A State Without a Budget, A Government Without a Clue: August 2008

Sunday, August 31, 2008

A State Without a Budget: Day 62 - SENATE TO MEET DAILY UNTIL BUDGET DONE

Sac Bee Capitol Alert | posted by Shane Goldmacher

August 30, 2008 - 5:46 PM -- Senate President Pro Tem Don Perata announced Saturday that the Senate will convene every day - including weekends -- until lawmakers pass a state budget, which is now 61 days overdue.

"Under the emergency circumstance, for us to be anywhere but here, on the floor, prepared to take up a bill would be wrongheaded, and we won't do it," Perata said.

The Oakland Democrat put a Democratic-backed budget up for a vote of the full Senate for the first time on Friday. Perata said he was "disappointed" that Gov. Arnold Schwarzenegger had not done more to corral support for the package from lawmakers from his own party.

"He has not been willing to talk to any of my Republican colleagues, apparently," Perata said.

The Friday budget vote failed with no GOP support. At least two Republicans in the Senate must support a spending plan for it to pass with the necessary two-thirds supermajority.

The rare Saturday legislative session brought other new developments in the budget impasse, though little progress.

Legislative Republicans unveiled the broad outline of a budget plan for the first time, one they say would balance the budget without new taxes.

Howard Jarvis Taxpayers Association President Jon Coupal quickly issued a statement saying the plan "will force the Legislature to stop their reckless overspending once and for all."

But Schwarzenegger was more critical, calling the plan "not fiscally responsible" in his own statement.

"I applaud the Republicans for proposing a budget and moving the debate forward. That said, their budget is not fiscally responsible because it simply pushes our problems to next year. We were sent to Sacramento to solve problems once and for all - not kick the can down the alley for others to deal with in the future," the governor said.

Perata has promised a floor debate for any Senate GOP proposal, though it could take Republicans a week to finalize a spending plan.

At the close of session, Republican Sen. Jim Battin rose to challenge Perata's decision to hold session daily, asking why Democrats haven't met every day for the last two months.

"That was then, this is now," Perata replied.

Battin then said of any Republican budget plan in the Democratic-controlled Senate: "My expectation is it will fail."

"Then what happens?" questioned the Inland Empire lawmaker.

"Let's not prejudge," retorted Perata, saying Republicans could unveil a spending plan that "might knock our socks off."

Battin chuckled. Kind of.

But daily sessions might not be so funny for the eleven Republican state lawmakers, including Battin, who are delegates or alternates at the Republican National Convention set to begin on Monday in St. Paul.

Read Capitol Alert's story on that here.

Saturday, August 30, 2008

WILL HURRICANE GUSTAV, CALIFORNIA BUDGET CRISIS SPOIL GOP CONVENTION?

By Mary Anne Ostrom and Lisa Vorderbrueggen | Bay Area News Group | San Jose Mercury-News

Click photos to enlarge

Republican Alaska Gov. Sarah Palin delivers her speech as Republican... ( Kiichiro Sato )

31 August 2008 -- BLOOMINGTON, Minn. - The Republicans are heading into a national political convention without a script.

Will the convention be overshadowed and even canceled because Hurricane Gustav is barreling down on the Gulf Coast? If it goes on, will Gov. Arnold Schwarzenegger and state legislators stay cooped up in Sacramento or skip it?

A party still in surprise mode over the Sarah Palin pick now faces the prospect of a major natural disaster, spoiling a convention 18 months in the making.

Saturday evening, John McCain suggested it would be insensitive to hold the quadrennial event if the hurricane, which is being compared with Hurricane Katrina of three years ago, continues on its destructive path.

He told Fox News in a taped interview for Sunday morning, "It wouldn't be appropriate to have a festive occasion while a near tragedy or a terrible challenge is presented in the form of a natural disaster."

California officials and delegates arriving at the state's official delegate hotel Saturday afternoon said there was not much to do except wait for word from convention officials.

"We can't control an act of God," said Rosario Marin, former U.S. treasurer under Bush who serves as Schwarzenegger's housing secretary.

The California delegates already in Minnesota headed out Saturday evening for a Tiki Party, complete with a roasted pig and boat rides.

Hector Barajas, spokesman for the California GOP, said Saturday that national convention officials told him that after 18 months of planning they hoped the convention gavel would still begin Monday. Even if it does, it's unclear if any of the featured speakers, including President Bush, will go on.

The White House is carefully tracking the storm. The hurricane is predicted to hit the Gulf Coast late Monday, just as Bush is scheduled to give his final address as president to a GOP convention.

Privately, Republicans are wringing their hands. They want to avoid happy convention scenes as mandatory evacuations were beginning Saturday night. More than 1 million people already have been told to move away from the Gulf Coast.

Scenes of damage from Hurricane Katrina already have been playing on television marking the deadly storm's third anniversary, an unhappy reminder of the Bush administration's handling of the disaster response.

There are media reports that the convention officials and McCain officials could change the emphasis on Monday's planned schedule, and instead focus on an effort to raise money for storm-stricken areas. The original Monday schedule calls for Bush, Vice President Dick Cheney and Schwarzenegger to speak.

But budget negotiations in Sacramento are not faring well either.

Saturday afternoon, Schwarzenegger issued a statement calling a budget proposal by legislators in his own party "not fiscally responsible." Spokesman Aaron McLear called the negotiations "a fluid process" and said Schwarzenegger is sticking to his vow: no budget, no convention. That also probably means several legislators who serve as delegates and State Sen. Abel Maldonado R-San Luis Obispo, who is scheduled to speak Wednesday, will be delayed, if they make the convention at all.

Although the approaching storm was dampening some spirits, the buzz still continued around Palin, McCain's vice-presidential pick.

"When we heard it was Sarah Palin, we cheered and clapped until it hurt," said McCain delegate Jill Buck of Pleasanton, who heard the news at a GOP Rules Committee meeting in St. Paul. "She got a standing ovation and she wasn't even here."

A State Without a Budget: 63 Days and counting: Video - GOVERNOR SAYS BUDGET IS NO. 1 PRIORITY

Raw Video | August 30: Governor Says Budget No. 1 Priority KCRA TV/Channel 3 | Sacramento

A State Without a Budget: Day 62 - THE MUSH IN CALIFORNIA's MIDDLE

By George F. Will - The Washington Post

Sunday, August 31, 2008 — If John McCain becomes president, he will be confronted by a Congress with significantly larger Democratic majorities than today's -- majorities furious about high hopes dashed by an eighth Republican victory in 11 presidential elections. And if the normal pattern of off-year elections holds in 2010, those majorities will expand. So McCain would have to deal with a hostile legislature for four years, as Arnold Schwarzenegger has done for almost five years. For that reason, and because these two self-styled post-partisan, reach-across-the-aisle mavericks admire one another it is pertinent to survey Schwarzenegger's governorship of one-eighth of America's population.

Becoming governor in 2003, when Gov. Gray Davis was recalled, Schwarzenegger promised frugality. But even adjusting for inflation and population growth, spending has increased 20 percent under Schwarzenegger. The $102 billion general fund budget is $15 billion in deficit. This year Sacramento will swallow 9.58 percent of personal income, up from 8.78 under Davis, who was recalled because . . . does anyone remember?

In January, Schwarzenegger proclaimed: "I will not raise taxes on the people of California." Then he proposed raising the state's sales tax -- the nation's highest (7.25 percent statewide with local additions) -- a full penny on the dollar, unless (mostly low-income) Californians vastly increase the amount of money they squander on the state's poorly performing lottery, thereby enabling the state to borrow against projected future lottery earnings. Now Schwarzenegger favors a "temporary" sales tax increase.

Schwarzenegger began governing as a Republican, but public employees unions easily defeated his four principled proposals -- reform of public employees' pensions, merit pay for teachers, automatic spending cuts when the budget is not balanced and redistricting to be done by retired judges. So he made a Democratic operative his chief of staff and has governed accordingly.

He said he would support relaxing term limits on state legislators only if they promised to support transferring their redistricting power to nonpartisan retired judges. The legislators broke their promise, but he still favors relaxation.

When he ran for governor, desperate conservatives rallied 'round, reassured by reports that he had read Milton Friedman. But his governance has been, as populism usually is, both incoherent and predictable, a product of his gut and gusts of popular opinion.

When funding stem cell research was the indicator of advanced thinking -- nothing ages faster than intellectual fads -- he helped burden the state with $6 billion more in bond costs (including $200 million a year in interest for 30 years) to fund it. In 2003, Davis signed a law requiring employers with 20 or more workers to provide them with health insurance or pay into a state fund that would. Citizen Schwarzenegger called it a "job-killing health-care tax" and supported the referendum that repealed it. But Gov. Schwarzenegger, scrambling aboard the "universal coverage" bandwagon, proposed a pay-or-play mandate on employers with 10 or more workers: Provide insurance or pay a 4 percent payroll tax. Because imposition of new taxes requires a two-thirds legislative majority, Schwarzenegger called his proposed $12 billion in new taxes (including those on the gross revenue of doctors and hospitals) "levies" or "fees."

"It's not a tax" because "you take it for health care," not general revenue. Those from whom it would have been taken did not appreciate the distinction. Real Republicans helped killed the plan.

Today, politicians attempt to prove their gravitas and virtue by trying to fine-tune the planet's thermostat, so Schwarzenegger favors loading the state's sputtering economy (its 7.3 percent unemployment rate is 28 percent above the national rate) with taxes, fees and regulations. Nevada and Arizona thank him for the businesses he drives their way.

California Republicans have lost seven consecutive U.S. Senate races, hold only 19 of 53 congressional seats, have not controlled the state Senate since 1970, have controlled the assembly for just one year (1996) since 1970, and have bleaker prospects today than when they plighted their troth to the action hero who says: "Look, I cut to the chase. I know what the Democrats like, and I know what the Republicans like. So, I say let's meet somewhere in the middle." But Gov. Weather Vane, as the Orange County Register calls him, usually finds the middle in the middle of the Democrats' legislative caucus.

The other seven-eighths of the American population should understand that what Californians are enduring has a name: "post-partisanship." Somewhere, Gray Davis is smiling.

●●smf's 2¢ — Anybody who watched the Democratic convention on Thursday evening saw him there. And he was smiling!

A State Without a Budget: Day 62 - STATE BUDGET STILL STUCK, GOP OFFERS PLAN

They propose to collect almost $2 billion next year by selling bonds based on future lottery revenues.
Republicans also will raise another $349 million by raiding local city redevelopment funds for long-unspent money previously ear-marked for housing construction.
The GOP plan also would balance the budget by trimming or eliminating programs and agencies that Republicans have been trying to dump for years.

John Wildermuth, San Francisco Chronicle Staff Writer

Saturday, August 30, 2008 - 18:34 PDT SACRAMENTO -- California's long-running budget battle is virtually guaranteed to set an unwanted new record for delay after Senate Republicans today put out a new budget plan that won't be ready for a vote until later this week.

"We can't have this done by 9 a.m. (Sunday)," Senate GOP leader Dave Cogdill, R-Modesto, told a floor session of the Senate today. He said it will take several days to prepare the full proposal.

The state budget already is 62 days overdue, which ties the record set in 2002, when the Legislature approved the budget on Aug. 31. A proposal by Senate Democrats fell three votes short of passage on Friday, and there is no indication that there are the six Republican votes in the Assembly needed to give any budget plan the two-thirds majority needed for passage.

Don't expect Senate President Pro Tem Don Perata, D-Oakland, to celebrate the Legislature's dubious new accomplishment.

"The state is inching its way toward insolvency because we couldn't reach an agreement," a glum Perata told reporters. "That's what history will say."

Perata blamed Gov. Arnold Schwarzenegger for the most recent budget delays, complaining that the governor has been unable or unwilling to convince any Republicans to support a Democratic budget plan based largely on the governor's own proposed compromise.

"It's very difficult when a two-thirds majority requires Republican votes that a Republican governor can't get," Perata said. "This is a compromise, but (Schwarzenegger) is going to have to enforce that compromise."

Schwarzenegger, however, would like to see his own budget plan put up for a vote, without the alterations made by Perata and the Democrats.

"Since Senator Perata's budget failed and the Republican budget is likely to fail, leaders in both parties should put the governor's compromise budget up for a vote," said Lisa Page, a spokeswoman for Schwarzenegger. "It is a fair, middle-of-the-road compromise and he would sign it today."

But Republican legislators have been adamant that they won't vote for any budget proposal, even the governor's, that includes new taxes.

Their new tax plan avoids Schwarzenegger's call for a temporary one-cent boost in the state sales tax that would raise $4 billion dollars next year and $105 million in other taxes called for in the Democratic version of Schwarzenegger's budget.

Instead, they propose to collect almost $2 billion next year by selling bonds based on future lottery revenues. Unlike the governor's plan, which would require a ballot measure and not make money available until 2009-10, Cogdill said this new plan could be done without a statewide vote and raise money immediately.

Republicans also will raise another $349 million by raiding local city redevelopment funds for long-unspent money previously ear-marked for housing construction.

The GOP plan also would balance the budget with a variety of other cuts, trimming or eliminating programs and agencies that Republicans have been trying to dump for years.

The plan, for example, would eliminate the Agricultural Labor Relations Board, which Republicans have opposed since it was started in the 1970s. The UC Labor Institute, another GOP target, would be blue-penciled, as would the biodiversity conservation programs.

The plan also calls for cuts in welfare and health spending, a cap that would limit future state spending to some combination of population growth and the rate of inflation, gives the governor the right to make mid-year program cuts if the budget is out of balance and would prevent the Legislature from adjourning until a budget is passed.

Many of the suggestions, such as changes in overtime regulations, more public-private partnerships and runaway production tax credits, are straight out of a GOP wish list and are unlikely to get much Democratic support.

Even Republican Assembly Leader Mike Villines, R-Clovis, admitted that the Democrat-run Legislature wasn't likely to pass a GOP budget bill.

"But this shows you can do a budget without taxes that's responsible," he said. "It's the basis for a very good compromise in the next step."

The GOP budget plan received an immediate thumbs-down from Assembly Speaker Karen Bass, D-Los Angeles.

"The Republican proposal isn't a plan, it's a blueprint for economic disaster," she said in a statement. "Two billion in borrowing from a phony lottery scheme and $1.5 billion in cuts to the safety net for our most needy citizens ... are not reflective of California values."

Perata also was skeptical about the GOP budget plan, suggesting that the attempt to change the lottery finances without a public vote could be illegal.

But he told Senate Republicans that he wanted to see a complete budget proposal and then would allow them to bring it up for a full floor debate.

But even after the Legislature ends its session tonight, the Senate will continue to meet daily in special session until there's a budget, Perata said.

"For us to be anywhere but here, ready to take up a budget bill, would be unwise," he said. "I won't do it."

