Tuesday, September 23, 2008

Why is this man smiling? Who are these people – and why are they clapping?

Gov. Arnold Schwarzenegger holds a copy of the 2008-2009 state budget after signing it during a small ceremony in his Sacramento office. Representatives from California counties stand behind the governor. (Steve Yeater / Associated Press / September 23, 2008)

LONG AGO, earlier this year in a meeting room in Sacramento the legislation team from the State PTA met and discussed the state budget as it impacts Education and the Welfare of Children - back when the budget was first proposed. Before the May Revise. Before the Crisis of 85 days. We were strong and we had powerful friends on our side: the legislative majority, almost a million members who are united and vocal - every one a likely voter. We had The Truth on our side; we were in the majority and we were set out to do the right thing for kids and the future of the state.

We also knew that politics is the Art of Compromise - and that ultimately we and the children would be compromised by our legislative friends. The Republican minority had signed a pledge to Not Raise Taxes …and we knew that that was not the workable option. That determination was shared by our friends and ultimately by the governor himself - we shared his dedication to reach a long term solution rather than a quick fix to postpone the crisis to next year. We were committed in his proclaimed  Year of Education Reform to NOT do things the way things had always been done.

Now as the dust clears, we and the children have been compromised. The governor claims that Education has been kept whole - but Education hasn't been whole since 1978. It has been cut and reduced and slashed and nibbled at since the passage of Proposition 13. Proposition 98, which is supposed to be the floor for Education funding is looked at as being the ceiling by most - and as being an outrageous burden on the taxpayers by a few. It was that few who won in the end. Taxes were not raised. The problems were put off to next year. California moves a little lower into the Cellar of Education Funding, perhaps from 46th to 47th in the nation - it remains to be seen.

     2007 was the year of Healthcare Reform.

     2008 is the Year of Education Reform.

     2009 will be the Year of Budget Reform.

Don’t let me ruin it for you but I have a feeling I know how that turns out.

Onward nonetheless! - smf


“The governor, however, proclaimed the budget a victory.”

FOR REAL MASOCHISTS: The California State Budget…includes veto messages!


September 24, 2008 -- LOS ANGELES — Gov. Arnold Schwarzenegger on Tuesday signed California’s budget, a document that was 85 days late and among state lawmakers, perhaps the most universally despised budget in the nation.

State Controller John Chiang used the occasion to move quickly to dispense with some 80,000 in claims that have gone unpaid since the state began its fiscal year on July 1.

“This record-setting budget stalemate has been an enormous burden on so many small businesses and health care providers who care for our most vulnerable Californians: the sick, elderly, disabled and children,” Mr. Chiang said in a statement. “I will quickly pay all backlogged claims, and I am asking state agencies for their assistance to ensure that we get payments into the hands of those who most desperately need them as quickly as possible.”

The $143 billion spending plan, which the governor signed without the usual public ceremony, was the subject of heated debate and intense last-minute haggling among Democrats, who control the Legislature, Republicans and the governor, a Republican who was at odds with lawmakers from both parties over how to close a $15 billion gap.

The budget, $68 million larger than last year’s, sets $1.7 billion in reserves should state revenues come in below estimates, highly likely in California’s, and the country’s, volatile economy.

Mr. Schwarzenegger also vetoed $510 million in line items, including $944,000 from the Department of Fair Employment and Housing, a cut that means the loss of nine enforcement jobs; $8 million from the state’s Alcohol and Drug Program’s program for preventing crystal meth trafficking; and $2 million from a California Conservation Corps work training program.

The budget relies heavily on accounting maneuvers — moving tax receipts from one year to a next — as well as a plan to borrow $5 billion against future lottery earnings, which requires the approval of voters in a ballot measure in a special election next year. If the lottery plan is defeated, midyear cuts and other measures to rein in spending are likely.

The government will also increase the penalty on corporations that understate their tax liability by at least $1 million, to add a 20 percent penalty in addition to a 10 percent interest rate on underreported taxes. But the spending plan contains no substantive changes to the state’s expenses or its revenue-raising structure, which might have staved off another hole next year.

“We have always said this really does just kick the can down the road,” said Alicia Trost, a spokeswoman for Don Perata, the Senate president pro tem, a Democrat. “The only thing good is that we fully fund education, we prevent borrowing, and we avoid the most onerous cuts to the neediest communities.”

The governor, however, proclaimed the budget a victory — one he squeezed from the Legislature after rejecting an earlier plan and after Democrats and Republicans could not agree on a sales tax increase.

He said he was particularly pleased by the budget’s proposed increase in the size of California’s rainy day fund, to 12.5 percent of the state’s general fund expenditures from 5 percent. That provision, too, requires a nod from voters in the special election.

Mr. Chiang’s office may begin writing checks as early as Friday, a spokeswoman said, beginning with $3.6 billion in Medicaid payments to hospitals, nursing homes and other health care providers that had been held up under the standoff. Further payments to vendors and other state creditors will follow.

Monday, September 22, 2008

Day 84: CALIFORNIA’s BUDGET – Everyone is a Winner AND a Loser

by Jon Fleischman -Publisher  FlashReport | Fleischman is Vice Chairman (South) of the California Republican Party.


9-22-2008 8:36 am -- As Governor Schwarzenegger prepares to sign the California State Budget, we hear at the FlashReport are prepared to say that everyone involved in the process were winners AND losers.

The winners:

Legislative Republicans, led by Senate Republican Leader Dave Cogdill and Assembly Republican Leader Mike Villines, draw a bright line in the sand and said that the problems caused by massive over-spending in state government WILL NOT be resolved by increasing taxes on Californians. In the face of Democrats who made as a top priority a hike in the state's income taxes, and a Governor of their own party pushing a multi-billion dollar sales tax increase, GOP legislative solidarity won the day.

Legislative Democrats, due to their gerrymandered majority, managed to get through this budget season without a serious overhaul of California's government. Decades of dominance by liberals in Sacramento has grown state government into a grotesque and massive one - in need of serious reforms. Despite all of the hoopla, this new budget spends MORE than last year's - a testament to power of a party committed to growing government.

Governor Schwarzenegger's budget reform measures, after some political muscle-showing, were ultimately placed into this final package - which is to say that it will be placed before the voters (where presumably public-employee unions will pony up millions to try and kill it). While these reforms are short of the kind of absolute spending cap that is needed to reign in the insatiable appetite of Democrats to increase spending, they are certainly a step in the right direction.

Only in California are the winners also the losers...

The big loser was Arnold Schwarzenegger. First and foremost, the Governor demonstrated that his form of flip-flop governance only made him less relevant to the process. While he ultimately got a last-minute demand for some budget reform in the final budget, the only reason there is a budget is because eventually legislative leaders correctly saw the Governor as a nuisance and ineffective in putting together a budget deal. We'll write more on this in the weeks to come, but if the Governor wants to be relevant, he needs to be a part of a team, as opposed to trying to be all things to all people (or nothing to anyone, depending on your perspective). His gross violation of his no-new-taxes pledge has taken his credibility with the California political community, especially Republicans, to an all-time low.

The failure to increase taxes makes California Democrat legislators losers. Clearly Democrats were backed off of a strongly desired tax hike (or as they call it, "revenue increases") as part of a budget solution. They also caved to the Governor's demands for budget reform. Perhaps they are the biggest losers because this year's successful play by the GOP to fend off tax increases pretty much means no new taxes in the foreseeable future. Assembly Speaker Karen Bass was widely looked at as ineffectual and a "B" player in budget negotiations, with the more seasoned and spirited (despite being term-limited) Senate President Don Perata being looked at as the "King Fish" of the left.

Finally, legislative Republicans, despite the win on the tax issue, were forced to put up votes for a budget that increases total state government spending, fails to really include real reforms of the process, and largely continues the status-quo of California's modern-day welfare state. It is unclear if, given the partisan make-up of the legislature, any budget deal could have been better. But it doesn't change the fact that when you get passed the hoopla of holding the line in taxes, no Republican can be proud of the vote they were forced to cast on this budget.

Day 84 - standin’ around an’ waitin’ for the next shoe to drop: WHAT’S NEXT?

AM Alert: SacBee CapitolAlert | Mon Sept 22

Gov. Arnold Schwarzenegger could sign the state budget as early as today, a record 84 days into the fiscal year.

But state lawmakers are already looking at a multibillion-dollar deficit next year. And the year after that. And the year after that.

"I don't see much of a signing ceremony," Gov. Arnold Schwarzenegger declared Friday, "because there's nothing to celebrate."

