CAIVP > budget
Governor Schwarzenegger's continued persistence in the face of Democratic demands for higher taxes is, as already mentioned, one of the more risky moves of the governor's political career.
With only two months to
go before California completely runs out of money,
there are many people who are looking frantically for some way to shift
the blame either from Schwarzenegger to the Democrats, or from the
Democrats to Schwarzenegger. One YouTube video even compares Schwarzenegger explicitly to Scrooge, from Charles Dickens's A Christmas Carol,
a frenzied reaction that betrays the desperation which the Left must
feel when faced with a governor who, for years, they probably thought
would cave in to their demands if they going ever got politically tough.
Now, staring down the barrel of Governor Schwarzenegger's metaphorical
shotgun, California's Left wing is shocked and horrified to at last
discover that "Hasta la vista, baby" wasn't actually a bad campaign
slogan intended to drum up Hispanic support, after all!
As this is still the season to be jolly, (it's still Christmas, you
know) and a little holiday charity may be in order, it might be less
productive to make nasty
remarks about the sad state of Schwarzenegger's opposition than to
genuinely reflect on what caused this budget crisis in the first place.
In this respect, there is blame to be laid at the feet of many people,
Schwarzenegger and the Democrats included. As the World Independent Newspaper
reports, one of the problems which Schwarzenegger has faced is an
inability to manage the budget effectively because of "Direct
Democracy." The instances of "Direct Democracy" the report cites
are shamelessly biased (Proposition 13 caused the budget crisis!), but
still hold a grain of truth. There are times when, conceptually
speaking, a measure limiting taxes might be undesirable, even if its
consequences are desirable 99 percent of the time otherwise. Thirty years ago, it
seems unlikely that anyone could anticipate a time when California
would run out of money, as no state has ever done such a thing. But as
it may happen now, Prop. 13 is getting a bad rap for not being designed
for an unforeseeable situation - unjust, perhaps, but still a good
point.
But there are other problems with the "direct democracy" process
besides tax limitations, and the biggest one has to do with controlling
spending. People tend to be extraordinarily cavalier with other
peoples' money, and even if all the direct ballot measures trying to
increase spending don't always pass, they often center on emotionally
satisfying areas of spending that are very difficult to refuse.
It's
worth noting that similar propositions that were on the ballot in 2008 - Proposition 1a, Proposition 2, Proposition 3 and Proposition 12
- all passed. This is no accident. It's very hard to say no to
increased spending to high speed rail, more protection for farm
animals, increased spending on children's hospitals or increased
veterans' benefits. But like bulimic children in candy shops,
California's citizens continually need to understand that no matter how
large and sweet a particular bit of welfare statism might sound,
consuming too much of it will ultimately lead to a need to purge.
That,
or the citizens may end up choking on their own profligacy, and need a
strong-armed governor to come in an execute the Heimlich maneuver.
Whichever result happens, California's government needs to move
quickly, before mommy runs out of money and the candy shop permanently
closes, leaving its customers to starve.
The last few days have seen a great deal of vitriol from all sides commenting on California's sad budget situation. Democrats and left leaning commentators railed against a Republican plan that proposed about $22 billion in budget "solutions" only to be followed by a similar right side hyperbolic rage against a "majority vote" Democratic plan that would have trimmed about $18 billion from the $40 billion or so 18 month cavern.
At the risk of appearing out of vogue, I'd suggest that the peanut gallery has actually missed an important milestone in the road to agreement. Yes, we shouldn't have gotten here in the first place. Yes, it's the Legislature's fault. Yes, it's the Governor's fault. Yes, it's the fault of past Legislatures and Governors. Oh and yes, it's the fault of labor unions and business interests. Oh, let's not forget the voters who keeping passing clever initiatives sponsored by special interest groups. O.K., did we get that out of the way? Did I miss anyone? If so, I am sorry. It's your fault to.
But, what happened in the last two weeks is that Democrats and Republicans each published something they were willing to be for, rather than pontificate about what they were against.
In each of their plans there was a great deal of material for their respective base voters to dislike.
The Republicans deserved more credit than they got for suggesting that California seek voter approval for general fund use of tax streams previously approved by voters for special purposes.
It was innovative, and a significant recognition that the general fund budget gap could not be closed without new revenues. In a more reasoned environment of public comment it would have been acknowledged as such.
Similarly, the Democrats "majority vote" plan has largely been castigated because the majority party had the temerity to find a way to narrow the budget gap with a majority vote.
The plan was decried as sneaky and underhanded. Nonsense. In the end, it may or may not be legal. That would be for a court to decide. But, the approach was not invented out of whole cloth. The Legislature has used majority to votes to adopt conformity to the Federal tax code balanced by tax cuts elsewhere to keep the "net" tax effect neutral dozens of times over the past twenty years.
No one argues the fact that fee increases require a simple majority vote and the swap of fee based revenues in place of historical taxes on gasoline actually strengthens the nexus on highway monies thus assuring that "fees" paid on fuel will go to transportation-a long sought reform by many folks.