A State Without a Budget: Day 61 - TWO FROM THE SAC BEE — It may all come down to a whole lot of borrowing – again + Democrats' shift could crack budget impasse

It may all come down to a whole lot of borrowing – again

Democrats' shift could crack budget impasse

By Dan Smith - Capitol Bureau Chief - The Sacramento Bee

Saturday, August 30, 2008 –Politicians at the Capitol like to say budgeting for the state is no different from budgeting for a household: In tough times you either have to raise more money or cut expenses.

But in the end, they do what a lot of families do. They run up the credit card.

Deadlocked a record 61 days over a proposed $103.4 billion general fund that is at least $15.2 billion in the red, legislators once again are tempted to borrow.

They are privately discussing taking as much as $2.5 billion from cities, counties and transportation projects this year, despite voter-approved rules that require repayment within three years, with interest.

"The people of my district don't want tax increases," said Sen. Abel Maldonado, R-Santa Maria. "Of course, they don't want to cut education either."

"So they want what we've been doing for the last four or five years – they want us to borrow," said Maldonado, whose house defeated a budget proposal Friday that would have raised taxes and disappointed education advocates. "I'm for looking at restructuring our debt and borrowing. I think it's the way to go. I think it's a way for us to move forward and come back next year."

Gov. Arnold Schwarzenegger has called the idea "fiscally irresponsible," saying it would do nothing to narrow the state's ongoing gap between spending and taxing.

But even his plan, which raises the state sales tax for three years, includes about $741 million in other borrowing from special state funds. And in February, he and lawmakers agreed to sell the remaining $3.3 billion in "economic recovery bonds" approved in 2004 to close part of the budget gap.

In the Legislature, discussions over borrowing local government and transportation money seem to have been born of political necessity.

Democrats are seeking permanent tax increases. Schwarzenegger has offered his temporary tax increase followed in three years by a tax cut. Legislative Republicans have shown little willingness to vote for any tax increase, permanent or temporary.

Assemblyman Roger Niello, R-Fair Oaks, acknowledged the borrowing plan is "in the discussion," but is not favored by Republicans.

"It is absolutely not our first option," he said. "We don't want to do it. But the budget has to be resolved."

Advocates for road-builders, construction unions and local governments say the plan would cripple road projects and probably force local governments to borrow from banks at interest rates driven up by the credit crunch. Moreover, new payback rules approved by voters would force the state to repay the principal and all the interest within three years, creating a looming bill that exacerbates the state's ongoing budget problems.

"It's a legal approach, but from a financial and political standpoint, it's totally irresponsible," said Paul McIntosh, executive director of the California State Association of Counties.

Cities and counties, he said, may have to pay as much as 19 percent interest on bank loans to cover their losses. All of it would have to be made up by the state.

Transportation projects would slow, leaving more construction workers unemployed in an economy that is already struggling, said Jim Earp, executive director of the California Alliance for Jobs, a coalition of infrastructure construction companies and related labor unions.

"By taking that money out of circulation, we've created a huge funding hole and thrown a lot of people out of work," Earp said. "All they're really doing is driving themselves deeper into debt without taking care of the structural deficit."

The borrowing program under discussion envisions the state repaying the money from higher lottery proceeds, based on predictions that modernization of the games will increase interest and the state's take.

Schwarzenegger's proposal, meanwhile, would borrow against future lottery proceeds, using the money to repay current debt.

Other budget proposals under consideration also amount to borrowing, if somewhat indirectly. Republicans and Democrats are considering a plan to restrict the losses businesses can write off for two to three years, but it would include a method for the companies to recoup the losses – and then some – in later years.

Schwarzenegger's plan also would essentially borrow from taxpayers by raising the sales tax by 1 cent on the dollar for three years, and then paying them back by reducing it by 1.25 cents permanently.

In both cases the state would gain revenue in the short term, but lose money in future years.

Lawmakers also have pondered borrowing more money from two funds voters set aside for mental health programs and early childhood education and health. Those measures, however, have tighter restrictions that would probably require voters to sign off on any borrowing.

Local government and state budgets have been intertwined for decades. But the idea of the state using local coffers to escape budget messes took hold in 1993, when Gov. Pete Wilson and lawmakers shifted billions in local property taxes to schools from cities, counties and special districts. The fiscal gymnastics allowed the state to meet its legal obligation to schools by using what was essentially local money.

After more raids on their funds, local government advocates teamed with Schwarzenegger in 2004 and agreed to a ballot measure that would block the takings but allow limited borrowing.

Voters in 2002 approved a special transportation fund fueled by the sales tax on gasoline for road projects, but lawmakers twice borrowed from it to cover other state expenses. In 2006, voters tightened the loophole, requiring repayment with interest.

Schwarzenegger supported both measures to tighten the rules, and he remains opposed to any talk of borrowing from local government and transportation this year.

"It is like a family taking credit cards and overextending and then getting another one to pay all of the debt off," the governor said last week. "It doesn't solve any problems. It isn't a solution. It is a disaster."

By Dan Walters - SACRAMENTO BEE COLUMNIST

Saturday, August 30, 2008 – The near-record political stalemate over the deficit-ridden state budget may – repeat, may – have moved a notch closer to resolution Friday even though the Senate rejected a new Democratic version.

The new version is based on Republican Gov. Arnold Schwarzenegger's latest proposal and hinges on a 1-cent increase in the state sales tax for three years. But Republicans continued to oppose it unanimously, and any budget needs votes from at least two GOP senators.

Despite being rejected, it represents major movement by Democrats because it embraces – at least momentarily – Schwarzenegger's "reforms" to prevent future budget problems, including his authority to cut spending in midyear that Democrats dislike.

The chief difference between the Democratic senators and Schwarzenegger now appears to be the form of the sales tax boost. The governor wants to not only end it after three years but then reduce the sales tax slightly below the current level so that it constitutes a long-term tax cut. Democrats would merely end the 1-cent increase after three years.

Pointedly, when asked about the Democratic move during an appearance in San Diego, Schwarzenegger described it as "very courageous" and urged Republicans to vote for it, although his aides said later he was not endorsing it as a final budget.

Republican senators, however, denounced the budget. Tom McClintock of Thousand Oaks quoted Democratic presidential nominee Barack Obama's promise that "I will cut taxes … for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class."

But another Republican, Bakersfield's Roy Ashburn, hinted anew that he might vote for a sales tax-based budget if, as Schwarzenegger's can, it could be viewed as a long-term tax cut. It's widely believed that Ashburn and Santa Maria Republican Abel Maldonado could be persuaded to vote for such a budget if Democrats are willing.

All in all, therefore, the Senate may be edging toward some budget deal that could then be dumped on the Assembly, where Republican opposition to any kind of new taxes appears stronger. Democratic senators have been openly worried that a "borrowing budget" – one that relies on shifting funds from local governments and transportation funds rather than taxes – might emerge from the Assembly and put them on the spot.

Schwarzenegger uttered his praise of the Senate Democrats' budget while appearing with local government officials to denounce more borrowing. "Let's fix the budget problem once and for all," Schwarzenegger said.

The budget machinations are occurring as the Legislature churns toward what had been scheduled to be its annual adjournment Sunday, the constitutional deadline for most legislation to be passed.

The budget, however, is not subject to that deadline. If there's no breakthrough this weekend, the multi-sided stalemate will continue indefinitely.

Friday, August 29, 2008

Senate Compromise Fails

Bowen: Deadline has passed for fall ballot

Capitol Alert/ Sac Bee | Published 4:29 PM Friday, August 29, 2008 by Shane Goldmacher

Secretary of State Debra Bowen declared Friday that it is now too late to add any more measures to the November ballot, saying "any more changes would seriously jeopardize the integrity of the election." ... (more)

Budget vote fails

Capitol Alert/ Sac Bee | Published 1:29 PM Friday, August 29, 2008 by Shane Goldmacher

Though the tally isn't final yet, the state Senate budget vote failed along party lines, with 24 votes in favor and 15 against.
The lone abstention was moderate Democratic Sen. Lou Correa of Orange County.
See sacbee.com for more. ... (more)

Perata's floor speech

Capitol Alert/ Sac Bee | Published 12:48 PM Friday, August 29, 2008 by Amy Chance

Here's what Senate President Pro Tem Don Perata had to say about the budget he put up on the Senate floor this morning. ... (more)

A State without a Budget: Day 60@11:49AM - GOVERNOR PRAISES NEW DEMOCRATIC BUDGET

CAPITOL ALERT/SAC BEE: Posted by Dan Walters on August 29, 2008 11:49 AM

August 29, 2008 - Gov. Arnold Schwarzenegger today praised a new Democratic version of the state budget as "very courageous" and urged Republican senators to vote for it.

Schwarzenegger was 500 miles away in San Diego, campaigning against any budget that relies on borrowing money from local governments and transportation funds, as the Senate began debating the new Democratic version. He issued his words of praise in response to a reporter's question.

The new Senate Democratic version is based on Schwarzenegger's own latest proposal to break a near-record-long stalemate, with its centerpiece being a one-cent increase in the state sales tax for three years. Its chief difference is that Schwarzenegger would reduce the sales tax below the current after the three-year period while Democrats would merely end the extra penny without a further decrease.

Schwarzenegger stopped short of saying he would sign the new version.

Urgent Alert -- Senate Vote this morning will make deeper cuts -- Call Legislators Immediately to Oppose the Senate Proposal

A message from 4LAKids the California State PTA and The Education Coalition.

The Senate has announced a budget vote for 10 am Friday -- at stake are deep cuts to vital services for all Californians, both now and into the future.

The Assembly may vote shortly thereafter.

CALL YOUR 2 LEGISLATORS THIS MORNING -- and forward this message on!

1. Call 1-888-268-4334, the "Cuts Hurt Hotline" (Special hotline provided by CTA, as we need action now!)

2. Press 1, to be connected directly to your Senator

3. Tell your Senator:

"OPPOSE the Senate budget proposal because:

-- it makes MORE cuts to our schools, hospitals, and communities, now and into the future

-- it does NOT include the responsible, stable revenues needed to prevent deeper cuts and invest in the future."

4. Call again, pressing 2 to be connected directly to your Assembly member and tell them of your opposition to the Senate Budget Proposal.

Thanks to those of you who have called so many times already this very important (and very long) budget season. Why call again NOW? Two reasons:

· First, this weekend is the final deadline for any budget deal that would include items for the November 4th ballot, so the pressure is high for a final deal to be struck.

· Second, it's clear that all your calls, visits, letters, and direct actions in districts across the state have made a difference in holding the line on cuts to vital services and forcing reasonable revenue proposals into the conversation.

Now, our Senators and Assembly members must lead the charge to pass a responsible, compassionate budget. Let them hear from you NOW!

The somewhat latest budget news.

Day 60: CALIFORNIA SENATE DEMOCRATS TO INTRODUCE BUDGET PLAN: The proposal includes a sales tax increase and controls on future state spending.

It is unclear whether the proposal has the support of any Republicans.

By Evan Halper, Los Angeles Times Staff Writer

August 29, 2008 -- SACRAMENTO -- -- Democrats in the state Senate said they would attempt to break the budget impasse today by offering their own spending plan for a vote.
It would be the first floor vote on the budget in that house since the fiscal year began 60 days ago.

The plan Democrats are offering is rooted in a proposal Gov. Arnold Schwarzenegger unveiled this month. It includes a temporary sales tax hike and controls on how much the state could spend in the future.

It is unclear whether the proposal has the support of any Republicans. A budget cannot pass the Senate without at least two GOP votes. Senate Leader Don Perata (D-Oakland) suggested the governor may be able to persuade some Republican lawmakers to support the plan.

"If the governor can get a couple of votes, then we will have a budget," he said.

If the plan were to pass, it would go to the Assembly, where it would need at least six GOP votes.

Assembly Democrats are working on an alternative plan -- one that would allow them to raise taxes without the required two-thirds majority vote, according to people involved in confidential negotiations.

The plan would attempt to exploit a legal loophole by eliminating a tax cut that was put in place several years ago. Legislative lawyers have suggested it could be approved without Republican votes.

Thursday, August 28, 2008

Breaking News: California Senate to Vote on Compromise Budget Tomorrow (Thursday Aug 29) Morning at 10 A.M

Details of Proposed Compromise Emerging

By Frank D. Russo - California Progress report

Thursday Aug 28 7PM - Word has just been received that Democratic President pro Tem Don Perata has scheduled a vote on a compromise proposal to end the budget stalemate that has California on the verge of setting a record for the longest delay beyond the fiscal year for passing a budget. The vote is scheduled to take place tomorrow morning, August 29, at 10 a.m.

I do not believe this vote has been scheduled unless there are indications that there are at least two Republican Senators ready to vote for the budget so that it will secure the necessary two-thirds vote, or unless the governor believes he can deliver these votes.

A document which is ~~not yet~~ available on the net entitled “Governor’s Budget with revisions: August 2008-09 Update Proposed Compromise” is ~~not~~ available on the internet. It details how the proposal differs from that recently put forth by Governor Schwarzenegger and also how it differs from the one passed out by the joint legislative conference committee on the budget.

Update: 8/29: Governors Budget with revisions: August 2008-09 Update Proposed Compromise - Available Here

Budget reform and securitization of the California lottery is part of the package.

It says that a total of $12.0 billion or 51% of all solutions are revenue solutions. These include a temporary sales tax increase of 1%, not to apply to the sale of motor vehicles and motor fuel. There is also the sale of $3.3 billion of economic recovery bonds and loans of $714 million from special funds, revenue acceleration involving suspending net operating losses for two years, an amnesty of personal income tax and corporate income designed to speed up payments owed the state, and the accrual of personal income tax and corporate income tax estimated payments.

There is additional non-tax increase revenue involving Franchise Tax Board and Board of Equalization collection efforts, additional Tideland revenues, and transfer of $141 from ten different special funds.

A total of $11.3 billion or 49% of all solutions represent reductions in program costs.
The document quoted verbatim below appears to be changes made to the proposal the Governor made last week (dubbed by some the "August Revise") with items crossed off and language added. Hence it tracks some of the preferatory remarks about what the Governor has said and the like.

The introduction of the document contains the following:

“California's budget problem has reached crisis proportions. After months of negotiation, the Administration and the Legislature have yet to agree on a plan for solving the state's budget shortfall this year, eliminating its long-term structural deficit, and reforming the budget process to prevent such a crisis from recurring.

The Governor believes that to solve the budget crisis and move forward, the state needs to do all of the following:

Make major reductions in programs to bring spending in line with a realistic long-term revenue projection.

Provide for a temporary increase in revenues to see the state through the next several years of anticipated slow economic growth.

Modernize the state's lottery and securitize expected increased revenues to pay off General Fund debts or contribute to the "rainy day fund" (Budget Stabilization Account) to help see the state through the next three years.