The next year's state budget will start out $1.5 billion in the hole.

And that includes $5 billion in funds borrowed from future state lottery earnings. If those don't materialize (the money depends on passage of a ballot measure that the education community is leery about), the state starts off in a $6.5 billion hole.

And that's if the economy holds up, which, well, who knows.

"We have simply rolled the problem into the next year," Senate President Pro Don Perata said last week.

Minority legislative Republicans, meanwhile, have been emboldened by the 2008 impasse, as they fended off calls for tax hikes from a GOP governor and from majority Democrats.

"So it's a W for the reps," wrote ex-Assemblyman Ray Haynes, a conservative Republican, on the FlashReport. "They should go home proud of their accomplishment, apologize to no one for what they have done, and gird their loins for next year's fight. It is going to be even nastier."

For their part, Democrats are ramping up the rhetoric to turn the Big Five into the Big Three, pushing a potential ballot measure to eliminate the two-thirds vote for passage of new taxes and budgets.

Such a measure could go on the 2009 special election ballot.

There's also the matter of the 800-plus bills lawmakers are dumping on Schwarzenegger's desk. He has until the end of the month to sign or veto them.

Saturday, September 20, 2008

Day 81+: SENATE PASSES BUDGET …AND THE ASSEMBLY TOO (meaning also and again) But the clock is still ticking until the Governor signs and The Lege decides to do nothing about the inevitable line item vetoes.

Senate passes budget updates

SacBee CapitolAlert | Published 4:46 PM Friday, September 19, 2008 by Shane Goldmacher

The state Senate has just passed the final updates to the 2008-09 state budget, shipping the bills over to the state Assembly.
"We are finished," pronounced Senate leader Don Perata, amid clapping among the lawmakers.
It is the 81st day of the fiscal year. ... (more)


And the Assembly, too

SacBee CapitolAlert | Published 5:38 PM Friday, September 19, 2008 by Shane Goldmacher

It's official. The final budget bills of 2008 have passed through both houses of the Legislature and are on their way to Gov. Arnold Schwarzenegger, where he will likely line-item veto certain spending and then sign the spending plan.
The Assembly adjourned after passing the final pieces of the budget around 5:30 p.m. on Friday, 81 days into the fiscal year.
"I move that the Assembly adjourn -- again," said Assembly Major leader Alberto Torrico, D-Fremont. ... (more)

Friday, September 19, 2008

Education leaders blast proposed state budget plan

By Kimberly S. Wetzel | Contra Costa Times

09/19/2008 05:51:22 PM PDT - State and local education leaders this week, getting their first glimpse of the new state budget proposal, blasted the tentative spending plan as an "accounting gimmick" that leaves students out in the cold.

The plan — approved by the Legislature more than 80 days late and which was still awaiting Gov. Arnold Schwarzenegger's signature Friday — allots $58.1 billion for education, an increase of almost $300 million over last year. That amounts to a cost-of-living increase of 0.7 percent, much less than the 5.66 percent increase school districts hoped to get, or about $3 billion less than educators would like to see, according to Jennifer Kuhn, analyst at the state Legislative Analyst's Office.

Education leaders this week echoed each other in criticizing the plan, saying it doesn't do enough to help local school districts pay for the rising costs of just about everything. State Superintendent of Instruction Jack O'Connell called the plan a "gimmick," while California Teachers Association President David Sanchez and California PTA President Pam Brady each urged Schwarzenegger to use his veto power to leverage a more education-friendly budget.

"The proposed budget includes a reduction of the cost-of-living adjustment that will further tighten the vise on local school budgets as districts across the state face increased costs for supplies, food, transportation and employee health care costs," O'Connell said in a statement. "These reductions are a disservice to California's 6 million school children and the thousands of educators across the state."

The plan does keep in place state Proposition 98, a 1988 constitutional amendment approved by voters that guarantees minimum funding for education, and there's language that restores cost-of-living funds in the event the money becomes available. There was some discussion of suspending Proposition 98 earlier this year amid the $17 billion state deficit.

The Legislature approved the $104 billion spending plan Tuesday, but the relief was short-lived as the governor threatened to veto the bill later that day. A compromise announced Thursday does not change the education components of the plan, and Schwarzenegger is expected to sign off on the deal soon.

Because of the record-long impasse, local school districts have been operating without state money for months. Mt. Diablo school district Superintendent Gary McHenry said the district has been able to pay its bills using a carry-forward balance but is awaiting state money for such things as classes to help high-schoolers pass the state-mandated exit exam.

He said he's disappointed that the Legislature took so much time to deliver such a lackluster budget.

"My first reaction is it's not sufficient," McHenry said. "My second reaction is it took too long. The proposal they came up with, to me, could have been done two months ago."

Troy Flint, spokesman for the state-run Oakland schools, said the drawn-out legislative process, with its fluctuating budget projections, has posed an extra challenge for his district.

Oakland Unified, which received a multimillion-dollar emergency loan from the state in 2003, has had to revise its long-range financial recovery plan in light of the new projections, Flint said. The district is now expecting to spend $9 million less in 2009-2010 than it had planned because of a dramatic reduction in the cost-of-living money from the state.

"We were hoping for a better solution," Flint said. "While the impact for this year will be minimal, next year's outlook is discouraging."

Day 81: SCHWARZENEGGER: “A budget deal, but not structural change” + “Special election in '09”

sacbee.com - The online division of The Sacramento Bee

By Amy Chance – Sacramento Bee | Published 3:28 pm PDT Friday, September 19, 2008

Gov. Arnold Schwarzenegger told a Capitol press conference this afternoon that the budget the Legislature will consider tonight is "an improvement" over earlier versions, but still fails to solve California's structural financial problems.

"Unfortunately the Legislature was unable to make the hard decisions to end our structural deficit, but this budget is an improvement of the earlier versions," he said. The Republican governor nevertheless plans to sign it next week, perhaps as early as Monday.

"Hospitals, nursing homes, day care services will be able to get paid...and California will be able to fulfill its obligations," said Schwarzenegger, who said he hopes to move on to make redistricting changes, reform the health care system and develop a statewide water plan.

"I don't see much of a signing ceremony, because there's nothing to celebrate," he said.

Schwarzenegger said he would support an initiative to penalize lawmakers when the budget is late.

"The one thing that I would look at right away is to create consequences so that when the Legislature is late one day there are consequences," he said. "Even after two months, you know, they are just very relaxed about it and in the meantime you cannot pay your bills. I think there's something wrong with that."

The governor said such a ballot measure would have to be put on via initiative, because the Legislature would not do it themselves. "I don't think it will get done in this building," he said.

Schwarzenegger: Special election in '09

SAC BEE CAPITOLALERT by Shane Goldmacher on September 19, 2008 3:25 PM

After three elections in 2008, California voters better start gearing up for another election in 2009. Gov. Arnold Schwarzenegger said he and the Legislature would call a special election next year for voters to approve changes to the lottery and, likely, budget reform in a press conference announcing he would sign the budget.

"Because of the lottery and various different other things, yes, we will be calling a special election," Schwarzenegger said.

The timing of a special election next year remains up in the air. In March, voters in Los Angeles, the state's largest city, are set to go to the polls for a mayoral election. Consolidating a special election with that one could save the state money.

But Schwarzenegger said Friday that "March is probably too early. It could be June."

A special election appeared likely after the initial passage of the budget on Tuesday morning, with the overhaul of the state's rainy-day fund and the changing of the state lottery both requiring voter approval.

Since 2002, Californians have had to go to the polls at least once every year except 2007.

Besides the regularly scheduled elections, there was the 2003 recall and the 2005 special election. By 2010, voters will have been to the polls in eight of nine years.

Posted by Shane Goldmacher on September 19, 2008 3:25 PM

State's Top Education Leaders Urge Everyone to JOIN THE PTA!

image CONTACT: Carol Kocivar
Vice President- Communications
(916) 440-1985

FOR IMMEDIATE RELEASE:                                                                        Friday, September 19, 2008

State's Top Education Leaders Urge Everyone to Join the PTA

SACRAMENTO, CA- California’s top education leaders, State Superintendent of Public Instruction Jack O’Connell and Secretary of Education David Long, today called on parents, teachers, and administrators to join the PTA.

Proclaiming September and October “PTA Membership Months,” Secretary Long said, “PTA support for children is critical for the future of California.  I urge anyone in California who cares about children and our public schools to join the PTA. Superintendent O’Connell and I are both proud PTA members. Students truly benefit from the active involvement of caring adults and we want every school in California to have a strong PTA.  Join us—join PTA!”