But, more importantly, the Democratic plan also signals a move toward the center. It includes significant measures opposed by core Democratic constituencies and, rather than just hold a press conference, the Democratic legislators actually put up the votes.
Both the majority party and the minority party have a responsibility to follow the rules. If the rules allow the majority party to effectuate solutions that they are willing to stand behind, it is not only their right to do so, it is their responsibility.
Whether we like their solutions is another question to which we are all entitled to an opinion.
So, while this Legislature has been slow to understand the depths of the problem, both caucuses show signs of warming to the task. Wherever they land will be unfriendly territory. California's problems are beyond "structural". To fix this permanently will require us to fundamentally rethink the roll of State government.
I don't think the Legislature is quite there yet. But, piling on with venom- filled-and generally simplistic-criticism contributes to the problem not the solution. Democracy is about compromise. It is the process we depend upon as an alternative to violent resolution of differences of opinion. When we arrive at those compromises, we retain our principles and carry them on to the next fight. It is why the job is never done.
These are serious times. We would all be well served to carry a little humility and charity into the public dialogue. It is more likely to reward those who understand that their job is not to cast solutions in their own image but to seek the common ground, temporary that it may be, that allows our communities to begin the work of moving forward.
Read More...It’s a funny thing: the elementary and high school education centers across California do not appear to be showing improvements, and yet funding for public schools is at an all-time high across the state.
While the entire projected budget is just over $144.3 billion, more than $45.7 billion is going to K – 12 education, more than $41 billion of which will be coming from that state’s General Fund alone. Comparatively, Higher Education (colleges and universities) will receive about $14.2 billion of this coming year’s project budget, more than $11.7 billion of which will come from the General Fund. While state colleges are taking leaps and bounds in research, the funding allocated to these institutions is just over one-quarter of what is being spent on K – 12 education.
So even with rising tuition costs, and an incredibly competitive admissions process, why is the state only allocating a budget of about one-fourth the size of K – 12 expenditures, to our bastions of higher learning, the state colleges? Perhaps this is a question better answered by vague accountability standards for K – 12 educators and unions that have been slow to accept sweeping reforms.
Of course, plenty of money needs to be spent on all education, from kindergarten through college. However, isn’t it time government officials truly took a look at fiduciary trends, moving forward with what works, and fixing what doesn’t? Few can argue believably that there is not a problem with the way California currently funds educational institutions.
This year’s General Fund provided $41,145,000 toward financing K – 12 Education, a drop of $1.362 billion from last year’s $42,507,000. This constituted a decrease of 3.2 percent in spending by the General Fund for this particular arena. Along with that cut came another decrease in the amount of money provided for Higher Education by the General Fund. For the 2008 – 2009 project budget,the General Fund will fund Higher Education 0.5 percent less than 2007 – 2008, for a decrease of $61 million or a change from $11,819,000 to $11,758,000.
There have had to be cuts across the board (except for Health and Human Services, which was the one area with a budgetary increase of 0.2 percent, from $29,726,000 to $29,800,000), so it was inevitable that Higher Education would be cut as well. But why is the funding for our colleges still lagging so far behind, while new technologies and viable research arises all the time from our noted University of California, California State University and California Community College systems?
As with any household budget in decline, our state legislators need to take an honest look, and here are some suggestions: Drop the funding for K – 12 by 1.8 percent (for an even 5 percent). If testing scores and school rankings stay approximately the same, we can determine that massive funding increases are not directly correlated to massive increases in school performance. Set up greater accountability; only offer salary increases/bonuses to instructors whose classes consistently show improvement; for every 70 percent of their students who score at or above their expected grade-level performance levels, give teachers a 1 – 5 percent salary bonus.
There are so many ways to reward good work, and conversely, (and sadly) there are methods in place that still reward those who go through the motions, rather than help educate minds.
Read More...Yesterday, I wrote an article titled "America: Land of the Czar?" which presented my worries that America is indirectly handing over its representative government authority to unelected officials with superior power. Now, just today, the news from Washington D.C. is that the Senate has blocked the auto bailout package from going through.
The response from the treasury department: a blasphemous slap in the face to the American government, its constitution, and its people. Just in from the Associated Press:
The Treasury Department said Friday it's prepared to act to avoid any possible collapse of nation's three largest auto companies given that rescue efforts in Congress have failed.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.
Whether you are for or against this bailout is irrelevant. This is a major swipe at our system of checks and balances and should remind us all that next Tuesday is the 235th anniversary of that cold winter day when Sam Adams and John Hankock, among others, led what is now known as the Boston Tea Party, to protest taxes imposed on the colonies by the British without colonial representation.
Read More...Jim Carlton from the Wall Street Journal reports on the CA budget, and its not good:
The governor chided the legislature for failing to heed his call last month to come up with a plan to rein in spending and increase revenues to deal with the tide of red ink. He said in a press conference Wednesday in Sacramento that the deficit keeps increasing at the rate of $40 million a day, and that if nothing is done the state will run out of cash by the end of February. "We're heading towards a financial Armageddon," the governor said.