Enact major budget reform that will prevent future legislatures and governors from committing temporary surges in revenues to ongoing program expansions or tax cuts, and that will provide a rainy day fund and mid-year cut authority to address future downturns in revenues.

The last two components of this plan both must be enacted by the people. Budget reform can only be achieved with a constitutional amendment, and lottery reform requires amending both the Constitution and an initiative enacted by the people in 1984.

In the absence of these two components, the only alternatives to solving the state's budget problems will be massive program cuts and/or major tax increases. The Compromise reflects lessons learned after months of negotiation with legislative leaders of both parties. It is a plan that has components that are objectionable to all parties—including the Governor.

Downside Risks to Economic and Revenue Forecasts

Since the May Revision, the economic news has worsened and many forecasters are predicting a slower return to normal growth rates. If, in fact, the economy does not grow at the rates forecast in the May Revision, revenues could decline significantly in 2008-09 and 2009-10, possibly on the order of $5 billion over the two years. This downside risk to the forecast is all the more reason to enact a balanced budget that does not rely on borrowing from local governments or transportation funds.

Outline of the Plan

Figure INT-01 represents the Governor's proposed Compromise which includes General Fund spending of $103.4 billion in 2008-09. This reflects virtually no increase from the previous year and only a 2-percent increase as compared to 2006-07. However, as compared to a workload budget, that is the projected costs of maintaining state programs at their current levels, it reflects a reduction of $9.9 billion, or 9 percent.

The figure also shows that the Compromise is balanced, not only in 2008-09, but into 2009-10 as well. In fact, the Compromise would allow the state to begin rebuilding its rainy day fund in 2009-10, thus setting the stage for achieving structural balance in the future….

The May Revision identified $24.3 billion in solutions needed to address the projected shortfall at the end of 2008-09 and leave a reserve of $2 billion. The Compromise proposes a reserve of $1.1 billion and therefore proposes solutions totaling $23.3 billion. Figure INT-02 displays how the proposed solutions in the Compromise are divided among various categories, with cuts accounting for the largest contribution to solving the budget problem.

Proposed Compromise Compared to the Conference Committee Report

The proposed Compromise includes $2 billion in additional spending reductions beyond the $9.3 billion in reductions adopted by the Conference Committee. Specifically, the Compromise maintains funding for public transit at the 2007-08 level for savings of $317 million, suspends the federal cost of living adjustment for SSI for savings of $109 million in 2008-09 and $218 million in 2009-10, achieves $210 million in savings from temporary Medi-Cal provider rate reductions, temporarily shifts $228 million in funding from local redevelopment agencies to schools, suspends homeowner assistance programs and reduces senior's property tax relief for savings of $56 million, saves $150 million by deferring "settle up" payments and makes reductions of $50 million to various health and human services programs. The Compromise provides $57.8 billion tofund the Proposition 98 guarantee, $1.1 billion less in funding than what was proposed by the Conference Committee and X1.2 billion above the 2007-08 level. Lastly, the Compromise proposal restores 101 million in funding for local public safety programs.

The Conference Committee Report included $9.7 billion in revenue increases and accelerations, including $6.6 billion in ongoing tax increases. These ongoing tax increases included higher personal income taxes and higher corporate taxes. If enacted, these tax increases would increase the volatility of California's revenue structure and target specific sectors of the state's economy. Recognizing a temporary decline in revenues and the need for a balanced approach to address the budget shortfall, the Compromise includes a three year, one-cent increase in the state sales tax that will be repaid by a permanent 1/4 cent decline in the sales tax. Given higher gas prices, the increase exempts gasoline, diesel and jet fuel from the proposed increase. In addition, the Compromise modifies the tax amnesty proposal included in the conference report to target the proposal to truly non-compliant taxpayers, it suspends the Net Operating Loss deduction for 2 years instead of three years, and it does not require Limited Liability Corporations (LLCs) to pre-pay their fee.

Budget Reform

California's fiscal strength and security hinges on fixing our broken budget system.

In his State of the State speech, Governor Schwarzenegger proposed a constitutional amendment to address two shortcomings in the state budget process: volatile revenues and over-spending. This Compromise would achieve both of these goals, by building on a proposal made by the Legislative Analyst and negotiated with the Legislature.

The Compromise strengthens Proposition 58 by increasing the size of the Rainy Day Fund from 5 percent to 12.5 percent, capturing unexpected increases in revenues following passage of the budget, and ensuring annual transfers to the reserve occur. Specifically, it ensures annual 3-percent of General Fund revenue transfers into the Budget Stabilization Account (BSA), except in years when the reserve exceeds 12.5 percent of General Fund revenue or in years in which revenues are low enough to allow for transfers from the BSA. Transfers from the BSA back into the General Fund would only be allowed when revenues are insufficient to cover baseline spending increases (i.e., the current level of spending as reflected in the annual Budget Act adjusted by the Gann Limit adjustment factors). Lastly, it ensures that one-time revenues available when the reserve has reached the cap are only available for one-time purposes, including paying off state bonds, making pre-payments for the health benefits of retirees, or granting tax rebates. The Compromise proposal would not impact Proposition 98. These Constitutional amendments would take effect in 2010-11 in order to give the state time to recover from the current cyclical downturn in the economy.

This Compromise also proposes a statutory change that would grant the Governor the power to reduce spending on state operations by 7 percent and to suspend implementation of cost of living adjustments or rate increases whenever a budget deficit developed after the enactment of the annual budget.

Proposed Compromise Compared to the Conference Committee Report

The proposed Compromise includes $2 billion in additional spending reductions beyond the $9.3 billion in reductions adopted by the Conference Committee. Specifically, the Compromise maintains funding for public transit at the 2007-08 level for savings of $317 million, suspends the federal cost of living adjustment for SSI for savings of $109 million in 2008-09 and $218 million in 2009-10, achieves $210 million in savings from temporary Medi-Cal provider rate reductions, temporarily shifts $228 million in funding from local redevelopment agencies to schools, suspends homeowner assistance programs and reduces senior's property tax relief for savings of $56 million, saves $150 million by deferring "settle up" payments and makes reductions of $50 million to various health and human services programs. The Compromise provides $57.8 billion to fund the Proposition 98 guarantee, $1.1 billion less in funding than what was proposed by the Conference Committee andj1.2 billion above the 2007-08 level. Lastly, the Compromise proposal restores $101 million in funding for local public safety programs.

Budget Reform

California's fiscal strength and security hinges on fixing our broken budget system.

Lottery Securitization

The Lottery remains a greatly underutilized state asset. Because of constraints that prevent California's lottery from performing like those in other states, it produces revenues that are only about half of the national average. This compromise proposes to place a ballot measure before the people to modernize the Lottery and authorize a securitization of the resulting increased revenues. The modernization would allow an increase in game payouts and provide more administrative flexibility. These modest changes are expected to improve the Lottery's performance significantly.

The compromise further proposes to use Lottery revenues to the benefit of the General Fund and to compensate education for the loss of these revenues by an equal increase in the Proposition 98 minimum guarantee and the base budgets of higher education.

Revenues from the modernized lottery would be available to pay down General Fund debts or to augment the state's "rainy day fund" (BSA). It is further proposed that a portion of the revenue stream from the lottery be securitized to provide $5 billion in 2009-10 to be used for these purposes.

Program reductions include the following description:

“PROPOSITION 98

Proposition 98 Guarantee

As a result of these actions in the special session, and the revised revenue estimate being proposed in the Compromise, the Proposition 98 General Fund appropriations for 2007-08 are now approximately $41.6 billion, which is $187.3 million lower than the minimum Proposition 98 Guarantee. Total Proposition 98 funding for 2007-08 is $56.6 billion.

The Proposition 98 Guarantee for 2008-09 is projected to grow to $57.8 billion of which $41.8 billion would be from the General Fund. While the Compromise fully funds the Proposition 98 Guarantee, and provides a $1.2 billion year over year increase, it does not fund the cost-of-living adjustments required under current law. This level of funding is higher than the amount necessary to fund Proposition 98 programs, including Special Education, Class Size Reduction and Child Nutrition, at their 2007-08 base program levels.

2008-09 Proposition 98 Guarantee Program Savings:

Cost-of-Living Adjustment: $2.9 billion savings: The Budget does not provide Proposition 98 programs with the statutory 5.66 percent cost-of-living adjustment resulting in a $2.9 billion savings, including $353.9 million from Community Colleges.

Community College Growth: $58 million additional savings are realized by reducing new enrollment growth from 3 percent to about 2 percent resulting in a total Proposition 98 expenditure level of $4.46 billion for the community colleges.

Redevelopment Agency: 5 percent or $225 million savings: The Budget also proposes a shift in the amount of funding provided by local redevelopment agencies (RDA's) to local schools and community colleges in each county. For 2008-09 through 2010-11, RDA's will be required to shift the greater of (a) five percent of their tax increment revenue, or (b) $225 million, to the Education Revenue Augmentation Funds (ERAF's) in their respective counties. For 2008-09, the Budget assumes that $228 million in additional local revenue will be passed on to schools and community colleges, which in turn reduces the state's Proposition 98 General Fund contribution by an identical amount.

2009-10 Proposition 98 Guarantee: Increase $1.1 billion: Under the Lottery proposal, commencing with the 2009-10 fiscal year, the Proposition 98 Guarantee would be increased to reflect a shift of $1.1 billion, which is the amount that was dedicated to K-14 education programs from the Lottery in 2008-09. The University of California, California State University and Hastings College of Law, will receive non-Proposition 98 General Fund in 2009-10, in place of the amount they would have otherwise received from Lottery proceeds.

Proposition 98 Settle-Up Payment: $150 million deferral. The Budget proposes to defer the annual $150 million settle-up payment. Proposition 98 appropriations for fiscal years 1995-96, 1996-97, 2002-03, and 2003-04 are $1.4 billion below the amounts required for those years. Chapter 216 of the Statutes of 2004 annually appropriates $150 million beginning 2006-07 to repay prior-year Proposition 98 settle-up obligations.

Home to School Transportation Reimbursement from Public Transportation Account: $1 billion savings over two years: The Special Session authorized up to $409 million in Proposition 98 General Fund expenditures for the Home-to-School Transportation Program for the 2007-08 fiscal year to be reimbursed from the Public Transportation Account (PTA). Similarly, the Budget Act includes $592.9 million from the PTA to reimburse the General Fund for the 2008-09 cost of the Home to School Transportation Program, including Special Education transportation (reflected in the totals for General Government).

HIGHER EDUCATION (NON-PROPOSITION 98)

Savings of $486 million are realized for higher education segments (excluding community colleges) resulting in a $7.1 billion General Fund expenditure level. Major reductions include $233.4 million for UC and $215.3 million for CSU from the workload budget level. The savings include unallocated reductions of $201.1 million and $172.1 million for UC and CSU, respectively, and 10 percent reductions to Institutional Support of $32.3 million for UC and $43.2 million for CSU. One-time savings of $24 million were realized in the Student Aid Commission budget due to a one-time fund shift to the Student Loan Operating Fund for a portion of CalGrant payments.

HEALTH AND HUMAN SERVICES

Department of Health Care Services

As part of the 2008 Third Extraordinary Legislative Special Session, legislation was enacted to reduce expenditures by authorizing a ten percent reduction in payments to Medi-Cal fee-for-service and managed care Medi-Cal providers/programs, inpatient care payments to hospitals that do not contract with Medi-Cal, as well as provider payments for the California Children's Services (CCS) program, the Child Health and Disability Prevention (CHDP) program and Genetically Handicapped Persons Program (GHPP). This Compromise retains these reductions until March 1, 2009, which will save $505.4 million General Fund in 2008-09.

Department of Social Services

Current law suspends provision of the June 2008 State Supplementary Payment (SSP) COLA until Oct 2008. Permanent suspension of the June 2008 SSP COLA would result in General Fund Savings of $198.3 million in 2008-09.

Suspension of the June 2009 SSP COLA would result in General Fund Savings of $48.9 million in 2008-09.”

That is all for now.

Posted on August 28, 2008

Everything - or more than- you ever wanted to know about the budget impasse: ON THE ROCKY ROAD TO THE 2008-09 BUDGET

by Dan Walters from the Sacramento Bee - published Wednesday, August 20, 2008 ...and still true today

Why does California seem to struggle with its budget every year?
Is state spending really out of line, as Republicans suggest, or are Democrats right when they say we need more revenue?

Dan Walters walks us through some key mileposts on the road to this year's state budget stalemate, and offers some key statistics to help you get to the bottom of the debate.

GENERAL FUND SPENDING

2002-03: $77.5 billion

2007-08: $103.5 billion

Increase over those five years: $26 billion (+33 percent)

Increase tied to inflation: $13.2 billion (+17 percent)

Increase tied to population growth: $5.4 billion (+7 percent)

Spending growth beyond inflation and population growth over those five years: $7.4 billion (+9 percent)

IS STATE SPENDING OUT OF CONTROL?

One way of measuring state spending is by looking at its relationship to the overall economy. In the last five years, general fund spending has increased from 6.75 percent of Californians' personal income to 6.82 percent.

Fiscal year general fund spending* as a percentage of personal income:

1981-82: $21.7 billion (6.78%)

1985-86: $28.8 billion (6.43%)

1990-91: $40.3 billion (6.21%)

1995-96: $45.4 billion (5.93%)

2000-01: $78.1 billion (7.07%)

2002-03: $77.5 billion (6.75%)

2005-06: $91.6 billion (6.08%)

2007-08: $103.5 billion (6.82%)

*Not adjusted for inflation.

BIGGEST CONTRIBUTORS TO SPENDING GROWTH

PRISONS: Spending jumped nearly 75 percent, from $5.8 billion a year to $10.1 billion, thanks not only to an 11,000-inmate increase in prison populations but sharply higher salaries for guards and other prison workers.

VEHICLE LICENSE FEES: Gov. Arnold Schwarzenegger cut the car tax but promised to pay local governments who use the money from the state treasury anyway. State payments to local governments rose about $3 billion over the period, to $6.1 billion per year, as more cars hit the road and their value increased.

EDUCATION: The biggest dollar increase has been in state support of K-12 education, from $28.8 billion in 2002-03 to $42.1 billion in 2007-08, but $6.1 billion of that increase was from shifting the method of reimbursing local governments for losses of vehicle license fee revenues. The real increase for schools was $7.2 billion, or 25 percent. Inflation during the period was 17 percent, and school enrollment was relatively flat, so inflation-adjusted per-pupil spending by the state did rise by approximately 8 percent.

OTHER FACTORS: Spending on Medi-Cal also outstripped population growth and inflation due to increased health care costs. Increases in most other major state expenditures were in line with inflation and population growth.