“Parent involvement through the PTA is critical for the success of our children,” Superintendent O’Connell said. “PTA volunteers work in schools and communities to improve the education, health and welfare of all children and youth.”

The California State PTA, with nearly one million volunteer members, has been instrumental in efforts to support small class size, bring arts and physical education back into our schools, and ban junk food at school.

PTA provides members with free resources and training to build leadership and parenting skills. It also provides programs on a wide range of topics, including student achievement, childhood nutrition, and prevention of violence and bullying, to increase parent awareness of issues affecting their children.

For more than a century, the PTA has been supporting and advocating for public schools, children and families under the motto “Every child, one voice.”  The PTA is non-profit, non-partisan, non-sectarian and non-commercial. For more information about how you can join PTA, go to www.capta.org and click on “Join PTA.”

The mission of the California State PTA is to positively impact the lives of all children and families by representing our members and empowering and supporting them with skills in advocacy, leadership and communications.


There are 4 ways to get involved with PTA in California:

1. Join a local PTA Unit.

If you know the PTA district you are in, send an email to the district president at districtpresident- @capta.org (Insert your district number in the blank).


If your school is in the San Fernando Valley, Sunland or Tujunga – LAUSD Local Districts 1 & 2 - you live in 31st District PTA

email districtpresident-31@capta.org

Your District President is Dell Goodman


If your school is South of Mulholland Drive,  – LAUSD Local Districts 3 - 8 - you live in 10th District PTA

email districtpresident-10@capta.org

Your District President is Silvia Flores

If you don’t know your PTA unit, send an email to membershipchair@capta.org providing your contact information and location so that we can assist you, or call the California State PTA office at 916-440-1985 ext. 328.

If your neighborhood school has a PTA, you can join that PTA and automatically become a voting member of the California State PTA and the National PTA. Each PTA sets its own dues, typically between $4.00 and $10.00 per member. The amount of the dues is found in the PTA's bylaws. Dues are not tax-deductible.

2. Join the Golden State PTA

Interested individuals and businesses that do not have an affiliation with a particular PTA unit or area also have the opportunity to support PTA by joining the Golden State PTA. Click here to join the Golden State PTA.

Download the GSPTA membership application [pdf]

The Golden State PTA is a statewide organization that allows individuals with an interest in PTA in California to show support and to maintain contact with the California State PTA.

By joining the Golden State PTA, each member

  • pays $10.00 dues per year
  • supports the Scholarship and Grant program
  • can receive a subscription to PTA in California newsletter for an additional $5.00
  • receives member privileges to the state convention (upon payment of registration fee)

3. Organize a New PTA unit

Please send an email to leadership@capta.org and provide your contact information and location so that we can assist you or call the California State PTA office at 916-440-1985 ext. 301.

4. Contribute to the Founder's Circle and support California State PTA without joining.

Thursday, September 18, 2008

80 Days 16 Hours 51 Minutes: BUDGET STANDOFF OVER - Governor and lawmakers agree on spending plan

Matthew Yi, San Francisco Chronicle Staff Writer

Thursday, September 18, 2008  4:51 PM

Gov. Arnold Schwarzenegger, backed in Fresno by Mayor Ala...

(09-18) 16:51 PDT SACRAMENTO -- California's longest-ever budget standoff ended this afternoon when Gov. Arnold Schwarzenegger and legislative leaders struck a deal, avoiding the governor's promised veto of a budget the Legislature approved earlier this week.

The compromise, expected to be approved Friday, eliminates extra withholdings from workers' paychecks and revenue from a tax amnesty program. It bridges the $17 billion budget gap by adding penalties on corporations that underpay quarterly income taxes and reduces reserve funds, according to lawmakers and legislative sources.

Lawmakers also agreed to Schwarzenegger's demand to make it more difficult for the state to dip into a rainy-day fund to be created as part of budget reforms to avoid future fiscal crises like the one this year, when a slowing economy resulted in a huge budget deficit.

The governor met for more than an hour this afternoon with legislative leaders to finish the deal, after he told them at a meeting this morning to strengthen fiscal reforms and eliminate accounting maneuvers in the budget - or send it to him for a veto.

Legislators had faced a quandary, legislative sources said: The budget approved early Tuesday had the support of more than two-thirds of the Legislature, but the provision to raise billions of dollars in early collection of some taxes needed only a simple majority to pass.

No Republicans voted for that portion of the budget, saying it was the equivalent of raising taxes, and without support from GOP lawmakers, Democrats would not have been able to muster a two-thirds vote to override a veto by the governor.

The budget-related legislation had been criticized by several politicians because it called for the state to collect more taxes earlier to pump revenue into the state budget. The money would be refunded to taxpayers later if they had overpaid taxes.

Facing billions of dollars in deficit, the governor last month proposed a temporary increase of 1 cent in the state sales tax, which would be followed by a 1 1/4-cent cut after three years. Schwarzenegger pitched the idea as a long-term tax cut, although the proposal got little support from his Republican colleagues in the Legislature.

The governor said this week that he also has problems with state lawmakers' fiscal reform proposals in their approved budget.

On Monday, as lawmakers prepared to vote on a package of budget bills, Schwarzenegger sent a letter to legislative leaders threatening to veto the budget unless three changes were made to strengthen fiscal reforms.

Lawmakers adopted two of the suggestions: increasing the amount of the rainy-day fund and creating more-stringent rules to force the state to continue depositing money into that fund. But lawmakers rejected Schwarzenegger's third proposal, which would allow the state to dip into that fund only when the state's revenues fall below the estimates in the enacted budget.


By Anthony York | Capitol WeeklY | published Thursday, September 18, 2008 @ 4:06PM PDT


Gov. Arnold Schwarzenegger and legislative leaders are nearing agreement on a budget compromise that would allow the governor to sign a new state spending plan that is more than 80 days overdue. The first signs of an accord emerged after the political leaders met today in the Capitol behind closed doors.

Sources say the draft agreement includes a smaller emergency reserve and increased penalties on corporations that under-report their income.

The tentative accord does not include an earlier proposal that would have accelerated the collection of withholding from California taxpayers, which would bring in $1.5 billion in one-time revenue to the state.

To make up for that lost revenue, the proposal increases penalties on corporations that fail to disclose their earnings by $1 million or  more. The new penalty on corporate taxpayers could raise an estimated  $1.5 billion.

The easing of the historic impasse began after a stormy day in which angry lawmakers in both major parties threatened to unite against the governor.

Relations between legislative leaders and Gov. Schwarzenegger reached the boiling point this week, after the governor threatened to return the budget bill to the Legislature without his signature. Schwarzenegger cited bookkeeping gimmickry and "fake budget reform" as the reasons for rejecting the budget.  Democratic and Republican legislators angrily responded that the "gimmickry" cited by the governor originated with his own finance department.

According to Capitol sources, the Legislature has agreed to the governor's proposal to develop  a so-called Budget Stabilization Fund, and tighter restrictions on when that "rainy-day fun" could be tapped.

The Big 5 -- the governor and the four legislative leaders -- planned to meet later today.


Need a Real Sponsor here

By JIM CARLTON – The Wall Street Journal

SEPTEMBER 18, 2008, 6:50 P.M. ET -- The California Legislature was racing to amend its $104.3 billion state budget to head off a threatened veto by Gov. Arnold Schwarzenegger, with a new deal possible later today.

According to two people familiar with the plan, the legislature's reworked budget would make it harder for lawmakers to dip into a "rainy day" fund that can be used to help close future shortfalls. The governor had threatened to veto a budget the legislature passed on Tuesday, in part, because he felt the fund was not tamper proof. Failure to pass the budget that is now nearly three months overdue has led to a fiscal crisis in the nation's most populous state, with mass layoffs, hiring freezes and reduced pay hammering the state government.

The legislature was also working to address another concern of the governor's: that about $1.6 billion in new revenues aimed at helping to close an estimated $15.2 billion shortfall this fiscal year would come from accelerating withholdings on tax filers in the Golden State. The Republican governor told lawmakers he considered that funding tactic -- opposed by every Republican in the Democrat-controlled legislature -- a tax increase and would move to block it.

Legislators, who said the governor's office actually gave them the withholding idea, were instead looking at increasing corporate tax penalties to raise the money, said a person familiar with the matter. But representatives of the governor said he never supported that idea.