The Republican governor has wrestled with the Democrat-led legislature for much of this year over budgetary issues. The issue isn't so much between him and the Democrats, but with fellow Republicans who carry enough votes to thwart any spending plan. Because of the Republican minority's opposition to new taxes proposed by the governor and Democratic majority, it took three months before the legislature could agree in September on a budget to close a $15.2 billion deficit for the last fiscal year...
Read More...From the Sacremento Bee:
Gov. Arnold Schwarzenegger is in Philadelphia today to meet with other governors and President-elect Barack Obama about the economy.
The top of Schwarzenegger's wish list is more infrastructure spending by the federal government to stimulate California's economy.
Schwarzenegger said that California is on the forefront when it comes to infrastructure. "The people of California and also the legislature have made a commitment in 2006 for $42 billion of infrastructure," said Schwarzenegger. "So we hope that is an inspiration for the federal government and the Obama administration to do the same thing nationwide."
According Schwarzenegger infrastructure investments would create jobs. "With an immediate commitment to national infrastructure investment, it's possible to put shovels in the dirt and start immediately on projects across the nation," said the Governor. "This would quickly start to boost the economy with orders from U.S. factories for steel, cement, asphalt and other materials - creating jobs now and laying the foundation for future economic growth."
Read More...From the LA Times:
Gov. Arnold Schwarzenegger ordered the new Legislature in to work on its first day, declaring a fiscal emergency Monday in response to the state's deteriorating finances and urging lawmakers to "get off of their rigid ideologies."
But even as Schwarzenegger warned that California could run out of cash within two months, there was little indication that the Capitol's partisan gridlock has waned enough to allow for an easy resolution to the state's $28-billion budget gap...
The fight over how to tackle the budget moves forward in Sacramento.
The Oakland Tribune reports:
SACRAMENTO — As the Legislature's latest attempt to fix the state's fiscal mess ended once again in a bout of partisan sniping and no visible progress, something surprising happened: Hints began to emerge of the possible contours of a compromise.
All year, Republicans have refused to entertain raising taxes, without which Democrats and Republican Gov. Arnold Schwarzenegger insist the state's massive deficit — $28 billion through mid-2010 — can't possibly be closed. At least a handful of GOP votes are needed because of California's two-thirds supermajority requirement to increase taxes.Read More...
David Kerstan of the California Progress Report repudiates the Republicans plee to lower taxes, faulting the Republicans for a blind ideological position against necessary tax reform to increase revenues. He also proposes many reform measures that simply close the loopholes that allow many businesses and contractors to "hide" their taxable income. From the Report:
With a $25 billion budget deficit looming next year and a $22 billion structural budget deficit as far as the eye can see, it is essential that the California Legislature do everything it can to get the state’s fiscal house in order.
The failure of State Republican lawmakers to debate the state’s tax system in an open and honest manner, coupled with the 2/3 vote requirement for tax increases, has created a situation in which it is impossible to raise revenues even by closing the most egregious of tax loopholes.
Republican lawmakers’ blind insistence that all tax increases are bad public policy defies all rational logic and fundamental principles of responsible policy-making.
The Republican mantra goes something like this: “All tax increases are bad, will lead to job losses and devastate the California economy.”
Assembly GOP leader Mike Villines and Senate Republican leader Dave Cogdill recently stated that “Raising taxes is the worst thing we could do right now…It will devastate an economy that is hanging on by a thread, threaten jobs and hurt working families.”
The truth is that an excessive tax burden is bad for the economy. But the Legislature’s failure to address tax loopholes and a tax system that is outdated and inequitable is even worse for the economy and job creation.
Read More...Califonia is facing not only a budget crisis, but a one of the highest jobless rates in the nation. Today, the Governor issued the following statement:
"Our economy continues to be difficult, especially for people who have lost their jobs or who have begun looking for one. As our state unemployment rate rises, my administration continues to work hard to generate jobs and help re-train people who have lost jobs in our hard-hit industries.
"I have urged the Legislature to pass an economic stimulus package that includes workplace reforms to help keep jobs in California and ways to speed up the release of billions of in-the-pipeline infrastructure and construction dollars into our economy; and our increased unemployment rate underscores the need for that package to be passed in the Legislature immediately.
"This week, through my Labor and Workforce Development Agency, I have taken action to pump out $33 million in job training funds directed toward regions of the state hit hardest by our economic downturn and to our military veterans. These grants will provide education, training, and job placement assistance for thousands of Californians.
"I also want to reiterate the need to shore up our state's Unemployment Insurance Fund. We've known for years that changes must be made to the Fund to keep it solvent, and it is unfortunate that now, when we need it most, it is racing toward the red. I have proposed a plan to ensure this important Fund continues to be a safety net for unemployed Californians and for our economy, and I urge the Legislature to pass it.
"I am pleased that, today, President Bush signed an extension of unemployment benefits that my administration had pushed so hard for, so that Californians out of work can continue to receive their benefits through the holiday season."
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