30 YEARS OF BUDGET PROBLEM MILEPOSTS

1978: Before 1978, fashioning a state budget each year was a fairly routine task. But passage of Proposition 13 in June 1978, which slashed local property taxes, began a radical budgeting makeover. General fund spending jumped as the state assumed greater responsibility for schools and local services.

1979-1990: After Proposition 13 passed in 1978, its co-author, Paul Gann, sponsored a 1979 measure to limit government spending increases to inflation and population growth, with excess revenues rebated to taxpayers. The measure limited state spending increases in the 1980s, and mandated one rebate, but was loosened in 1990 as part of deal between Republican Gov. George Deukmejian and Democratic legislators on a boost in gas taxes. The Gann Limit has never been a factor in the state budget since, but Republicans are now demanding that it be revived.

1988: The budget continued to balloon as the state assumed more burdens previously borne by property taxes. In 1988, a coalition led by the California Teachers Association persuaded voters to pass Proposition 98, aimed at giving schools a guaranteed portion - 40 percent or more - of the state's revenues.

1991: The end of the Cold War and the rapid drop in military spending plunged the state into the worst recession in a half-century. General fund spending was virtually frozen at about $40 billion for several years as GOP Gov. Pete Wilson battled with Democrats and the CTA. They balanced the budget by raising income and sales taxes, cutting some state spending and forcing local governments to shoulder some of the impact. A temporary sales tax increase was later made permanent, with approval of voters, to make up some of the losses to local governments.

1999-2000: A new economic surge, centered on the high-tech industry, flooded state coffers. Revenues - mostly income taxes - skyrocketed to $75.7 billion in 2000-01. Under Wilson and then-Democratic Gov. Gray Davis, spending also jumped sharply for schools and health care for the poor. Republicans demanded and got billions of dollars in corporate and individual tax cuts, including a two-thirds cut in property taxes that motorists paid on their cars, known as vehicle license fees or the car tax.

2001: The surge of revenue from high-tech stock transactions was a one-time windfall. As the dot-com bubble burst, revenues dropped to $62.7 billion in 2001-02, leaving the state with a $14 billion operating deficit that year. Thus began a cycle of deficits that has plagued the state ever since. The gap narrowed somewhat mid-decade as the state's economy picked up again, but has worsened since the housing industry's meltdown.

2003: As the state's deficit worsened, Davis reinstated the car tax to ease the impact on the general fund. The move added fuel to a drive to recall him. Actor Arnold Schwarzenegger made restoring the tax break a cornerstone of his campaign, a promise he fulfilled in his first act as governor, even as he promised to end "crazy deficit spending."

2004: Schwarzenegger persuaded voters to approve $15 billion in bonds to refinance short-term debt the state could not repay. Repaying those bonds has become a multibillion-dollar bite on the general fund, worsening the deficit. His aides contend that the repayments should not be counted as spending increases on his watch, since they covered deficits run up during the Davis years. Overall, however, general fund spending has outstripped population growth and inflation during Schwarzenegger's five years as governor. Gaps have been covered largely by borrowing, including raids on special funds, and accounting maneuvers, such as shifting liabilities to the next fiscal year.

2008: Schwarzenegger has pegged the 2008-09 deficit at $15.2 billion plus another $2 billion he says the state needs as an emergency reserve. He initially proposed borrowing against the state lottery's future profits, as well as making some spending cuts and accounting maneuvers to close the gap. Recently he has proposed a temporary one-cent increase in the state sales tax, which would raise about $6 billion a year - about what the car tax cut costs the state.

Sources: California Department of Finance, Legislative Analyst's Office, Bee research by Dan Walters

Day 59½ - LAIRD ANSWERS THE QUESTION: 'WHY CAN'T WE GET A STATE BUDGET?'

By John Laird
Chair
Assembly Budget Committee

FROM THE CALIFORNIA progress report

Aug 28 /1PM - The state budget is now nearly two months late. Republican legislative leaders refuse to offer a budget for consideration, let alone level with California about the need to increase revenue in order to prevent very deep, draconian cuts.

At more than $15 billion, the budget shortfall is breathtaking and the only way to bridge the gap is through a balanced mix of responsible cuts and new revenues—Democrats in the legislature have proposed billions in difficult cuts coupled with raising taxes on the wealthiest Californians and closing tax loopholes.

Even Governor Schwarzenegger has reversed his pledge against tax increases and has come to understand that the alternative to a tax increase is devastating cuts to education, healthcare, environmental resources and public safety.

Republican legislators have come to the table with just one thing: signed pledges not to raise taxes. How is it possible that a minority in the legislature can hold up the state budget while not even proposing how to end the stand-off? The two-thirds budget approval requirement in the state constitution.

California is one of three states with a two-thirds requirement—joining Rhode Island and Arkansas. And it's not just the two-thirds; it's the resulting unique budget culture that is also the problem.

The first issue is party discipline. After a 2001 budget in which four Assembly Republicans joined all Democrats in approving a budget, for various reasons not one of those Republican legislators returned after the next election. That experience hangs over every budget.

The second issue is leverage. This past spring, Republican legislative leaders indicated they wanted to slow down implementation of AB 32, California's popular anti-global warming law, as a condition of budget approval. The two-thirds requirement gives them the leverage to attempt this. Some Republicans are even seeking to expand this leverage power by insisting on a two-thirds vote at every procedural level. This would only further undermine efforts for responsible budgets.

The third issue is transparency. Not since the 2003-04 legislative session has there been a public budget proposal from the Republican side. Each year, the budget is delayed with no public alternative proposal in play. When the final budget is negotiated—generally, out of the public eye—advocates for health care, transit, education and local government find out just before a public vote what was on the table at the end—generally too late to influence it.

Two months into the budget stand-off, the Democratic legislative committees and the Governor have long-since proposed balanced budgets with some new taxes and targeted cuts—none of these proposed budget have included borrowing. And, if by the time you read this, there is borrowing in the budget—it is not what the Governor or a majority of the legislature wanted. It will be the two-thirds requirement that will have leveraged it in so the budget process can end.

To add insult to injury, often the very interests that leverage borrowing into the budget won’t actually vote for the budget—leaving it to the rest of us to approve a budget that includes things we find distasteful.

While any list of necessary state reforms should include campaign finance, the initiative process, redistricting and term limits—at the top of the list should be the legislative two-thirds budget approval requirement.

It’s said the two-thirds requirement protects fiscal responsibility. I think the opposite is true. We got where we are now with the two-thirds requirement. This is no way to run the government of the eighth largest economy in the world. This needs to be changed. There's a reason forty-seven other states do not do this—and that their budgets are adopted on time.

For more about the state budget crisis, go to www.assembly.ca.gov/laird.

Assemblymember John Laird (D-Santa Cruz) is chair of the Assembly Budget Committee

A State Without a Budget: Day 59 - CALIFORNIA BUDGET BATTLE GOING NOWHERE FAST

By Dan Walters - Sacramento Bee Columnist

August 28 - So where is the state of California's struggle with a long-overdue, deficit-ridden state budget headed? Nowhere fast.

Sometime this week, perhaps already, the drop-dead date for placing measures on the November ballot passes, thus adding another level of complexity to the multi-sided political struggle over whether the $15.2 billion deficit in the 2008-09 budget will be closed by new taxes, spending cuts, more loans or some combination thereof.

Although Secretary of State Debra Bowen refuses — somewhat faintheartedly — to impose a hard deadline, local election officials are scheduled to mail ballots to overseas voters next week.

It would be virtually impossible for politicians to add more measures, even though certain aspects of any budget deal probably require voter approval, without disenfranchising soldiers in combat and embarrassing themselves even further.

Gov. Arnold Schwarzenegger, meanwhile, is driving his political credibility even lower, if that is possible, by saying he'll sign some legislation to revise the $9.95 billion bond issue for high-speed rail that's already on the ballot.

Schwarzenegger had pledged not to sign any bill until a budget is passed, including the rail bond measure, but now says he will.

It's not the first time that Schwarzenegger has drawn a line in the political sandbox, promising to do or not do something, and then reneged.

He did it, for instance, when he endorsed a measure to modify legislative term limits after saying he wouldn't do it unless it was paired with redistricting reforms.

More recently, he's backtracked on his pledge to balance the state budget without new taxes and is now pushing a sales tax boost.

Every time Schwarzenegger does one of these political flips, his political credibility sinks a little lower, making it that much more difficult for anyone to take any of his pronouncements seriously and that much more difficult for him to broker a budget deal.

Politics may be an unseemly trade at times, but among politicians themselves, there's a certain code of honor about keeping one's word.

Schwarzenegger violates that code as casually as he changes his socks.

The issue isn't whether some new taxes of some kind aren't needed to close the budget gap; they most certainly are. But that's been known for months, and Schwarzenegger shouldn't have taken the no-new-taxes pledge if he wasn't prepared to honor it.

Even more curiously, Schwarzenegger's flip-flop on taxes isn't really advancing the cause of responsible budgeting.

His proposed new taxes, as well as other revenue proposals, would be in effect for only a few years, after which the state's structural deficit would return — but by then it would be another governor's problem.

It's becoming evident that Schwarzenegger will say and do anything — as well as sign anything — to slide through the remainder of his governorship, and then dump his mess in someone else's lap.

He's rapidly approaching buffoonery.

Wednesday, August 27, 2008

A State Without a Budget: Day 58 - SCHWARZENEGGER COULD BE NO SHOW AT GOP CONVENTION

By JULIET WILLIAMS – Associated Press

August 27 - SACRAMENTO, Calif. (AP) — When the Republican convention opens Monday night, its prime-time lineup could be missing one of its biggest draws: California Gov. Arnold Schwarzenegger.

Shackled by the mundane business of state government, Schwarzenegger is vowing to remain in California if lawmakers fail to reach agreement on a state budget, now two months overdue.

"The work for the people of California, and to solve this budget problem, is the most important thing right now for me," Schwarzenegger said Wednesday during a news conference in Los Angeles.

<— Gov. Arnold Schwarzenegger buttons his jacket as he walks to a news conference to unveil his new compromise state budget at a Capitol news conference in Sacramento, Calif., Wednesday, Aug. 20, 2008. Schwarzenegger's plan calls for a temporary 1 percent sales tax increase and additional spending cuts to close the $15.2 billion deficit.(AP Photo/Rich Pedroncelli)

A budget deal by showtime seems unlikely at this point, potentially costing Schwarzenegger a national platform and Republican candidate John McCain a high-profile supporter who has been popular with the kind of independent voter McCain hopes to attract.

Schwarzenegger's absence also would be a letdown for the TV networks, which would lose one of the biggest potential draws on the convention's opening night. Other speakers scheduled for Monday include President Bush, Vice President Dick Cheney and numerous members of Congress.

Schwarzenegger's failure to commit is proving to be a source of frustration for convention organizers, who like to nail down their programs well in advance. Given the star power of the actor turned politician, they'll still squeeze him into a prime slot if they can get him.

The stalled budget already forced Schwarzenegger to curtail nearly all appearances this summer. His efforts to cajole lawmakers into a compromise have repeatedly fallen flat.

California is the only state with a fiscal year beginning July 1 that has not approved a spending plan.

Lawmakers remain at odds over how to close a $15.2 billion budget gap, with Republicans adamantly opposed to any tax increases and Democrats seeking to avoid massive program cuts.

Most Democratic lawmakers already made the decision to stay home and miss their historic convention in Denver this week. The majority party likely won't be motivated to strike a deal with their Republican counterparts in time for them to attend next week's GOP convention.

Organizers of the St. Paul, Minn., convention still hold out hope that Schwarzenegger will show. Because his speech is scheduled for the Labor Day holiday, he could fly in and out on his private jet without missing any state business.

"We recognize his responsibilities in California and we'll certainly work with him regarding scheduling should that issue arise," convention spokeswoman Melissa Subbotin said.

She declined to say whether organizers were considering another option: a Schwarzenegger appearance by satellite from Sacramento, as Republican Gov. Pete Wilson did in 1992 during a similar budget stalemate.

Tuesday, August 26, 2008

A State Without a Budget: Day 56 ...and counting - Federal Judge Orders State to Explain Delay in Implementing Order to Restore Medi-Cal Rates

California Budget Crisis - Day 56: Federal Judge Orders State to Explain Delay in Implementing Order to Restore Medi-Cal Rates - full article in California Progress Report

Monday, August 25, 2008

A State Without a Budget: Day 56½ - CALIF. SPEAKER CHANGES MIND, RESCHEDULES SESSIONS

The Associated Press | san Jose Mercury News

08/25/2008 12:15:42 PM PDT -- SACRAMENTO—Assembly Speaker Karen Bass has abandoned her plan not to hold sessions on Tuesday, Wednesday and Thursday, a move that would have freed fellow Democrats to attend the party's national convention in Denver.

Bass announced last week that the Assembly wouldn't meet those three days, despite the lack of a state budget and an end-of-session agenda loaded with hundreds of bills awaiting votes.

Her spokesman, Steve Maviglio, says now the Assembly will meet every day but Tuesday this week. He says Bass decided to add the Wednesday and Thursday meetings because bills that were bottled up in the state Senate are "trickling out."

Lawmakers are supposed to wrap up their 2009 session by Sunday, but they're likely to be stuck in Sacramento until there's a budget deal.

Calif. speaker changes mind, reschedules sessions - San Jose Mercury News

A State Without a Budget: Day 56 - WHY ARNOLD SCHWARZENEGGER SAID YES TO TAXES

The LA Now Blog in the LA Times -- from Veronique de Turenne

who will blink first? 10:55 AM, August 25, 2008 -- Tick-tock, tick-tock -- 56 days and counting without a state budget. Our own George Skelton sits down with California's governor to talk money, politics and (in the nicest way) says "I told you so" about raising taxes.

Here's a snippet:

I'd asked the governor how he could explain his new advocacy of a sales tax increase to Republican voters who had supported his reelection two years ago after he promised not to raise taxes. Many still believe the state can make ends meet merely by cutting spending.

"You can't cut the whole $15 billion," Schwarzenegger said, referring to the gaping hole in a $102-billion general fund.

"You'd have to severely cut into education, which I don't think is the right thing. You would severely cut into health care, which is not the right thing to do. You would severely have to cut into prisons, and we can't do that."

A good Republican trade-off for a one-cent-on-the-dollar sales tax increase for three years, he asserted, would be a long-term budget fix: A constitutional amendment requiring the state to transfer 3% of its annual revenue to a rainy-day fund until it grew to 12.5% of the general fund. The kitty could be tapped only in a fiscal emergency.

Also, if the state were heading into a hole in midyear, the governor could unilaterally pare spending up to 7% on state operations and deny cost-of-living adjustments.

"Fix the budget system once and for all so this will never, ever happen again," he asserted. "Do a compromise where you make the Democrats do something they never would have done and make we Republicans do something we normally would never do."