According to another person close to the negotiations, Gov. Schwarzenegger gave legislative leaders until today to fix the budget, or he would veto the one they already approved. A spokesman for the governor, Aaron McLear, disputed suggestions by some in the Sacramento statehouse that Gov. Schwarzenegger had delayed his veto to give lawmakers time to amend the plan to his satisfaction. Mr. McLear said the governor was simply awaiting all pieces of the budget, which he still had not yet received as of today.

Whether the governor gets his way in the end, political observers say this likely won't go down as a significant accomplishment on his part. "It's really hard for anyone to claim victory for something that has taken this long to produce," says Mark Baldassare, president and chief executive officer of the Public Policy Institute of California, a think-tank based in San Francisco.


Sources close to all four legislative leaders – two Democrats and two Republicans – said their bosses believe the governor has been deliberately deceptive, and they are prepared to go on a joint public offensive against the governor.


by Anthony York  | CAPITOL WEEKLY | published Thursday, September 18, 2008 @ 1:14PM

Legislative leaders say critical pieces of the state budget denounced by Gov. Arnold Schwarzenegger -- and  used by him to justify an unprecedented veto -- actually originated in the governor’s own Department of Finance.

Tempers flared inside the Capitol today, as sources close to all four legislative leaders – two Democrats and two Republicans – said their bosses believe the governor has been deliberately deceptive, and they are prepared to go on a joint public offensive against the governor.

Many of the so-called “revenue accelerators” -- the bureaucracy’s term for speeded-up tax collections and increases in income tax withholding -- came from the Department of Finance, according to documents reviewed by Capitol Weekly. The department, which writes the governor’s budgets, is among the most powerful agencies in state government.

A copy of  the governor’s “August Revision” sets out nearly $2 billion in one-time, “accelerated revenues” by changing the way personal and corporate income taxes are collected.

Schwarzenegger’s revenue acceleration proposal was part of the budget blueprint adopted by lawmakers. A similar plan to accelerate withholding collections from income tax payers has been the focal point of the governor’s derision of the budget as a “kick the can down the alley” proposal. But legislative sources say that, too, came from the governor’s office.

"The one thing that he's objecting to came from the governor's office," said Eileen Ricker, a spokeswoman for Senate Republican Leader Dave Cogdill, R-Fresno. Sources in the offices of all three other legislative leaders also say the withholding proposal originated in the governor’s office.

A Schwarzenegger spokesman said he could not confirm or deny that the withholding proposal came from the governor’s office. But he tried to distance the governor from the proposal.

“It was not in our January budget, not in our May budget, and not in our August budget,” said Schwarzenegger spokesman Aaron McLear. “This administration never included that in one of our three budget proposals.”

McLear did not dispute that the concept for increasing withholding collections may have come from the governor’s office. McLear, however,  sought to link the accelerators to the Legislature.

“They (lawmakers) are the ones who voted for this,” he said of the Legislature. “It’s their budget,” he said.

The standoff has led to an unprecedented showdown, with all four legislative leaders barely containing their outrage Thursday at the governor. A meeting of the Big 5 began late this morning, and is expected to continue into the afternoon.

Schwarzenegger, in public appearances across the state, contends that his threatened veto of the Legislature-approved state budget is justified, because the document just “kicks the can farther down the road” and does not contain an adequate cushion in future years. He suggested that the “revenue accelerators” delay meaningful action, and promised to veto the document. He says the cushion, or “rainy day fund,” is his principal reason for his veto.

But while the governor, loudly, has attacked the Legislature over these provisions, among others, he hasn’t told the public that he himself embraced a number of similar measures. He supported a two-year sales-tax increase that would have expired after he left office. In his August revision, he introduced the concept of suspending corporate Net Operating Losses for two years and accelerating the cetion of income taxes by conforming state policies to the General Accepted Accounting Principles. Those concepts were contained in the budget adopted by lawmakers earlier this week.

The dispute between the governor and the Legislature is the latest wrinkle in a bitter dispute over the 2008-09 state budget, that by law is supposed to be approved by the Legislature by June 15 and signed into law July 1, the beginning of the new fiscal year. On Thursday, California moved into its 80th day without a spending plan, a record. Also historic is Schwarzenegger’s threatened veto—a governor never before has vetoed an entire state budget.

Earlier in the week, Schwarzenegger met with legislative leaders in a last-minute attempt to avoid the governor's rejection of the spending plan. The meeting, which caught the Capitol by surprise, abruptly ended when the Republican governor went to Fresno to publicly criticize the budget.

"The goal was to try to avoid a veto," Ricker said. "The Legislature feels the state needs to move forward now. The governor's budget didn't have the votes, and this is what the compromise was."

Both the governor and his critics have mounted public relations offenses to woo the public to their sides.

The governor has accused the Legislature of approving a budget that does little to curb future spending. Lawmakers, while acknowledging that the budget has flaws, say the spending plan should be approved immediately to avoid inflicting further pain on the public.

For Republicans, there is a real incentive to avoid a veto and an override vote.

When the budget was passed, the so-called "revenue accelerators" - the speeded-up tax and withholding collections that comprise the $5 billion in new revenues that string the budget together -- were approved on a majority-vote bill. In the Senate, that bill, AB 36xxx (the triple Xs officially denote the Legislature's third special session), passed without any Republican votes at all. The bill received just 21 votes in the Senate, and 43 in the Assembly.

But if the Senate is to override a veto of that measure, it would take a two-thirds vote, and that means Republicans would have to put up votes supporting what amounts to a $5 billion tax increase. That vote could prove difficult: Many Republicans earlier signed pledges that they would not approve new taxes.

But Cogdill and Villines both said they want the governor to sign the budget.

"Not getting your way is no reason to the veto the state budget," said Villines. "While not perfect, the budget compromise funds our state's priorities without raising taxes on California's hard-working families."

Cogdill went further, saying he "will vote to override the governor's veto, as should every other legislator who approved this budget."

In a Sept. 15 letter to legislative leaders, Schwarzenegger said he "would be unable to sign a budget without meaningful budget reform."  He said he would not " not sign a 'get-out-of-town budget' that punishes taxpayers, pushes the problem into the next year and includes fake budget reform," Schwarzenegger said.

By by Wednesday evening, it appeared that budget reform alone will not be enough to avoid a veto. Senate Leader Don Perata said the governor is "pretty dug in" on the idea of a veto, and budget reform alone would not be enough to avoid the governor's rejection.


Sep 18, 2008 12:48 pm US/Pacific

CBS 13 News/Sacramento and Associated Press

It used to be "The Big Five" ...now it's "The Big Four +1"?

SACRAMENTO (AP) ― This morning's budget meeting between Governor Schwarzenegger and legislative leaders ended abruptly after 20 minutes with the Governor threatening an immediate veto of the current budget.

Governor Schwarzenegger's spokesperson told CBS13 that the governor told lawmakers to go back to the table and fix the 'rainy day plan' and get rid of accounting gimmicks.

The Legislature's budget relied on accounting gimmicks -- such as accelerating the withdrawal of state income tax from workers' paychecks -- that could lead to an even larger deficit next year.

But another sticking point is the strengthening of the state's rainy-day fund; lawmakers made changes but rejected Schwarzenegger's demand that they restrict when and how the Legislature can tap into the cash.

The 'Big Four' lawmakers are scheduled to meet again with the governor at 3:00pm this afternoon.

It's unclear whether there are enough votes in the Legislature to override a governor's veto.




SacBee CapitolAlert | Sept 18

Lawmakers and Gov. Arnold Schwarzenegger met on Wednesday afternoon to discuss ways to sidestep a budget veto and an override showdown.

"We'd like to avoid a veto," said Assembly Speaker Karen Bass when she emerged from the gathering. "We'd like to avoid a veto override. Conversations are ongoing. No decisions were made. We'll be back tomorrow morning."

Linda Corbin waves an adult diaper, left, as Gov. Arnold Schwarzenegger explains his planned budget veto Wednesday during an appearance outside Fresno City Hall. Corbin said the diaper was her last and that budget cuts and service closures would cut off her supply. Meanwhile, lawmakers - who expected to easily override a gubernatorial veto - learned that their plan to accelerate tax payments might be much more difficult to push through the Legislature again. ERIC PAUL ZAMORA / Fresno Bee

In part, that may be because lawmakers who thought an override of a governor's budget veto would be easy learned Wednesday that things are more complicated than that.

Jim Sanders reports in today's Bee (Overriding Schwarzenegger's promised budget veto won't be simple, following) that not all of the so-called budget "trailer bills" passed with the two-thirds vote necessary to override a gubernatorial veto.

