-checking the paper's report of the lobbyist's alleged prowess as a teen-age weight-lifter.

Posted by dweintraub at 4:31 PM



Giving the dog back its bite

Sen. Deborah Ortiz today unveiled legislation to give the state's political watchdog, the Fair Political Practices Commission, a 30 percent increase in its annual budget (to $9 million) along with an automatic cost of living increase every year. The bill is SB 1120.

Posted by dweintraub at 4:20 PM



Justice Corrigan

Carol Corrigan, the governor's pick to succeed Janice Rogers Brown on the state Supreme Court, was confirmed and sworn into office on Wednesday.

Posted by dweintraub at 4:09 PM



State revenues keep climbing

It looks as if December was another hot month for state revenues. The tax on banks and corporations produced about $1.7 billion after refunds, an increase of about 25 percent over December 2004, according to numbers from the Franchise Tax Board. The personal income tax (not counting withholding from wages) brought in about $1.6 billion, which was about 19 percent more than December 2004. Both numbers were considerably higher than was forecast when the budget was approved last summer, but more closely in line with the more robust revenue numbers projected in November by the Legislative Analyst and confirmed by the administration.


Posted by dweintraub at 12:55 PM



January 3, 2006

Busy week

Geez. Can’t a guy take a few days off around here?

In the run-up to his state-of-the-state speech scheduled for Thursday night, the governor has either announced or leaked the following:”

--He supports a $1 increase in the minimum wage as long as it is not tied to an automatic cost-of-living increase every year.

--He wants the federal government to allow Americans to buy drugs from Canada and other foreign countries while working to eliminate price controls in those countries.

--He will propose a $4 billion increase for public education, about $1.7 billion more than the minimum Prop. 98 guarantee.

--He will not propose any fee increases for higher education in the coming year.

None of this is especially shocking. Schwarzenegger supported a minimum wage increase last summer, but the Legislature refused to send him a bill along the lines of what he said he would sign. And while the governor vetoed legislation to allow Californians to buy drugs from Canada, he has always said he favored a national solution to that problem. As for his budget priorities, Schwarzenegger last year gave the schools $3 billion more within the context of a budget situation that was worse than it is today. And no governor likes to raise student fees, even if it is the wise thing to do.

What is interesting about these policy proposals is that the gov’s office seems to be taking the initiative in putting him on the offensive on issues that will prove popular with voters. They are not taking for granted that voters will know where he stands and what he is doing.

Conservatives have already begun to muse that one or all of these moves suggest the long-awaited tilt to the left. But even as the activists grumble, how many conservative voters really oppose a minimum wage increase, or a freeze on student fees, more money for the schools or cheaper prescription drugs? I don’t agree with all of these ideas, but I have to admit they are pretty mainstream proposals.

The school funding items concerns me the most. I haven’t seen any long range projections yet on the budget, but the money for schools may be something that sets up whoever is governor in January 2007 for some very tough decisions. While it is clearly doable this year, with a short-term surplus in the budget, it can only add to the state’s operating deficit going forward. I am not surprised that Schwarzenegger would do this given the beating he took on schools last year. But he might be walking farther out onto that limb that makes a tax increase inevitable.

Posted by dweintraub at 4:52 PM



 
 

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