He added: "I just think the wisest thing to do is to go to the people and say, 'Look, I know I've said no taxes. But now we are in a situation where we have to do that temporarily . . . I need your help.' "

Meanwhile, back at the Capitol, Republicans are looking for loans while Democrats are still pushing the budget they came up with. Gridlock, anyone? George Skelton's full column follows.

Confronted by realities, Schwarzenegger turns to tax hike: With the state budget 56 days overdue, the governor explains his shift on taxes.

George Skelton, LA Times

Capitol Journal

August 25, 2008 -- SACRAMENTO -- It can't be done, Gov. Arnold Schwarzenegger was insisting, staring at me over a table in his office. You can't have a responsible, honest state budget without a tax increase.
Not this year.

Schwarzenegger's push to hike sales tax riles GOP

Budget deadlock may cut Schwarzenegger's starring role

The governor wasn't trying to convince me. I've been singing that tune every budget since he took office. This was a new song for him.

I'd asked the governor how he could explain his new advocacy of a sales tax increase to Republican voters who had supported his reelection two years ago after he promised not to raise taxes. Many still believe the state can make ends meet merely by cutting spending.

"You can't cut the whole $15 billion," Schwarzenegger said, referring to the gaping hole in a $102-billion general fund.

"You'd have to severely cut into education, which I don't think is the right thing. You would severely cut into healthcare, which is not the right thing to do. You would severely have to cut into prisons, and we can't do that."

A good Republican trade-off for a one-cent-on-the-dollar sales tax increase for three years, he asserted, would be a long-term budget fix: A constitutional amendment requiring the state to transfer 3% of its annual revenue to a rainy-day fund until it grew to 12.5% of the general fund. The kitty could be tapped only in a fiscal emergency.

Also, if the state were heading into a hole in midyear, the governor could unilaterally pare spending up to 7% on state operations and deny cost-of-living adjustments.

"Fix the budget system once and for all so this will never, ever happen again," he asserted. "Do a compromise where you make the Democrats do something they never would have done and make we Republicans do something we normally would never do."

He added: "I just think the wisest thing to do is to go to the people and say, 'Look, I know I've said no taxes. But now we are in a situation where we have to do that temporarily . . . I need your help.' "

But he's getting few takers in the Legislature.

The budget proposal Schwarzenegger outlined last week also calls for $2 billion in additional program cuts, including $1.1 billion in education. He'd raid $567 million in public transit money. And he'd steal federal cost-of-living adjustments for the aged, blind and disabled. Democrats object to all that.

They're also not wild about his budget reforms. "We don't want to exchange multi-year spending cuts for a one-year budget," says Assembly Budget Committee Chairman John Laird (D-Santa Cruz).

So you'd think this would be a good bargain for Republicans: a temporary tax increase in return for long-term spending restraint. But they don't think the restraint is strong enough -- not strong enough to overcome their hatred and fear of taxes. Practically all have signed pledges not to vote for a tax increase.

"We Republicans have all been united in our belief that the state has a spending and not a revenue problem," declared Senate GOP Leader Dave Cogdill of Modesto, echoing what also used to be Schwarzenegger's mantra. "It is so discouraging to see the governor walk away from these core principles."

That comment fired up Schwarzenegger.

"I have people's principles," he told me. "I want to be a public servant, not a party servant. I mean, I'm a supporter of my party and I'm a Republican. But we're supposed to serve the people, not the party."

He's frustrated at the Republicans' unwillingness to bend and deal.

"Look," he said, "I hate tax increases. But I'm willing to go beyond my beliefs and ideology to make a compromise. It's the only way we can solve this budget problem."

Last week, GOP leaders were trying to devise a no-tax budget that relied on widespread borrowing -- dipping into state money jars, including local government and public transportation accounts. The money would have to be repaid at steep interest rates. Assembly Speaker Karen Bass (D-Los Angeles) even seemed willing because more borrowing would mean less cutting.

But borrowing is partly what got Sacramento in trouble. One of Schwarzenegger's first acts as governor, in 2004, was to lead the charge for voter approval of $15 billion in bonds to cover everyday state expenses. He and the Legislature also dipped into various state kitties that they're still replenishing.

Enough's enough, Schwarzenegger now says.

"When I stepped into this mess we had to borrow," he contended. "But that hasn't even been paid off. You can't have a loan out that you haven't paid off -- can't even find a way to pay it off -- and you say, 'Let's borrow more.' That is terrible business. That's what gets people into trouble with their credit cards. All of a sudden they're in bankruptcy.

"Just bite the bullet and get the revenue from the temporary sales tax increase."

In fact, Schwarzenegger vowed to veto any bill that relied heavily on borrowing -- any gimmicky "get-out-of-town" budget. He'd call the Legislature back into special session to do it again.

"I don't want to go and sign a budget that borrows any more money," he said. "I am very adamant about not creating more debt."

Sunday was supposed to have been the drop-dead day for passing a reform measure in time for the November ballot. Schwarzenegger said he might call a special election next year.

"No one here should think that because they go past the deadline that now they've pulled a nice trick," he cautioned. "There will be no budget signed without a good budget reform."

The governor chided Republicans for not producing their own budget. He has. Democrats have.

"Republicans talk about the borrowing scenario and about the cuts," he said. "I'd like to see their budget. Why haven't we seen any numbers? Wouldn't it be wonderful? 'Here are the cuts in education and in healthcare and in prisons and law enforcement.' "

Schwarzenegger expects the fight to drag out a lot longer, even if the budget already is 56 days late. The fiscal year began July 1.

"Lock the building and don't let anyone leave until there's a budget," he declared.

The governor has an anti-borrowing ally in Senate leader Don Perata (D-Oakland). Perata has vowed to spend Thanksgiving in the Capitol negotiating before he'll surrender to more borrowing.

"Oh, we definitely will be here on Thanksgiving," Schwarzenegger said. "That's for sure."

Surely he jests. Surely legislators will see the governor's offer as a realistic basis for compromise.

Sunday, August 24, 2008

A State Without a Budget: Day 55 - FIRST 5 PROGRAM THREATENED

Editorial from La Opinión | Translation by La Opinión

Sunday 25 August 7;30 PM -- The Sacramento budget stalemate continues given the Republican refusal to consider a tax increase, whether proposed by the Democrats or the governor himself, as part of the package to address the state’s more than $15-billion deficit.

The Republican minority’s proposal is to cut spending, put the state in debt, and use funds already allocated by voters in ballot initiatives to specific areas—including preschool education—for other purposes. This is the case with the First 5 program.

Research shows that the first years of a child’s life are critical for our future development. First 5 aims to serve the needs of low-income, predominantly Latino children, in terms of health and education. The funds allocated by Proposition 10 to support First 5 are derived from a cigarette tax.

Now, using the deficit as an excuse, this initiative is targeted for elimination by a Republican bill, which would divert part of the First 5 funds to Healthy Families. Another Republican proposal wants to use undisbursed funds from the ballot initiative to cover general spending.

A conservative block in the State Capitol has always rejected the important work of First 5, charging that it aids undocumented children. Now this contention is masked behind the exigencies of the budget’s red ink.

The refusal to increase state revenues has a purpose beyond its purported principles: to serve as a vehicle to force unpopular, detrimental policies on California, such as eliminating a program like First 5, which is building our state’s future. We believe First 5 should continue to be supported.

A State Without a Budget: Day 55 - BACK TO SCHOOL: AILING ECONOMY STRAINS STUDENTS, PARENTS

By Kimberly S. Wetzel - Contra Costa Times/San Jose Mercury News

August 25 -- Children across the country will return to school this year to face a money-hungry bully: the unstable economy.

Soaring food prices will extract more lunch money from students, while higher pump prices mean children will either pay more to ride a gas-guzzling bus or won't get a seat at all. Field trips are being reduced or scrapped altogether to save fuel.

It doesn't stop there.

California budget cuts mean students will compete for the attention of fewer teachers. Some electives will be nixed, and booster clubs and education foundations, which raise money for such things as classroom projects, are collecting less as businesses cut back and parents fret over job security.

"I think everybody, if they're not struggling themselves, they're aware that the overall economy is declining and there's just a sense of caution," said Teresa Barnett, an Albany parent and board member of the Albany education foundation SchoolCARE. "Just the basics, the fuel and food prices are enough to be crimping people's budgets."

Gas prices shot up an estimated 35 percent to 40 percent nationwide in the past year, while food costs jumped between 12 percent and 20 percent.

Those grumbling yellow buses — which have 25- to 100-gallon tanks and chug along at seven to eight miles per gallon — can cost as much as $400 to $500 to fill. That has forced schools across the country to make cost-saving shortcuts on service or to charge fees.

Districts in Utah, Rhode Island, Connecticut, Washington, Minnesota, Colorado, Massachusetts and elsewhere have resorted to four-day school weeks or reduced or eliminated bus routes altogether.

The service changes come at a time when many schools are seeing more students at the bus stop because parents no longer can afford the gas used to drive their children to school.

Bay Area school leaders have taken measures of their own. The Fremont school district this week will consider doubling its annual student bus fee to $700; the John Swett district increased bus fees to $300 this year. Contra Costa's Knightsen school district, which used to let students ride for free, now charges $200 annually.

Hayward students may see more localized field trips and fewer buses as the district consolidates routes, said Debi Parker, Hayward Unified's transportation manager.

"We're trying to tighten it up as much as we possibly can," Parker said, noting that the district pays $4.27 for diesel fuel and the cost fluctuates weekly.

Some administrators likened the situation to the oil crisis of three decades ago.

"In the '70s we couldn't get fuel," said Bill Stephens, Fremont's associate superintendent of business services. "Today we can get the fuel, but it's exploding in cost for us."

Pump prices also are driving up food costs, as drivers add fuel surcharges to customer costs. Districts are paying more than ever to stock cafeterias with staples such as milk and they're passing the cost on to students.

A recent survey by the national School Nutrition Association said that 75 percent of responding school districts had either raised school lunch prices or plan to this year.

"We've been dealing with this for quite a few months now," said Stephanie Bruce, School Nutrition Association president and director of food and nutrition services at the Ontario-Montclair school district in Southern California.

"Everything is being passed on, even with the cost of fuel going up, it doesn't just effect food and gas prices, it effects all of our petroleum products, like lunch trays."

The Albany school district increased prices by 50 cents last week; the Antioch, Oakland, John Swett, Dublin and New Haven districts recently raised prices, as well. Students who receive free and reduced-cost lunches will not be charged more.

"It's affecting everyone," said Peggy Stevenson, director of food services for Antioch Unified. "It's affecting restaurants; it's affecting people buying groceries at the store."

California children who escape lunch and bus increases will be bullied by the economy in other ways.

The state's budget deficit necessitated that districts throughout the state cut millions from budgets in the spring, meaning fewer teachers, supplies and class offerings. Children in the Mt. Diablo school district will have fewer electives and larger kindergarten classrooms. West Contra Costa students must make due without some of their favorite secretaries, teachers and other staff members.

Outside the classroom, parents hampered by high costs will have to make difficult decisions during back-to-school shopping trips.

Parents have become used to paying more for things that schools increasingly can't provide, such as sports uniforms, class projects and proms. That's why Hayward High senior Verena Kwan said she was not too concerned about the economy's grip on schools.

"Senior year you kind of expect to fork over a lot of money," she said. "

But Richmond parent Maria Lopez was worried. She watched her grocery and gas bills swell over the past several months, and because of that she had little money to spend on school clothes this year.

"It's difficult right now, definitely," Lopez said. "I worry about how I'm going to get them to school; I worry about how I'm going to pay for supplies. I'm just holding on right now, but I'm afraid it's going to get a lot worse."

Staff writers Linh Tat, Kristofer Noceda, Paula King, Eric Louie, Rowena Coetsee and Shelly Meron contributed to this article.

Back to school: Ailing economy strains students, parents - San Jose Mercury News

Saturday, August 23, 2008

A State Without a Budget: Day 54½ - AMERICAN EXPRESS COULD SUSPEND AmEx CARD SERVICE TO STATE EMPLOYEES IF BUDGET DELAY DRAGS IN

sacbee.com - The online division of The Sacramento Bee

This story is taken from Sacbee / Politics.

By Andrew McIntosh - Sacramento Bee

12:39 pm PDT Friday, August 22, 2008 - With California's budget impasse approaching its 54th day, financial services giant American Express Co. has warned the state that its workers may have to leave home without their state AmEx travel card if the dispute drags on too long.

"American Express will not suspend state billing accounts at the normal past due interval; however, we reserve the right to suspend service should the impasse become protracted," Doug Browne, an American Express government services manager, told government travel coordinators in a June 12 memo.

Brown declined to discuss his memo, which was obtained by The Bee.

AmEx spokeswoman Janet Lee said the financial services giant does not publicly discuss its corporate accounts.

California is currently not refunding its workers for any travel expenses they incur using their state credit cards, from air fare to car rentals to hotel rooms and conference room rental fees.

Eric Lamoureux, spokesman for the Department of General Services, said AmEx is carrying $10.4 million in unpaid charges on its books that were incurred by state workers and agencies since the new fiscal year began July 1.

Managers and employees have been urged to avoid business-related travel until a budget is passed, Lamoureux said.

"Some staff are choosing to absorb the costs and seek reimbursement later," he said.

Browne also wrote that AmEx would suspend and deactivate accounts and cards that included spending before the state's last fiscal year ended June 30, but which was not paid for in full before its June 25 billing cycle ended.

State workers typically charge government trips or travel expenses directly to their government AmEx cards and later request refunds from their department or agency. No refunds are available now for expenses incurred after the fiscal year began.

In his memo to state travel coordinators, Browne wrote that the conglomerate has some patience for the state's yearly budget feuds because of its long relationship with the state "and history of prompt payment following previous budget delays."

Yet his note suggests that AmEx feels there are limits.

"A budget impasse imposes American Express with a financial liability," Browne wrote, noting that his company has traditionally not charged interest or penalties on overdue state government accounts.

"During our long term partnership we have found ourselves supporting transactions that cannot be paid by the state and supporting state travelers who cannot be reimbursed for travel expenses," Browne added.

Lamoureux of DGS dismissed any suggestion that AmEx is impatient.

"AmEx is demonstrating to us that they want to work with us by agreeing to carry balances without penalty until a budget is signed," he said. "What they aren't willing to do is carry balances that are holdovers from the last fiscal year that should have been taken care of by employees already."

A State Without a Budget: Day 55 - DEMOCRATS IN CALIFORNIA ASSEMBLY TO TAKE 3-DAY VACATION DESPITE BUDGET IMPASSE

Their time away from the Capitol coincides with the Democratic National Convention, but one official says that has nothing to do with their decision not to hold sessions.