One of those majority-vote bills contained the key "revenue acceleration" proposal, which would hike the percentage the state takes from taxpayers' paychecks only to cut a bigger refund check every April.

To override, some Republicans would have to vote for a bill they stayed off the first time around.


Overriding Schwarzenegger's promised budget veto won't be simple

By Jim Sanders - Sacramento Bee

September 18, 2008 -- Lawmakers who assumed an override of a governor's budget veto would be easy learned differently Wednesday.

As they sent Gov. Arnold Schwarzenegger a budget he opposed this week, legislative leaders of both parties said they were confident they could override a gubernatorial veto. That takes a two-thirds vote, the same threshold required to pass the budget bill in the first place.

But complications surfaced Wednesday because the linchpin of the spending plan – an attempt to raise nearly $4 billion by accelerating tax payments – was passed in separate legislation using a procedural maneuver that required only a majority vote.

That allowed Republicans to sidestep an action that political opponents could call a tax increase.

To override, Republicans will have to cast votes on that measure.

Assemblyman Alberto Torrico, a Newark Democrat who serves as majority floor leader, said the controversy adds to an "absolute mess" surrounding the state's record 80-day budget standoff.

"I think it's going to be a significant problem," he said of garnering enough GOP votes – at least six in the Assembly, two in the Senate – to override a veto of the tax bill.

The development gives Schwarzenegger substantially more leverage as he seeks to alter the deal lawmakers struck without him over the weekend.

If Republicans were to stand firm on their Tuesday votes, the lawmakers' budget wouldn't balance and they would be forced back to the drawing board. California's constitution requires a balanced budget.

Schwarzenegger spokesman Aaron McLear said the governor's goal is passage of a state budget that does not push fiscal problems into next year and cracks down on future spending.

"We'll work with them to do the right thing," he said of lawmakers.

Legislative leaders, who met with Schwarzenegger on Wednesday, were hesitant to speculate on how events will play out.

"We cross that bridge when we get there," said Steve Maviglio, spokesman for Assembly Speaker Karen Bass, D-Los Angeles.

"Everything is wait and see," said Alicia Trost, spokeswoman for Senate President Pro Tem Don Perata.

The tax-acceleration bill opposed by Republicans calls for raising billions this fiscal year by advancing collection of income taxes, then refunding overpayments later. The state essentially would receive a short-term, interest-free loan from taxpayers.

Schwarzenegger called the measure a smoke screen that cuts paychecks.

"It's really increasing the taxes, and they're putting a burden on taxpayers," he said at a Capitol press conference Tuesday.

Supporters of the measure disagree.

They argue taxpayers would not pay more in taxes but would just remit payments sooner – and they could avoid any impact by altering the withholding forms they file with employers.

GOP legislative leaders have publicly supported overriding a gubernatorial veto on the primary budget bill. Prospects for the tax-acceleration bill are less certain.

"It does create some heartburn for Republicans," Sen. George Runner, R-Lancaster, said of a second vote on the trailer bill. "Will it create enough that they wouldn't go up on an override? I don't know."

Senate Republican leader Dave Cogdill of Modesto, who voted against the tax-acceleration bill Tuesday, is willing to help line up GOP votes for it if necessary for an override, spokeswoman Eileen Ricker said.

Assembly Republican leader Mike Villines of Clovis could not be reached for comment.

Because the bill did not actually raise taxes, only accelerated collection, state law allowed it to be passed Tuesday by a simple majority of each legislative house as part of a special session on budget matters.

Assemblyman Anthony Adams, R-Hesperia, voted against the tax acceleration Tuesday but said he would be willing to reconsider, if pressed.

"It's not desirable, but at the same time, the governor is playing games with California families – and if we have to step in and provide the only real leadership in the Capitol, then so be it," Adams said.

Republican Assemblyman Chuck DeVore of Irvine characterized the tax-acceleration bill as "taking money out of people's pockets." He has not decided, however, whether he would support an override as a last resort to save the budget package.

Adding to complications at the Capitol, the Assembly has sent to Schwarzenegger the primary budget bill but not its tax acceleration, one of about two dozen trailer bills.

The strategy prevents the governor from vetoing both at the same time.

After Wednesday's session with Schwarzenegger, legislative leaders expressed hope that a showdown will not be necessary.

"We'd like to avoid a veto," Bass said. "We'd like to avoid a veto override. Conversations are ongoing."

Wednesday, September 17, 2008




Tuesday, September 16, 2008

CONTACT: Carol Kocivar

Vice President- Communications

(916) 440-1985

Pam Brady, President, California State PTA has issued the following statement:

On behalf of nearly one-million volunteer members, California State PTA opposes the budget that was passed late last night by the legislature.

We urge Governor Schwarzenegger to veto this budget because it is not good enough for California’s children or for California’s future. It is impossible to know just how bad this budget is yet because the public did not have a chance to review details before the legislature took action – but from the details we do know, this budget relies on borrowing and gimmicks that are not in our state’s long-term interest. After months of delay by the legislature, the public deserves a fair chance to see any proposal before it is passed and signed into law.

By vetoing the budget, the Governor will be standing up for transparency, and standing up for a budget that will not simply pass the buck for another year.

The PTA is the nation’s oldest, largest and highest profile volunteer organization working on behalf of public schools, children and families, with the motto “Every child, one voice.” PTA volunteers work in their schools and communities to improve the education, health and welfare of all children and youth. The PTA also advocates at national, state and local levels for education and family issues. The PTA is non-profit, non-sectarian and noncommercial.


Day 79: League of California Cities Statement: FINAL BUDGET UNDERSCORES DRASTIC NEED FOR REFORM

Last update: 5:46 p.m. EDT Sept. 17, 2008

SACRAMENTO, CA, Sep 17, 2008 (MARKET WIRE via COMTEX) -- The League of California Cities has urged state leaders for months to find common ground on a state budget and produce one that is responsible and does not raid voter-protected local government, redevelopment or transportation funds. We urged them to level with the taxpayers about what it would take to get the job done, including budget cuts and tax increases. The Legislature's adoption of a budget early Tuesday morning, that some legislative leaders described at worst as a "Ponzi scheme" and at best as a "short-term solution," gives Californians little comfort that this goal has been met.

Gov. Arnold Schwarzenegger's announcement yesterday that he intends to veto the budget because of its many shortcomings underscores just how broken the state budget process really is. Californians have every right to expect better than a budget that passes the buck to next year's state leaders. Unfortunately, that is what this budget gives them, and its shortcomings will become even more evident in the days and weeks to come.

Early this spring, the League committed to supporting a budget that did a few simple things:

-- Achieves savings by eliminating overlapping, obsolete and redundant programs;

-- Balances state spending and state revenues without "borrowing" voter protected funds;

-- Cuts spending responsibly and raises new revenues only to address the structural deficit and avoid devastating budget cuts (not for new programs), but only if there is substantial budget reform;

-- Enacts meaningful budget reforms to help the state weather the next economic crisis; and

-- Continues to invest in infrastructure to aid the economic recovery.

The League's leadership applauds the Governor and Legislature for agreeing that the budget should not rely on "borrowing" local government and transportation funds. We are also pleased that the adopted budget provides additional Proposition 1B funding for local streets.

However, we strongly oppose the fact that part of the Legislature's final budget effectively steals $350 million of local redevelopment funds that are so essential to the vital community infrastructure investments that generate both high paying construction jobs and substantial state and local revenue. There also seems to be little in this budget in terms of streamlining or real solutions that address the state's structural budget deficit. In fact, some of the solutions are expected to make next year's problems worse.

In short, after 78 long days of gridlock, it is clear that most legislators, the Governor and other opinion leaders agree that the adopted budget will not serve California well in either the short- or long-term. More importantly, this consensus emphasizes the critical need for comprehensive budget reform.

The League stands ready to work with state leaders and other stakeholders in moving this agenda forward. California can ill-afford another budget impasse that threatens funding for critical services and undermines public confidence in government. The time has come to fix this dysfunctional system and do the job Californians rightfully expect from their state and local officials. Now is the time and this is the place.

Eva Spiegel
(916) 658-8228
Cell (530) 400-9068

1400 K Street, Suite 400
Sacramento, California 95814
Phone: (916) 658-8200
Fax: (916) 658-8240


Senator Tom Torlakson

BREAKING NEWS: The following update about the state budget situation was drafted before Governor Schwarzenegger announced his intention to veto the budget package. In the interest of keeping you informed about the state budget process, Senator Torlakson still wanted to send this statement to you for your review.
Senator Torlakson watched the Governor's press conference today. He is continuing his efforts to find a solution to the state budget debate, and looks forward to working with his colleagues to seek a resolution in the coming days.