By Michael Rothfeld and Nancy Vogel, Los Angeles Times Staff Writers

August 23, 2008 - SACRAMENTO -- With the end of the legislative session approaching, no budget in place and a $15.2-billion deficit hanging over their heads, the Assembly's Democrats on Friday unveiled their plans for the next week: a three-day vacation from the Capitol.

Their scheduled time away coincides with the Democratic National Convention in Denver, where 31 members of the Legislature are expected as delegates. But that has nothing to do with the decision not to hold sessions Tuesday through Thursday, a spokesman said.

"If we had work to do, we'd be here," said Steven Maviglio, a spokesman for Assembly Speaker Karen Bass (D-Los Angeles). "It's literally silly for some of them to sit around in Sacramento."

Maviglio said the Assembly finished this week voting on most of the legislation sent over by the Senate, and new bills have not arrived. And it's legislative leaders, not the rank and file, who are negotiating the budget, he said.

Barbara O'Connor, director of the Institute for the Study of Politics and Media at Cal State Sacramento, said lawmakers shouldn't go anywhere until they pass a budget.

"It's poor judgment on their part and only fuels the fire of the public's animus toward the Legislature," she said. "It looks immature and childish."

In the state Senate, half a dozen members said Friday that they had canceled their convention plans. Senate President Pro Tem Don Perata (D-Oakland), who had intended to go, told his members to stay in town.

It is unclear how many of the Assembly members will attend the convention. Sandré Swanson (D-Alameda), a delegate, said Friday that he could not attend "in good conscience." Bass, also a delegate, canceled her plans. But she has not forbidden anyone to go.

"I don't know who is going to the convention from my caucus," Bass said. "What I do know is that our No. 1 priority is to settle the budget . . . and none of us would sacrifice that to go to a convention."

Even though many will not be in Sacramento, Assembly members will still get paid more than $1,000 in tax-free living expenses for the next six days because they scheduled a Monday afternoon meeting on water bond legislation and other matters, Maviglio said. Under Assembly rules, they can collect their allowance as long as they don't go four days without a meeting.

Democrats in California Assembly to take 3-day vacation despite budget impasse - Los Angeles Times

A State Without a Budget: Day 54 - CALIF. LAWMAKERS OPT NOT TO MEET DURING CONVENTION

By JULIET WILLIAMS, Associated Press Writer from San Francisco Chronicle

Friday, August 22, 2008 - 16:30 PDT Sacramento, CA (AP) -- Lawmakers in the state Assembly have opted not to meet for most of next week, despite a state budget that's nearly two months late and a looming deadline for hundreds of bills to pass out of both houses.

The decision makes it possible for members of the mostly Democratic body to attend the party's national convention in Denver.

Many said they still won't attend the four-day convention, which runs Monday through Thursday.

"I don't think I should festoon myself with buttons and signs and spend a week in Denver," said Jared Huffman, D-San Rafael, who is a member of the convention's platform committee.

The state Senate said it would meet every day next week.

Speaker Karen Bass, D-Los Angeles, scheduled Assembly sessions for Monday afternoon and next Friday morning, but denied she was shutting down the Assembly Tuesday through Thursday so lawmakers could attend the convention.

"I don't know who is going to the convention from my caucus. What I do know is that our Number 1 priority is to solve the budget," Bass said.

Her spokesman, Steve Maviglio, said Bass had canceled her scheduled events in Denver and her plane tickets and had no plans "at this point" to attend. Bass was scheduled to attend several events at the convention, including one with U.S. Sens. Barbara Boxer and Dianne Feinstein.

Maviglio said there's no need for the Assembly to meet every day next week because many of the bills the Assembly has to act on are still in the Senate, and with the budget unresolved, members have little to vote on.

The Legislature is supposed to wrap up its 2008 session by Aug. 31, although some bills, including the budget, can be acted on after that date.

Many Democratic legislators are delegates to the convention who would vote on the party's nomination of Illinois Sen. Barack Obama as its presidential candidate.

Still, "I can't justify going when we don't have a budget," said Assemblywoman Patty Berg, D-Eureka.

Legislative leaders have been deadlocked for weeks over how to solve California's $15.2 billion budget deficit for the fiscal year that started July 1. Democrats and Gov. Arnold Schwarzenegger have proposed several combinations of cuts and tax increases, but Republicans are staunchly opposed to higher taxes and have not offered an alternative.

Schwarzenegger has urged lawmakers to stay in Sacramento until a budget deal is worked out and has left his own appearance at the Republican National Convention the following week in St. Paul, Minn. in doubt.

"Given the fact that the Legislature is over two months past their constitutional deadline and our state faces a looming cash crisis, most Californians will probably be disappointed to hear that the Assembly has chosen not to hold session for most of next week," Schwarzenegger spokesman Matt David said.

Senate President Pro Tem Don Perata said he turned in his convention credentials last week and expects his entire caucus to be in the Senate chamber at 11 a.m. Monday and to remain in Sacramento the rest of the week.

"I can't imagine anyone going. So if anybody goes there and they're not here, then I think all hell will rain down upon them," he said. "We ought to be here, and the public ought to be outraged if we're anywhere but here."

Perata said he was more upset about the overdue state budget than missing his party's biggest party.

Freshman Democratic Assemblyman Mike Davis of Los Angeles said he would go to Denver as long as a budget vote wasn't scheduled next week.

Other Assembly lawmakers remained on the fence, though, noting that only legislative leaders negotiate the budget, not rank-and-file members.

Assemblywoman Fiona Ma, D-San Francisco, said she was still undecided, but added, "If we don't have official work that we're supposed to be here doing here, part of our job as Democrats is to help elect our next president."

Former Assembly Speaker Fabian Nunez, whose is termed out in November, was rethinking his comments from earlier in the week when he said he would go to Denver regardless of the Legislature's schedule.

"I was gung-ho about going to the convention, but I'm going to take it one day at a time," said Nunez, D-Los Angeles. "I've got to think about what I should do, how it might look for me to be partying at the Democratic Convention when we're without a budget."

___

Associated Press Writers Judy Lin, Don Thompson and Samantha Young also contributed to this report.

Calif. lawmakers opt not to meet during convention

CALIF. LAWMAKERS OPT NOT TO MEET DURING CONVENTION

By JULIET WILLIAMS, Associated Press Writer from San Francisco Chronicle

The decision makes it possible for members of the mostly Democratic body to attend the party's national convention in Denver.

Many said they still won't attend the four-day convention, which runs Monday through Thursday.

"I don't think I should festoon myself with buttons and signs and spend a week in Denver," said Jared Huffman, D-San Rafael, who is a member of the convention's platform committee.

The state Senate said it would meet every day next week.

"I don't know who is going to the convention from my caucus. What I do know is that our Number 1 priority is to solve the budget," Bass said.

The Legislature is supposed to wrap up its 2008 session by Aug. 31, although some bills, including the budget, can be acted on after that date.

Many Democratic legislators are delegates to the convention who would vote on the party's nomination of Illinois Sen. Barack Obama as its presidential candidate.

Still, "I can't justify going when we don't have a budget," said Assemblywoman Patty Berg, D-Eureka.

Perata said he was more upset about the overdue state budget than missing his party's biggest party.

Freshman Democratic Assemblyman Mike Davis of Los Angeles said he would go to Denver as long as a budget vote wasn't scheduled next week.

Other Assembly lawmakers remained on the fence, though, noting that only legislative leaders negotiate the budget, not rank-and-file members.

___

Associated Press Writers Judy Lin, Don Thompson and Samantha Young also contributed to this report.

Calif. lawmakers opt not to meet during convention

Friday, August 22, 2008

A State Without a Budget: Day 53 and counting - WHAT HAPPENS NOW?

Despite the requests from the Governor to stay at their desks and not go to their respective conventions - and assurances from the legislators that they would stay on the job ...and rumors that they would work through the weekend - none of the above seems destined to happen. Marty D. Omoto, Director/Organizer of the California Disability Community Action Network reports Friday evening on the California Progress Report that No California budget deal appears cose but both houses will meet on Monday.

Assembly Will Finish Up Work On Bills Aug 31

Assembly Will Meet Monday and Then No Session Until Friday

The Assembly - with over 30 Democratic members scheduled to attend next week's Democratic National Convention - will convene on Monday (August 25) at 1 PM, but will not meet again until Friday, August 31 at 9:30 AM. That will allow State Senate and Assembly Democrats time to attend the Democratic Convention. The Republican National Convention is scheduled the following week.

Senate Schedule Not Certain

The State Senate is scheduled to convene on Monday (August 25) but has not scheduled sessions beyond that yet.

NEXT STEPS

* LEGISLATURE: Both State Senate and Assembly will meet on Monday with floor sessions to take final actions on bills. Assembly will then not meet again until Friday, August 31 to finish its work on bills for the 2008 legislative session. The Senate has not released its schedule beyond Monday yet. Those session dates could change if a budget deal is reached - but at this point, no agreement is even close and a vote on the budget doesn't appear to be likely any time soon.

* GOVERNOR: Bills passed by the Legislature are not being sent to the Governor, but are being held temporarily because of his threat to veto all bills sent to him until a budget is passed. The State Constitution give the Governor until September 30th to sign or veto bills (or allow bills to become law without his signature), so the Legislature could hold bills that it passed until close to that date in theory. This has never happened before however.

Omoto: With California now 53 days without a State budget, the State Senate and Assembly will convene on Monday (August 25) to continue finishing up work on regular legislation. Currently, the deadline to pass bills for the 2008 Legislative session is August 31.

Both houses have adjourned for the day (Posted on Friday, August 22, 2008 ) and will not return until Monday. Leadership in both houses could call members back into floor sessions over the weekend if a budget deal is reached - though that is not likely to happen with Legislative Republicans and Democrats still far apart on any budget deal.

Earlier both houses had hoped to finish up work today and perhaps even recess the legislative session, but that hope vanished as the stand-off on the State budget grew worse.

Impact of Budget Delay On People With Disabilities, Mental Health Needs & Seniors

The impact of budget cuts - both proposed and enacted, and the delay in the budget itself has major impact on hundreds of thousands of children and adults with disabilities (including developmental), mental health needs, seniors, low income workers and families, community organizations who provide services and supports because the State has cut off payments until a budget is in place.

The impact varies depending - some services have received funding through a special trust fund, but even that fund now has been exhausted. Community organizations - especially the middle sized and small ones across California are facing serious crisis in meeting payroll and paying other costs without receiving State reimbursements or knowing when it can receive those funds.

Governor Arnold Schwarzenegger released a proposed budget compromise - referred to as the "August Revision" this week that includes $2 billion more in proposed spending cuts and also a temporary 3 year 1 cent increase in the State sales tax and budget reforms. But his budget compromise proposal was greeted with opposition by Legislative Republicans who strongly oppose any tax increases and by Legislative Democrats who oppose more spending cuts, especially to education, and have reservations about a sales tax increase as opposed to increase income taxes.

CPR: No California Budget Deal Appears Close—Both Houses to Meet on Monday

A State Without a Budget: Day 53 GOVERNOR MAY SEEK SPECIAL ELECTION FOR BUDGET

Gov. Arnold Schwarzenegger's budget has gained no support. The last special election in California was in 2005 and cost the state about $50 million; California voters rejected all eight ballot propositions.

Matthew Yi, San Francisco Chronicle Sacramento Bureau

Friday, August 22, 2008 - 4:00 AM -- Sacramento -- Gov. Arnold Schwarzenegger said Thursday that the budget deadlock could last for several more weeks, a delay that would force him to call a special election.

Two significant pieces of his budget require voter approval, and many state lawmakers consider Sunday to be the drop-dead deadline for placing new measures on the ballot for the November election.

A budget deal after Sunday would mean the governor would have to put his budget measures - calling for budget overhauls and for borrowing against future lottery sales - to voters in a special election later this year or next year.

"We can have a special election. ... I prefer to put it on this ballot, but you always have to go for the next best thing. You can't always have it exactly your way," he said Thursday.

The last special election in California was in 2005 and cost the state about $50 million, according to Kate Folmar, a spokeswoman for Secretary of State Debra Bowen.

California faces a $17.2 billion spending gap, which includes $2 billion in reserves. The governor and legislators have been unable to reach a compromise on the budget for the current fiscal year, which began July 1.

It could be weeks before a deal is reached, the governor said.

With his term ending in 2010, this November election would be his last chance to take measures that he supports - structural changes in state budgeting, water and high-speed rail bonds - to the ballot box unless there is a special election.

Schwarzenegger's statements drew mixed responses from legislative leaders Thursday.

"I'm optimistic that we will pass a budget in time for this election," Senate President Pro Tem Don Perata, D-Oakland, said in a written statement.

But Eileen Ricker, a spokeswoman for Senate Republican leader Dave Cogdill from Modesto, said the senator is "willing to stay as long as it takes to get the right, responsible kind of budget for California."

The latest round of talks between Schwarzenegger and legislative leaders fell apart Tuesday when Assembly Republican leader Mike Villines, R-Clovis (Fresno County), stormed out of the meeting over talk of increasing taxes.

But budget negotiations are especially tough this year because Schwarzenegger wants structural changes, the governor said.

"I think we all could very quickly be on the same page if I would want to fix the budget problem only for this year and kick the problem down to next year. But is that what I want? No," he said, reiterating his stance that he doesn't want to borrow money to help fill the deficit.

"Republicans (in the Legislature) have no interest in thinking long-term," the GOP governor said.

Schwarzenegger made public on Wednesday his latest budget proposal, which he calls a compromise. The plan includes a temporary increase in the state sales tax by 1 cent per dollar, additional cuts and limits on spending that would allow the state to sock away additional revenue during economic boom years. He also proposes giving the governor authority to make midyear cuts during hard economic times.

Those plans, which the governor had revealed to legislative leaders during a private meeting Aug. 3, so far have failed to win endorsements from lawmakers.

Schwarzenegger said while he doesn't like raising taxes, he is willing to compromise for a budget overhaul.

"Here's a chance to go to the Democrats and say, 'Look, you've never been for budget reform. Why don't you give us budget reform and in exchange we do a temporary sales tax increase?' It could work," he said.

But Republicans maintain they won't support any taxes. Plus, GOP lawmakers also have complained the governor's proposal doesn't include a spending cap.

Schwarzenegger said the problem with trying to institute a spending cap is that even if Democratic lawmakers support it, he is convinced there is little chance it will get voter approval, recalling his attempts in the 2005 special election when his measures were soundly defeated at the ballot box. At that time, the governor had sought to change the way legislative district lines are drawn and to impose budget reforms with a spending cap.

He said he is frustrated not only by a lack of compromise in budget talks, but also with its effect on bigger projects that the state needs to take on such as improving water infrastructure and building a statewide bullet-train system.

"When you travel around the world, you see the rest of the world building, building and building, and cranes everywhere. I want to see that in California, rather than Mickey Mousing around with all this nonsense and arguing about the budget," he said. "We can have a budget system in place so that we don't have to argue about the budget all the time. ... Then debate about the big things."

Governor may seek special election for budget

Thursday, August 21, 2008

A State Without a Budget: Day 52 STATE SUPERINTENDENT TO LEGISLATORS: "OPPOSE ANY FURTHER COMPROMISE TO THE 'BUDGET COMPROMISE'".

A similar letter was sent to all state senators.

A State Without a Budget: Day 52 CALIFORNIA GOVERNMENT HAS FAILED US

Op-Ed by Jim Wunderman in the San Francisco Chronicle

Thursday, August 21, 2008 - California's government suffers from drastic dysfunction - our prisons overflow, our water system teeters on collapse, our once proud schools are criminally poor, our financing system is bankrupt, our democracy produces ideologically extreme legislators who can pass neither budget nor reforms, and we have no recourse in the system to right these wrongs. Drastic times call for drastic measures.

It is our duty to declare that our California government is not only broken, it has become destructive to our future. Therefore, are we not obligated to nullify our government and institute a new one?

Those were the rights and responsibilities that Thomas Jefferson wrote of in the Declaration of Independence, stating that governments derive their power from the consent of the governed and that whenever a government becomes destructive to the governed, it is a people's solemn right and duty to alter or abolish it.

Our state's founders gave us the tool to take this step - with a constitutional convention. We can either be led to a convention by our elected leaders in the Legislature, who, as fed up as we are, can authorize a convention with a two-thirds vote, or we can bypass any gridlock in Sacramento with a "citizen's constitutional convention." Changes from either would go on the ballot for a majority vote.

As rash as an act as this might seem, this is not unchartered territory. Nearly 30 years after the state was founded, California received a new government from a constitutional convention. We also had a California Constitutional Revision Commission from 1964-1976 and the voters approved and codified the commission's revisions in separate pieces in 1966, 1970, 1972 and 1974. Jefferson also cautioned that governments should not be changed for light and transient causes. So let us consider the seriousness of the ills and their relationship to the Constitution. California is the only state that has not passed a budget this year. While the budget battle rages, no other legislative matter gets real attention, despite an armada of problems requiring state attention - water, education, roads, prisons, health care, housing, economic policies and more. If this were a rare occurrence, then we could look the other way, but it has happened 18 of the past 22 years! The chief reason is that only Rhode Island, Arkansas and California have a constitutional requirement of two-thirds legislative budget approval, which in California is nearly impossible. Republicans contend this threshold is their only check on Democrats' profligate spending, but if Democrats do overreach, more Republicans would be elected. Likewise, some states pass two-year budgets, freeing at least one year for pure legislative work, but California's Constitution prevents such sensible practice.

California's primary system and gerrymandered Assembly and Senate districts, both parts of the Constitution, consistently produce candidates from the ideological extremes. In such an atmosphere, party orthodoxy rules all, and crossing the line to compromise is political suicide. For this reason, real, desperately needed change is blocked at every turn, and only bills like regulating tanning booths actually escape alive.

California's system of taxation and spending is almost entirely hardwired into the Constitution. It produces wildly fluctuating revenue booms and busts that put state services on a cruel feast-or-famine roller coaster that drags the poor, the elderly, children and even the business community along for the painful ride. Similarly, local funding is hogtied to the state's, forcing our cities and counties to suffer as well from outdated laws in the Constitution. California's bureaucratic red tape is legendary, reflecting nothing of our 21st century economy, culture and society.

That is because so many state agencies, boards and commissions have been placed forever in our Constitution. Texas actually has a Sunset Commission in which nearly all of its 150 agencies are automatically abolished after 12 years, unless legislation is enacted to continue them. Alas, our state Constitution prevents this, too. California's Constitution was always meant to be a living document that could adjust to the times. The time has come to make serious adjustments. As Jefferson would remind us, this is not just a right, it is a patriot's solemn duty.

Jim Wunderman is the president and CEO of the Bay Area Council.

A State Without A Budget: Day 52: CALL SCHWARZENEGGER'S BLUFF - LET DEADLINE FOR BALLOT MEASURES PASS

by Casey Mills, Beyond Chron/San Francsisco --

2008-08-21Earlier this month, Governor Schwarzenegger vowed he wouldn’t sign any legislation before a budget was passed, an obvious attempt to blackmail Democrats into hurrying along the process and accepting a Republican-driven result. Since then, mainstream coverage of the budget battle consistently includes hand-wringing over the looming deadline – this Saturday – for placing or altering measures on November’s ballot. This sort of coverage goes on to cite all the ‘major’ initiatives that wouldn’t go before voters due to the current logjam. Yet of the four big initiatives that must meet Saturday’s deadline to move forward, none are essential to a progressive Democratic agenda, and all were initiated at least in part by Schwarzenegger himself. State legislators should let the deadline pass … and let the Governor eat crow.

There’s no doubt that vital legislation remains trapped due to the Governor’s freeze on signing bills. A variety of important health care initiatives, for example, would benefit immediately from the budget passing. Landmark bills involving farm worker protections and electoral reform are also winding their way through the process, and deserve immediate attention by the Executive once they’re ready.

However, when it comes to items that must be approved by Saturday in order to go before voters, the ‘Big Four’ shouldn’t make progressives lose any sleep. They include:

Water: The Governor and Senator Dianne Feinstein want voters to okay a $9.3 billion water bond, which would go towards a slew of major infrastructure improvements. For starters, the bill remains woefully inadequate in terms of utilizing simple, cheap and effective strategies like water conservation, efficiency and recycling, which has earned it the ire of many major environmental groups. But even more important, Democrats have not had ample time to develop a counter proposal. There’s no question California faces severe challenges concerning its water supply, but at this point waiting a year for a good proposal is far preferable to rushing a bad one.

Lottery: Back in May, the Governor proposed borrowing $15 billion from state lottery income over the next three years. While Democrats continue to seek legitimate and progressive sources of new revenue to ensure a sustainable budget, Schwarzenegger continues to push this one-time fix with dubious certainty of success. Assembly Speaker Karen Bass hit the nail on the head when she called it “a Rubik's Cube budget, not a long-term, structurally balanced budget.”

Not only that, but it would give more flexibility to the state lottery to grow its operation. This would come in the face of a recent California Budget Project report citing studies that show “individuals with lower incomes spend more on lottery tickets per capita than those with higher incomes,” and that “lottery sales are higher for individuals who have little or no formal education, are residents of urban areas, are between the ages of 45 and 65, and are not white.” Essentially, it’s a proposal to borrow our future on the backs of those least able to afford it.

Spending Cap: Creating a state spending cap has been a state Republican priority for years, and while it’s sold as a fiscally responsible move to the average voter, it’s a thinly guised attempt to annihilate public services. While some Democrats have toyed with the idea of agreeing to a cap in order to satisfy state Republicans and pass a budget, progressives have rightly stood firm against the idea, and should continue to do so.

High Speed Rail: Of the four, changes to the high-speed rail measure represent the only thing that might be an unfortunate casualty. The initiative would allow development of the rail line along its entire proposed route, rather than just between San Francisco and Los Angeles. It would also create more oversight to ensure the bonds get spent efficiently.

However, the measure continues to poll above 60 percent as it is, and changes to it could cause confusion on the ballot by creating a ‘Prop 1A,’ or even a new ‘Prop 12,’ instead of a the existing and simple ‘Prop 1.’ In addition, building the first leg of the route first could generate immediate public support for high speed rail, potentially making it easier to build the extensions to Sacramento and San Diego later on. Ultimately, the benefits aren’t significant enough to fight for it, particularly considering they were all Schwarzenegger’s ideas in the first place.

Given the nature of these measures, why would Democrats lift a finger to ensure they make it to the ballot? More specifically, why would they rush to pass a budget by continuing to negotiate with a Republican legislature with no intentions of compromising, simply to further a conservative agenda?

Instead, state Democrats should be working to ensure the measures don’t make it on the ballot. For starters, it robs Republicans of the ability to achieve some major policy goals. It also robs the Governor of the spotlight this election season should his water bond and budget-related proposals make it on the ballot.

Even better, it lays the responsibility for the measures failing to make it to the ballot directly on the Governor’s doorstep. It was him and him alone that dreamed up the ban on not signing legislation until a budget is passed. That he didn’t stop to think that the first casualties might be his pet projects is no one’s fault but his own. Even worse for Schwarzenegger, it’s becoming increasingly clear that it’s not the Democrats holding up the budget process, but blindly anti-tax members of his own party – politicians who continue to refuse to even offer a budget proposal of their own.

There’s no question Republicans will try and blame ‘obstructionist Democrats’ from preventing these measures from reaching voters. But the fact will remain that the entire debacle represents some serious egg on the Governor’s face. Rather than letting the deadline come and go quietly, Democrats should be relentless in pointing this out.

He made his bed – now it’s time to lay in it.

A State Without a Budget: Day 52 CALIFORNIA'S BUDGET BILLIONS

No matter what budget Sacramento comes up with, California voters will probably increase the deficit in 10 weeks.

By Mark Paul Op-Ed in the LA Times

August 21, 2008 -- There's little chance that the state budget eventually passed in Sacramento will actually rid California of its stubborn $15.2-billion deficit. But in the improbable event that the Legislature and governor balance the budget without resorting to such gimmicks as raiding other accounts, enjoy the moment. In just 10 weeks, California voters will likely throw it out of whack again.

California has two budgets. One is passed by lawmakers. The other is improvised at the ballot box. The state's Constitution requires that the budget put together in Sacramento at least pretend to be balanced. The spending that voters enact operates under no such discipline. We do what we please.

And what usually pleases us is to add billions in spending obligations without providing any revenue to pay for them. Over the last decade, voters have passed bonds and programs, as well as shifted general tax revenue to transportation, that will cost the general fund -- when all the bonds are sold -- about $9.5 billion in debt service and spending a year, according to estimates by the Legislative Analyst's Office. That's equivalent to 9% of the current general fund,or about the total cost of all of today's state social service programs.

On Nov. 4, we will have numerous opportunities to spend even more. The ballot will include Proposition 1, a measure put on the ballot by the Legislature, which authorizes $9.95 billion in general obligation bonds to build a high-speed rail system between Los Angeles and San Francisco. Money from two other bond measures, qualified for the ballot by their intended beneficiaries, would build/renovate children's hospitals (Proposition 3) and subsidize alternative-fuel cars and electricity generated from renewable sources (Proposition 10). Big water interests are pushing lawmakers, in budget negotiations, to add a huge waterworks bond to the menu.

Voters also will decide three crime measures with fiscal consequences. Proposition 5 calls for more spending for drug treatment in prison. Proposition 6, an anti-gang measure, would increase state spending for a variety of criminal justice programs and lengthen sentences for some crimes. Proposition 9 would prevent the state from saving money by releasing prisoners before their sentences are up to reduce prison overcrowding.

Leave aside whether these measures are worthy as policy. Just look at the dollars involved. If voters pass all six, we will cumulatively add about $2.7 billion a year in bond debt service and direct state spending to the budget -- without including an extra dime to pay for them. That amount would grow to more than $3 billion if the water bond lands on the ballot and is approved. The sum is about what the state annually spends on the University of California, and it would be plopped into a budget already badly out of kilter because of a big spending/revenue imbalance.

California's spending addiction at the ballot box is thoroughly bipartisan. State Sen. George Runner of Lancaster, who chairs the Senate Republican Caucus and beats the drums against "the bloated budget," is the sponsor of Proposition 6, which would cost taxpayers about $600 million a year, according to the Legislative Analyst's Office. Proposition 5, funded by liberal drug-policy reformers George Soros and John Sperling, would annually spend about $1 billion to expand drug treatment programs for criminals and rehabilitation for parolees, in the hope of eventually reducing the inmate population and the need to build more prisons.

In a little-noticed report, Treasurer Bill Lockyer projected last year that, at current tax levels, California will not be able to pay for its existing programs and its debt service at any time in the next two decades if voters keep approving bonds at the same rate as they have over the last 20 years. Every ballot proposal that comes without a funding source adds to the problem. But that hasn't stopped people from putting spending measures on the ballot and voters from passing them. Fiscal discipline -- that's the Legislature's job, isn't it?

Mark Paul, senior scholar at the New America Foundation, was formerly deputy treasurer of California and deputy editorial page editor of the Sacramento Bee.

A State Without a Budget: Day 52 LEGISLATORS NOT OPTIMISTIC ON BUDGET - North Coast Democrats grim as state fiscal impasse reaches 8th week

By ROBERT DIGITALE | Santa Rosa PRESS DEMOCRAT

Thursday, August 21, 2008 at 4:30 a.m -- The 2008 state budget impasse is now among the fifth longest in the 22-year run of busted deadlines, and North Coast legislators -- all Democrats -- generally see little likelihood of a quick resolution.

What will it take to get a budget? "A lot of prayer," said state Sen. Patty Berg, D-Eureka, whose sprawling district stretches from the Oregon border to Santa Rosa.

She offered no specifics on what compromises she'd be willing to make, saying the budget is in the hands of "the big five," leaders -- Gov. Arnold Schwarzenegger and the two party leaders in the Senate and Assembly.

"This is the worst impasse I've seen since I've been here," she said.

"State Sen. Pat Wiggins, D-Santa Rosa, was no more optimistic. "We're not much closer than we were from Day 1," she said

California is beginning its eighth week without a budget. A vote Sunday in the Democratic-controlled Assembly fell short of the required two-thirds approval and failed to receive the support of a single Republican.

The latest signing of a state budget in the past 20 years occurred on Sept. 5, 2002. Last year Schwarzenegger signed the budget on Aug. 24, the third latest in the past two decades.

The legislators acknowledged that time is running out for a budget solution that could include items requiring voter approval this November.

"We probably need to lock everyone in the room and not let anyone out," suggested Assemblyman Jared Huffman, D-San Rafael.

The Secretary of State's Office has indicated that after this week it may be too late to get a measure on the November ballot. Republican lawmakers and the governor have warned that failure to get spending restraints onto the ballot could prompt a breakdown in negotiations.

Assemblywoman Noreen Evans, D-Santa Rosa, said it is conceivable that the Legislature still could get items on the Nov. 4 ballot after this week, but the cost might become prohibitive.

She said the two sides need to find an acceptable compromise. But to her what seems clear is that Democrats resist a "hard spending cap" on future government growth while Republicans reject new taxes.

A third option would be to balance the budget by borrowing more money, but Evans said that approach is "a large part of why we're in such a budget mess now." As such, the Democrats are "staying hard and fast to the rule of no more borrowing," she said. That's a position shared by Schwarzenegger but not his fellow Republicans in the Legislature.