September 16, 2008
1:30 p.m. (emailed @ 8:25:59 P.M. Pacific Daylight Time)

Dear Friend:

The California State Senate and State Assembly early this morning passed the 2008-09 state budget by the necessary two-thirds vote margins in the Assembly and Senate. The Legislature then sent the package of the bills to Governor Schwarzenegger for his signature.

This budget includes nearly $10 billion in budget cuts and various one-time revenue accelerations to close the remaining budget gap. This budget does not include any borrowing from Proposition 1A (2006) local government or Proposition 42 (2002)/Proposition 1A (2006) transportation funds. It also restores many of the most severe cuts proposed by the Governor and Senate Republicans. (Click here to see more of these budget details.)

But make no mistake: this compromise fails to address our long-term budget problems. Because of my concerns about our state's ability to fund our schools in the future, I voted against the part of the budget plan (AB 1452) that replaced the on-going revenues I believe are so necessary with one-time revenues and the creation of vast new loopholes in corporation taxes. These loopholes will reduce by $1 billion or more annually the amount of money our state will have in the future to fund our education system, health care needs, and public safety.

We have once again failed to find a fiscally responsible solution to our state's ongoing structural deficit. The Legislature also failed to find the ongoing revenue needed to fully fund our schools or give our children the healthcare and other supports they need to succeed.

One reason it was important to pass a budget was to end the horrible impacts created by the delay in payments to our schools, small business owners supplying health care and food to state institutions, providers of homes for people with developmental disabilities, child care providers, students who rely on CalGrants, and senior day care center operators.

Because of the two-thirds vote requirement to pass a budget, the Republicans were able to command key elements of this budget deal. This fact severely limited the opportunity to find balanced and long-term solutions to our ongoing budget problems. Preserving a minimum foundation for our education system and vital social services was the best we could do under these circumstances.

But I must ask: is the "bare minimum" now the best for which we can hope? Must we settle for funding our schools with less money per pupil than 46 other states? Will we accept ranking 46th in the nation in eighth grade math achievement, 44th in eighth grade science achievement, and 49th in eighth grade reading achievement? Do we serve our students by ranking 49th in student-teacher ratio, 51st in librarians and guidance counselors per pupil? Is allowing nearly 800,000 children to go without health insurance really acceptable?

I deeply regret that it does not include the restorations of even a dime from the $12 billion in annual tax cuts enacted over the past 15 years. Democrats fought this year for an ongoing revenue source -- but the Governor could not get the necessary Republican votes even for his own modest revenue plan.

This year's debate over the state budget once again highlights the need for significant reforms to our state budget process. I will be working diligently to return democracy to the budget process by promoting my legislation (SCA 22) to eliminate the two-thirds vote requirement. This reform is as important today as it was when I first proposed it ten years ago (ACA 26, 1998).

The only way to fully fund our schools -- to provide the additional $15-24 billion a year recent analyses say our public education system requires -- is to reverse some of the tax cuts imprudently passed over the past 15 years.

California will not remain a vibrant economy, and a great place to live, unless we begin to invest once again in our public education system. We must figure out how to give our students the tools and skills they need to live up to our positive aspirations and their dreams. We must restore the promise of our state's education master plan.

That is our challenge in the wake of this year's state budget debate. I hope you will join me in this effort in the coming weeks and months.


Tom Torlakson

79 Days + the clock is ticking: SCHWARZENEGGER VOWS TO VETO BUDGET - the view from two Times zones


[Transcript of Gov. Schwarzenegger's press conference vowing to veto state budget]

Schwarzenegger vows to veto state budget

Legislators say they will quickly override Schwarzenegger's action. He'd respond by killing many bills.

By Evan Halper and Jordan Rau • Los Angeles Times Staff Writers

September 17, 2008 -- SACRAMENTO — Gov. Arnold Schwarzenegger announced Tuesday that he planned to veto the state budget passed early that morning by the Legislature, setting the stage for an unprecedented confrontation in California's Capitol.

"When they send me the budget, I will veto it," Schwarzenegger said at a news conference here.

A budget veto would be a first for modern California.

The governor also said that if lawmakers decided to override him -- which they were openly planning -- he would kill most of the legislation they passed this year.

"Hundreds of bills will be vetoed," he said.

Schwarzenegger had warned lawmakers before they passed the spending plan, which was 78 days late, that he would reject it if it did not include three provisions to ensure the state a reliable rainy-day fund for times of fiscal trouble. This year, California has developed a $15.2-billion budget gap.

The Legislature agreed to two of his three requests, but balked at putting more restrictions on lawmakers' ability to raid the state's reserves.

The budget and accompanying bills are expected to be printed and reach the governor's desk in coming days. Legislative leaders in both parties said they would override a veto quickly.

"I'm pretty confident we are not going to have any difficulty," Assembly Speaker Karen Bass (D-Los Angeles) told reporters. "We would do it in rapid fire."

Senate Republican leader Dave Cogdill of Modesto said in a statement that he would vote for an override, "as should every other legislator who approved this budget."

The last override of any bill veto was in 1979, when Jerry Brown was governor, on measures concerning state employees and insurance. Schwarzenegger has rejected hundreds of bills since being elected in 2003, but none of his vetoes has been overruled.

An override requires a two-thirds majority in the Assembly and the state Senate, the same margin required for the budget that passed in the wee hours Tuesday.

Schwarzenegger's veto announcement is certain to cause anxiety among thousands of healthcare clinics, day care centers, schools and others reliant on state money but unable to receive it in the absence of a budget. The state has never gone as long without a spending plan, and many providers have stopped paying their staff or have shut down.

"Californians who are suffering need a budget," Cogdill said.

However, the governor, like many others at the Capitol, had harsh words for the deal cobbled together by lawmakers. By borrowing billions of dollars from taxpayers, their plan would avert deep program cuts as well as a multibillion-dollar tax increase that Democrats and Schwarzenegger had advocated.

The borrowing would consist of accelerated tax collections from individuals and businesses, taking cash now that otherwise would not come in until next year. That leaves a big hole for next year.

Schwarzenegger said the plan "takes our problems and makes them even worse. . . . The way this budget is right now, we will need a huge tax increase next year or to cut education severely."

Education expenditures make up roughly half the $106.4-billion general fund budget that lawmakers passed.

He said the spending restraints lawmakers approved amount to "fake budget reform."

"You . . . say we can do anything we want with the rainy-day fund and you can do it any time," he said.

Democrats said the governor was in no position to be making such charges. They said Schwarzenegger's inability to secure votes from fellow Republicans for his own budget proposal, which would have closed the deficit with the help of a one-cent sales tax hike, left the Legislature without recourse.

"He is a leader with no followers," said Senate leader Don Perata (D-Oakland).

Assembly Republicans said the changes the governor wants would do little or nothing to curb spending and thus are not worth a further delay in the budget.

Jack Pitney, a professor of government at Claremont McKenna College, said that if lawmakers do bow to Schwarzenegger's demands and begin renegotiating the budget, the governor may come to regret it.

"There's no guarantee the budget would go in a direction he likes," Pitney said. "Special interests would try to reopen certain issues and undo certain deals."

Regardless of what happens this week, Pitney said, the governor's historic standoff with lawmakers may not impress Californians.

"This isn't what people expected" when they recalled a sitting governor to put Schwarzenegger in office, Pitney said. "There was enormous hope for the governor that he'd be able to get Republicans and Democrats inside the smoking tent and smelling like a rose. . . . Things have worked out differently."

The governor's threat to use his veto pen aggressively on other legislation if lawmakers do not meet his demands leaves 873 bills hanging in the balance. Among them are measures to require chain restaurants to post calorie information, to impose fees on port cargo to pay for air-pollution reduction, and to deter metal theft by requiring scrap sellers to supply their thumbprints.

Lawmakers advised the governor against trying to punish them with his veto pen.

"To threaten bills without taking each one on the merits is more immature politically than anything else," said Assemblyman Chuck Calderon (D-Montebello).

He said lawmakers could just as easily turn the tables, declining to pass bills important to the governor's policy agenda or purposely putting bills on his desk that he doesn't want -- "veto bait," in the parlance of the Capitol.

"If he arbitrarily takes this action," Calderon said, "I think he has to worry about what bills the Legislature sends him."

The New York Times

Schwarzenegger to Veto Budget and Other Bills

By JESSE McKINLEY - New York Times

September 17, 2008SAN FRANCISCO — Gov. Arnold Schwarzenegger said Tuesday that he would veto a long-overdue state budget, and he threatened also to veto hundreds of other pieces of legislation, as the state’s 78-day budget crisis dragged on.

The California Legislature finally passed a $104 billion general fund budget by potentially veto-proof two-thirds majorities early Tuesday morning, after setting a record for tardiness.

But Mr. Schwarzenegger, a Republican, said he would not sign it, or very little else, until a “good budget” was passed.

“I say enough is enough,” he said at a news conference in Sacramento. “Californians have been put through this rollercoaster ride too many times.”

In particular, the governor asked for guarantees regarding contributions to a so-called rainy day fund, something he regards as critical to budget reform, which has become central to his second term in office.

Mr. Schwarzenegger said he expected the Legislature to override his veto, but promised to return the favor by sending back most of the laws it passed in the last legislative session. “Every bill will be carefully evaluated, and hundreds of bills will be vetoed,” he said.

Lawmakers on both sides of the aisle said they were prepared to override any budget veto.

“Not getting your way is no reason to veto the state budget,” said Mike Villines, a Republican. “It is disappointing that he would take this unnecessary step that will only prolong our budget stalemate and cause more pain for many Californians.”

Karen Bass, a Democrat and speaker of the state’s Assembly, said a vote to override the governor’s veto could come as early as Wednesday.

Leaders on both sides admitted that the budget that was passed was a disappointment and that lawmakers were likely to face similar problems next year.

“We tried,” Ms. Bass said. “But we weren’t able to do anything better.”

Under the bill, the state would close a $15 billion budget gap with about $9 billion in cuts and additional revenue essentially borrowed from future tax payments. Some tax exemptions, including business losses, would be temporarily suspended, and some loopholes would be closed.

Republicans in the Legislature had refused to consider new taxes desired by Democrats. And because California law requires two-thirds majorities for tax increases, several proposals, including a one-cent increase in the sales tax, were nonstarters.

All of which led to more than a little frustration.

“This is not a budget the Democrats or the governor wanted,” said Don Perata, a Democrat and Senate president pro tem. “It’s a failure. But Republicans had the final say — and they said no.”

Tens of thousands of businesses, from child care to nursing homes, have been missing payments from the state as the crisis dragged on. Mike Danneker, executive director of the Westside Regional Center, a state-financed medical services organization in Culver City, said that his center ran out of money last Friday.

“These guys have been playing with this stuff for 77 days,” Mr. Danneker said. “They should have done this in May.”

While Mr. Schwarzenegger’s veto announcement set the stage for a showdown with the Legislature, some experts said it was likely to be a lonely fight.

“Everybody has the votes to override him, so he doesn’t really matter anymore,” said John Ellwood, professor at the Goldman School of Public Policy at the University of California at Berkeley, “If I was a Democrat or Republican leader, I would say, “What has this guy given me?’ ”

On Tuesday, at least, the governor seemed to be asking the same thing. “They are three months late with the budget” he said. “And this is what we get on the desk.”

Rebecca Cathcart contributed reporting from Los Angeles.

Tuesday, September 16, 2008

On the cusp of Day #79: SHARON RUNNER: "I won't override the veto"

Sac Bee CapitolAlert • Posted by Shane Goldmacher on September 16, 2008 5:37 PM

Republican Assemblywoman Sharon Runner, R-Lancaster, became the first lawmaker who voted for the budget to announce she will not vote to override the governor's veto.

Runner issued a statement late Tuesday saying she is "committed to finding a compromise which benefits Californians now and protects their future."

Here's Runner's statement in full:

"I voted in favor of the budget compromise proposal early this morning because Californians needed us to put an end to the stalemate and provide them with the services that have been long overdue. Even though this spending plan is not the best solution to California's budget shortfall, it is a step in the right direction as it has no tax increases and it begins to implement common-sense budget reforms.

"Although I voted for this budget, I stand with the Governor in his decision to utilize his veto power and I will not vote to support an override of his veto. I am committed to finding a compromise which benefits Californians now and protects their future. I welcome any suggestions by the Governor to make this not perfect budget even better and look forward to working with my fellow legislators to find a solution that all Californians deserve."



" All levels of education remain on a starvation diet that is sapping the strength of tomorrow's workforce and leaving California employers with insufficient skilled workers, ill-prepared to compete in the world's economy. Furthermore the most vulnerable in our society, the poor, the aged, the blind and the disabled are denied the basic needs that they deserve. We are the sixth wealthiest economy in the world - we can and we must do better - for our future and our children's future."

SAC BEE CapitolAlert | Posted by Shane Goldmacher

September 16, 2008 4:28 PM - Lt. Gov. John Garamendi is bucking the Democratic and Republican leadership of the Legislature and standing with Gov. Arnold Schwarzenegger's planned veto of the state budget.

Schwarzenegger is "correct to veto the proposed budget...because it does nothing to solve the structural deficit, nothing to fund or to improve the efficiency and effectiveness of our poorly performing education system, the prison system or address the need for affordable health care," said Garamendi.

Garamendi, who is serving in his first term as lieutenant governor, is running for governor in 2010.

Here is his full statement:

"The Governor is correct to veto the proposed budget as it does not meet the minimum investment that California must make to maintain its economic competitiveness. All levels of education remain on a starvation diet that is sapping the strength of tomorrow's workforce and leaving California employers with insufficient skilled workers, ill-prepared to compete in the world's economy. Furthermore the most vulnerable in our society, the poor, the aged, the blind and the disabled are denied the basic needs that they deserve. We are the sixth wealthiest economy in the world - we can and we must do better - for our future and our children's future.

This budget "kicks the can down the road" because it does nothing to solve the structural deficit, nothing to fund or to improve the efficiency and effectiveness of our poorly performing education system, the prison system or address the need for affordable health care. It uses accounting gimmicks and borrowing to plug the hole, a hole that is guaranteed to be only bigger and deeper next fiscal year.

It's time for Californians to take a stand together. We must modernize our economy, stabilize our budget, reform and fully fund our education programs, establish a universal health care system, address the threat of climate change and adapt our water and transportation systems to the reality of the new and changing environment.

We must reestablish the successful California tradition of investing in both the public and the private sectors. We cannot allow a continuation of the gridlock caused by the Republicans' refusal to adequately fund those investments that create economic growth and social advancement. The two-thirds vote requirement must end along with the ideology that we can continue to cut essential services and education and end up with a vibrant economy and a peaceful society.

The Legislature should return to serious daily negotiations and adopt a budget that invests in California's future. The Republican's have already agreed to a tax hike for every Californian who receives a pay check and for every California Corporation. A 10% increase in tax withholding is nothing more than a tax increase. This flawed budget affects those least able to put food on the table. California's working families deserve real solutions and vital investments which ensure a better tomorrow."


Capitol Weekly - The Newspaper of California Government and Politics

“The fact that this deal was three months overdue and had more smoke and mirrors than a David Copperfield show is a direct result of our broken budget process. Unless we change the threshold to pass budgets and raise revenues, we’ll never move beyond real budget cuts and fake budget solutions.”

Art Pulaski, executive secretary-treasurer of the California Labor Federation

By Anthony York | Capitol Weekly |  published Tuesday, September 16, 2008

Before the ink was even dry on a new state budget, some labor leaders were already talking about going to the ballot to repeal a key provision of the deal.

As details of the proposed budget deal between Legislative leaders emerged Monday, the Service Employees International Union and other labor groups were already contemplating enlisting voters to get rid of the pieces of the deal they didn’t like. In particular, unions do not like provisions of the budget that they say could lead to billions in corporate tax breaks, and reduced revenues to the state.

“SEIU has serious questions about new tax cuts for wealthy corporations which, in our view, will likely result in deep cuts to health care, education and other vital community services,” said one senior union official who declined  to be identified. “We are already hearing from others who want to explore a ballot initiative to repeal these corporate tax cuts and protect California communities. It's a possibility.” The unions began developing their initiative even as the Legislature worked into the night on the budget.

Monday morning, an email was being circulated from Lenny Goldberg of the California Tax Reform Association warning allies of the details in the budget deal.

“In exchange for a small amount of temporary short-term revenues, the Legislature is poised to open two vast new loopholes in the corporation tax, loopholes which will continue indefinitely,” the email stated. “The impact will be to greatly diminish the corporation tax at future costs to education, health care, and public safety. This is a huge giveaway to multinational corporations.”

Specifically, Goldberg focused on a provision that would allow corporations to exchange tax credits among different companies under the same corporate umbrella. Under current law,  the state requires tax credits be taken by the specific corporation that is applying for the credit. 

The change was one of the provisions requested by Republicans during budget negotiations, said Democratic sources.

“There are many billions in unused credits from companies that have not earned sufficient profit to use them,” writes Goldberg. “This proposal will open the ability of companies to effectively sell these credits—e.g. by allowing ownership by another company—so that the billions in unused credits can now be used by profitable corporations.” 

Goldberg estimates this change could cost the state “billions per year and will total many billions over the years.

“These new loopholes will effectively mean the death of the corporation tax as an effective revenue-raiser.  This deal compromises future generations, and does not even receive any real revenues in return.  Borrowing from the future is bad enough.  Giving away the future to multinational corporations is unconscionable.”

Art Pulaski, executive secretary-treasurer of the California Labor Federation, blasted Democrats and Republicans for the budget. "

“The fact that this deal was three months overdue and had more smoke and mirrors than a David Copperfield show is a direct result of our broken budget process. Unless we change the threshold to pass budgets and raise revenues, we’ll never move beyond real budget cuts and fake budget solutions," Pulaski said in a statement.  “The budget passed today does not represent the values of California’s working families. It may let the governor and legislature get out of town, but it shouldn’t let them escape responsibility for its sorry contents.” 

Day 78 ...and still counting – SURPRISE#1: GOVERNOR WILL VETO BUDGET PROPOSAL!

Surprise #2: Governor's website crashes and cannot handle live webcast of veto press event!  •  play video

Surprise#3: If lege overides his veto he threatens to veto every bill on his desk!

By Steve Wiegand - Sacramento Bee

Published 3:26 pm PDT Tuesday, September 16, 2008

Gov. Arnold Schwarzenegger today said he would veto the long overdue budget lawmakers sent him just hours before because it does not include long-term spending changes he wants.

The move extends the state's record-setting budget impasse and sets up what could be an unprecedented override attempt.

"People aren't getting paid, hospitals are in danger of closing, but I will not sign a get out of town budget...that punishes taxpayers," Schwarzenegger said.

If lawmakers vote to override the veto, Schwarzenegger said, he will veto all the bills awaiting action on his desk.

A marathon session of the Legislature ended at 2:30 a.m. Tuesday with the proposed compromise receiving the necessary two-thirds majority to pass the Assembly, 61-1, and the Senate, 28-12.

But lawmakers rejected one of Schwarzenegger's demands, which would have placed tighter limits on when and how much money could be transferred from the state's rainy-day fund.

It would take two-thirds of the Legislature to override the veto, and veto overrides are rare in California. The last time it was even attempted, according to the Speaker's office, was in 2003, and it failed.

But legislative leaders of both parties said they were prepared to override Schwarzenegger this time.

Sen. Dave Cogdill, R-Modesto, the Senate's Republican leader, told a Los Angeles radio talk show that the Senate "most definitely" would override the GOP governor if he vetoes the budget.

Assembly Speaker Karen Bass said she was confident the two-thirds vote could be achieved. "If we bring 120 legislators up here to override a veto, I'm pretty confident that we're not going to have difficulty doing that, and we would do it in rapid fire," she said.

Schwarzenegger's veto sent Capitol historians scrambling today to look for precedents.

It's not clear when - or even if - a governor has ever actually vetoed an entire budget. H.D. Palmer, a spokesman for the Department of Finance, said research as far back as 1921 found no instances of it occurring.

Not that governors haven't threatened it. In July 1991, Gov. Pete Wilson promised to veto the budget legislators had sent him because it lacked a tax increase and workers' compensation reforms he wanted. Instead, Wilson held onto the bill until almost the last minute of the 12 days he could legally hold it without acting, and then sent it back to the Legislature, which immediately sent it back to him. That started a new 12-day clock in which the warring parties reached a compromise.

The last successful overrides were in July 1979. Gov. Jerry Brown vetoed a bill that sought to ban banks from getting into the insurance business. But the bill's author, Assemblyman Lou Papan, D-Daly City, succeeded in getting the veto overridden on his second try.

Another Brown veto was also overridden earlier that month. The bill, by Sen. Al Alquist, D-San Jose, proposed $220 million in pay raises for state workers. Legislators also overrode eight items in that year's budget bill.

Brown, in fact, had vetoes overridden several times, the first of which was in 1977 when he vetoed a bill that reinstituted the death penalty in California.

As it happened, Brown - now the state's Attorney General - appeared with Schwarzenegger Tuesday at a ceremony at the Stanford Mansion to honor heroic law enforcement officers.

Asked what it's like to be overridden by the Legislature, Brown said, "It's not a big deal. It happens. In fact, if you're not getting vetoed now and then you probably aren't doing too well."

Asked if Schwarzenegger should veto the budget, Brown said "I don't think I should enter the polarized fray ... I'm the governor's lawyer, so I think I'll keep my counsel as I provide him with my own."

The overrides during Brown's administration came even though members of his own party, the Democrats, controlled the Legislature. But like Schwarzenegger, Brown was almost as unpopular with many members of his own party as he was with the opposing party.

Prior to Brown, California governor's vetoes had been overridden only twice in the previous 31 years, once during Ronald Reagan's administration and once during Earl Warren's.

78 Days: VETO WEBCAST @ 3?

SAC BEE CAPITOLAlert| September 16, 2008 - 1:25 PM

Schwarzenegger 'discusses' budget at 3 p.m.

Gov. Arnold Schwarzenegger has scheduled a 3 p.m. news conference at the Capitol to "discuss the budget" among increasing indications that he will veto the budget passed by the Legislature early this morning, setting up an override battle with lawmakers.

Schwarzenegger's office also distributed a compilation of news media criticism of the budget as an expedient plan that doesn't solve long-term budget problems - another indication that a veto is likely.

Meanwhile, Sen. Dave Cogdill, R-Modesto, the Senate's Republican leader, told a Los Angeles radio talk show that the Senate "most definitely" would override the GOP governor if he vetoes the budget.

"I believe that as a Legislature we'll override the veto,"  Cogdill said.

From the Governor's Press Office:Governor to Hold Capitol Press Conference Regarding the State Budget


9/16/2008 - Governor Arnold Schwarzenegger will hold a press conference to discuss the state budget.
Watch the live webcast at 3:00 p.m.

78 days: A bit of the old S&M

"This budget has enough smoke and mirrors to play the main room in the Magic Castle."

Patt Morrison | KPCC-FM 89.3  | 1:16PM

78 days ...and now what? THE LATEST BUDGET NEWS as of 12:30PM Tuesday 16 Sept

The Sacramento Bee CapitolAlert

Lawmakers worked into the wee hours of Tuesday morning to pass a state budget. But they didn't include one of the three demands Gov. Arnold Schwazenegger made to earn his support.

Capitol Alert has a rundown on what lawmakers passed and what's next:

What's happened:
Who voted for the budget
'Yacht tax' loophole closed
High-tech overtime exemption passed
The Schwarzenegger demand lawmakers didn't meet
Lawmakers react to budget
What's next:
Will Republicans vote for override?
Special election in 2009 likely

78 days and holding: VETO BAIT

Sac Bee Capitol Alert | AM Alert

16 September -- Today we will see what Gov. Arnold Schwarzenegger does with a budget that doesn't meet his demands for systemic change.

A marathon session of the Legislature ended at 2:30 a.m. The proposed compromise got the necessary two-thirds majority to pass the Assembly, 61-1, and the Senate, 28-12.

But lawmakers rushing to pass a budget plan were willing to approve just two of the three "budget reform" requirements the governor wanted.

Democrats, already moving a budget plan that rejects their tax increases in favor of borrowing billions from taxpayers, weren't willing to impose the restrictions on use of the "rainy day" fund that Schwarzenegger sought.

Schwarzenegger could make history by vetoing the spending plan. Then he could face an override.

Meanwhile, a new Field Poll shows Schwarzenegger's approval rating slipping -- to 38 percent, near his lows of 2005.

His approval/disapproval rating among Republicans is a dead split 45 percent to 45 percent.

As usual, find the exclusive statistical tabulations only on Capitol Alert.

Despite the low numbers, voters don't have much of an appetite to recall the governor.

Only 29 percent of those surveyed said they would support a recall. And 77 percent said a recall would be a "bad thing" for California.

If you're into math, that is at least six percent of people who said they would both support a recall and that it would be bad for California.

Funny, that's the kind of math balancing the state budget.