Huffman said he is part of the leadership team on the budget for Assembly Speaker Karen Bass, D-Los Angeles. As such, he said, he has been "urging a budget vote for some time," and he maintained that Sunday's vote was helpful in allowing Republicans to vent and "blow off some steam."

Evans will become the new chairwoman of the Assembly Budget committee in November. She said she has been working with Speaker Bass and other budget committee members and staff.

The two also said they have been speaking individually with Assembly Republicans, trying to find any middle ground and to keep the discussions going.

"In the Assembly, that's not easy because both sides have been very polarized," Evans said.

Asked about her personal efforts, Wiggins said: "I keep telling locals and groups to push the governor to lead . . . He isn't doing that, but he should."

Evans and Huffman both said they "hate" the governor's proposed temporary 1-cent sales tax increase because of its regressive nature, meaning it takes a disproportionately larger bite from the pocketbooks of the poor. Still, they conceded they might support such a tax under certain circumstances.

Evans said her support for a sales tax hike would be tied to avoiding "huge hits" in the budgets of education, health care, parks, public safety and environmental protection.

Wiggins said she opposes the sales tax increase as regressive and too unpredictable for the amount of revenue it will provide the state.

Berg said she opposes the sales tax proposal and the Republicans' spending cap. "It's not how much money we have. It's how we spend it," she said.

Staff Writer Derek Moore and the L.A. Times contributed to this report

Legislators not optimistic on budget | PressDemocrat.com | The Press Democrat | Santa Rosa, CA

Wednesday, August 20, 2008

A State Without a Budget: Day 51 SCHWARZENEGGER'S PUSH TO HIKE SALES TAX RILES GOP: The governor says a temporary increase could help close the budget gap. But his party's leaders want to borrow.

Borrowing proposals involve diverting money specifically set aside by voters for local governments, road and other transportation projects, mental health programs and early childhood education.

By Evan Halper, Los Angeles Times Staff Writer

August 20, 2008 -- SACRAMENTO -- -- Gov. Arnold Schwarzenegger has taken on an unlikely role as one of the Capitol's most steadfast champions of a tax hike, spurning his fellow Republicans' uncharacteristic effort to borrow their way out of budget trouble.

The GOP lawmakers, preferring debt to a tax increase, say Democrats might have agreed to close the $15.2-billion budget gap with loans by now if not for Schwarzenegger.

"The legislative leaders understand we will not support a tax increase," said the leader of the Assembly's Republicans, Mike Villines of Clovis, who stalked out of budget talks in anger Tuesday afternoon. "I don't think the governor understands that. . . . It is so frustrating to sit through these meetings in his office. How many times can we say no to taxes?"

In an interview with The Times on Tuesday afternoon -- 50 days into the new fiscal year -- Schwarzenegger said resistance to tax hikes had led GOP lawmakers down a reckless path. He said they wanted to balance the budget by raiding local governments and public transportation accounts for billions of dollars. That money, under state law, would have to be repaid with steep interest.

The governor, who came to Sacramento promising never to raise taxes, now wants to raise the sales tax temporarily. If Republicans agree, he said, they would get, in return, Democratic support for future spending restraints.

"I think the sweet spot is a sales tax increase," Schwarzenegger said in the interview, "with the Democrats compromising on the budget reform in such a way that we have a real spending limit here. . . . Not everyone sees it that way. That's what I see."

Republicans say the governor's proposed spending controls, which would force lawmakers to put more money into a reserve, are inadequate. They want to prohibit state spending from growing faster than the population and inflation.

One of the governor's first big moves in office was cobbling together a plan to bail the state out of its last budget crisis, with more than $10 billion in borrowing. Despite pledges never to take that path again, the governor agreed this year to borrow $3 billion more. Now, he says, he is closing that door.

"We still haven't paid off the money we borrowed in 2003," Schwarzenegger said. "How can you go and borrow more? It is irresponsible."

Villines said that although GOP lawmakers' refusal to raise taxes may force the state to fall back on borrowing, the Democrats who control the Legislature are actually calling the shots, as the loans would pay for programs that they insist should not be cut.

Democrats, however, say the solution is more taxes.

Villines said the governor's continued support of that view had set negotiations back weeks.

"The approach he is taking is wrong on this one," Villines said, suggesting that talks among legislative leaders would be more productive if Schwarzenegger weren't in the room. "We would have been much better served having our own meeting and getting some work done."

The governor and legislative leaders refused to share details of the borrowing proposals being debated in confidential negotiations. But a memo obtained by The Times that was drafted by local government and transportation lobbyists close to the negotiations spells out what is on the table.

It involves diverting money specifically set aside by voters for local governments, road and other transportation projects, mental health programs and early childhood education. All of it would have to be repaid. Schwarzenegger, while refusing to discuss details, said the plan would leave the state with a $9-billion shortfall next year.

"What we need to do is just fix the problems and recognize we are short on revenues and deal with the issue right now," he said. "I don't know why we would wait."

Following Tuesday's rancorous meeting, Democratic leaders slipped out a back door, avoiding reporters. The governor stepped out of his office to hold a rare impromptu news conference.

He called on lawmakers not to leave town until a budget is passed, a comment that appeared aimed at Democrats who may be itching to attend their party's national convention in Denver next week. Assembly Speaker Karen Bass (D-Los Angeles), who is scheduled to host a fundraiser for the California Democratic Party at the convention, said she would cancel her plans in the absence of a budget.

Senate Leader Don Perata (D-Oakland) has said he told his caucus to plan on being in Sacramento next week.

As lawmakers bickered with one another and the governor, a federal judge issued a ruling that added significantly to their problems. U.S. District Judge Christina A. Snyder ordered the state to reverse a budget cut approved by lawmakers this year to the Medi-Cal health insurance program for the poor.

The ruling, which restores a 10% reduction in Medi-Cal reimbursement rates for doctors and other healthcare providers, will cost the state $575 million this fiscal year.

The ruling is temporary, pending the final outcome of a lawsuit filed against the state by healthcare providers, but Snyder determined that the lawsuit would probably succeed.

Snyder said the cut was probably illegal because lawmakers failed to consider factors required by the federal program, including providers' costs and whether enough doctors would be willing to accept Med-Cal patients.

Ned Wigglesworth, a spokesman for the California Medical Assn., which represents doctors, said the cuts exacerbated problems caused by the state's already low Medi-Cal reimbursement rates, which "forced many healthcare providers who were trying to hang on in the program out of the program."

Snyder did not reverse cuts for managed care programs and some hospitals, saying there was no proof that their care would be compromised.

Lisa Page, a spokeswoman for Schwarzenegger, said Tuesday that the administration was reviewing Tuesday's ruling and determining next steps.

Times staff writers Michael Rothfeld and Nancy Vogel contributed to this report.

Schwarzenegger's push to hike sales tax riles GOP - Los Angeles Times

A State Without a Budget: Day 51 CALIFORNIA NATIONAL GUARD LOSING BUDGET BATTLE IN LEGISLATURE: Democrats in the state Senate block a $3.3-million allocation to give educational benefits to Guard members

California is the only state that gives no educational benefit to National Guard members.

By Nancy Vogel, Los Angeles Times Staff Writer

August 20, 2008 -- SACRAMENTO -- While they have been beating back wildfires across the state and fighting wars on two fronts overseas, the citizen soldiers of the California National Guard have also been waging a battle in the Legislature -- and losing.

For the second year in a row, state lawmakers have rebuffed the Guard's effort to win state money to help cover the cost of college for its members. State military officials say their only hope now is that Gov. Arnold Schwarzenegger will prevail upon Democratic legislators to include money for tuition assistance in the budget that is 49 days overdue and more than $15 billion in the red.

Aid in other states for National Guard members

California is the only state that gives no educational benefit to National Guard members.

Schwarzenegger has called the lack of benefits "unconscionable" and proposed spending $3.3 million this year and next to help Guard members with tuition assistance. That is enough to cover most tuition and fees at community colleges or a state university for about 2,000 people.

Democrats and Republicans in the Assembly agreed. But Democrats in the Senate scuttled a bill that would have created the program and then stripped the $3.3 million from a Democratic budget plan.

Senators said the program's cost doomed it and hundreds of other spending proposals as the state wrestles with a $15.2-billion budget gap.

"Given the budget crisis, all bills that had a substantial amount of money" attached did not pass, said Sen. Jack Scott (D-Altadena).

But some senators had concerns beyond the fiscal, said Sen. Mike Machado (D-Linden), who chairs the subcommittee that oversees National Guard funding.

He said that given how the Bush administration has been using the National Guard to augment troops in Afghanistan and Iraq, the federal government -- not the state -- should pay for expanded Guard benefits.

"I think the federalization of the Guard is putting on an undue toll," Machado said, "and I think in that case, the federal government has a greater responsibility for providing incentives for recruitment and retention."

People who join the California National Army or Air Guard typically hold full-time jobs and do military training on weekends.

They act as the state's backup force in emergencies such as natural disasters and other crises.

Last month, more than 1,000 Guard members and 17 Guard helicopters helped state and local firefighters battle wildfires. California's 21,000 Guard members have also served 27,000 deployments overseas since the Sept. 11 terrorist attacks. Some members have been deployed several times.

California's Guard membership is the smallest per capita of any state and should be at least 25,000, Guard officials say.

The Legislature's reluctance to boost National Guard benefits is penny-wise but pound-foolish, they argue, because the federal government pays almost all of the state Guard's payroll, training and equipment costs.

The officials figure that an additional 8,000 members would draw a $400-million federal investment. But they say the lack of educational benefits hinders their ability to recruit and retain people.

"We're losing good-quality people to other states," said Maj. Thomas Keegan, a helicopter pilot who is also the legislative liaison for the California National Guard. "California uses its National Guard more than any other state in the nation, and does less for it than any other state."

Guard officials offered as an example Tech. Sgt. Maria Tubergen of Sacramento, who was named Non-Commissioned Officer of the Year in February by the California Air National Guard for her work with the 129th Rescue Wing at Moffett Field near San Jose.

Tubergen was honored by her supervisors for her community service, including volunteer work at an orphanage in Africa during a 2007 deployment, and for her handling of personnel issues for her squadron.

Tubergen, 26, moved to California three years ago and joined the Guard. She would like to remain in California and study to become a military flight nurse.

But she has used most of her federal GI Bill educational benefits, and staying in California does not make financial sense.

So she is applying to schools in Florida, Arizona, Washington and Michigan, because those states pay at least some college tuition for people willing to join their National Guard, which she would do.

"There are other states that will pay my full cost," Tubergen said.

In her native Michigan, she said, the Michigan Air National Guard paid more than half of her cost to earn a biology degree at Western Michigan University.

"It would be almost silly of me to take on debt," Tubergen said.

California National Guard losing budget battle in Legislature - Los Angeles Times

Tuesday, August 19, 2008

A State Without a Budget: Day 50 Schwarzenegger to Legislature: "YOU'RE GROUNDED"

In which the Governator threatens to keep the Democrats in Sacramento for the Democratic convention ...even though it's the Republicans that are holding up the budget! How Republican of him.

L.A. NOW BLOG | LA TIMES

4:27 PM, August 19, 2008

No state budget? Then no national political conventions for you, the Governator told state lawmakers today. Evan Halper passes along the news:

Gov. Arnold Schwarzenegger's comments came after a meeting with legislative leaders in his office that seemed to do little to move stalled budget talks forward.

"I told the legislative leaders that it is extremely important not to leave until we have a budget done," Schwarzenegger said. "We are two months past the constitutional deadline... and I think it is inexcusable not to have a budget yet."

The governor said he would not support a plan being pushed by Republicans in private talks that would replace proposed increases in taxes with borrowing from local government and transportation projects to close the state's $15.2-billion shortfall.

"We are still paying off debt that occurred from the 2003 [budget] disaster we had," the governor said. "The Republicans want to go out and borrow ... more money before we have paid off our debt. So I think that is not a good idea. The key thing here is to stay focused and come up with a compromise.

"I don’t want them to leave until the job is done. Anyone who says they do not want to compromise, I do not think they are doing a service to the state of California and the people of California."

Maybe Schwarzenegger should borrow a page from Karen Bass' playbook and boot everyone out of the Capitol until a budget is passed.

--Veronique de Turenne

Schwarzenegger to Legislature: You're grounded | L.A. Now | Los Angeles Times

A State Without a Budget: Day 50 STATE'S DEMS SHOULD HOLD STRONG ON BUDGET

"What’s important is that Democrats should cease trying to pass a compromise budget when the people they’re negotiating with obviously have no intention of compromising. They should instead focus their efforts on convincing Californians that the reason they’re refusing to capitulate is to protect and defend the interests of the state’s residents."

by Casey Mills, BeyondChron.com - San Francisco's Alternative Daily News

GOP Assembly Leader Mike Villines and Democratic Speaker Karen Bass

Aug 19, 2008 - Sunday’s vote on the state budget, in which every single Republican in the Assembly cast a ‘no’ vote against a proposal that would have both cut spending and raised taxes to close the current $15.2 million gap, exposed a glaring fact about the budget impasse. For state Republicans, the process has ceased to represent an effort to reach a solution. Instead, it represents an opportunity to stoke California’s anti-tax sentiments and tell constituents come election years that they ‘steadfastly opposed the Democrats’ attempts to raise taxes.’ While the State Dems must hold strong in their efforts to pass a more progressive state budget, they must simultaneously develop a simple argument targeted towards everyday voters explaining their refusal to bend to Republicans’ will.

Despite California’s progressive reputation, our state possesses a long history of being rabidly opposed to taxation. Proposition 13, passed in the late 70s, tapped into this wellspring and sparked a national movement still in bloom today. State Republicans in Sacramento remain determined to keep stoking the fires of the faithful.

Reading quotes from Assembly Republicans about Sunday’s vote made me feel like I’d been transported back to the apex of American fiscal conservatism, the Reagan era. Mike Villines (R-Clovis), for example, ripped a page from the Gipper’s playbook, telling the Chronicle that “what's important now is that they [the Democrats] know we're not willing to (vote for) taxes.”

To close the state’s $15.2 billion budget gap without raising a single tax represents an impossible task. Employing solely cuts would cause catastrophic effects to state services and anger amongst constituents across party lines. And the Republicans know it. They refuse to present a tax-free alternative to the Democrats’ solution, instead focusing on pandering to their anti-tax base and painting Democrats as fiscally irresponsible.

The state’s mainstream media seems determined to add credence to this narrative. They present the battle as one between the Governor and the Democratic-controlled legislature. In reality, because of California’s policy of requiring a 2/3 majority to pass the budget, it’s the State and Assembly Republicans who hold all the power. As long as these Republicans refuse to vote for a budget proposal, negotiations will remain at a standstill.

This leaves the Democrats with two options:

First, they can continue to bend over backwards to produce compromise budget proposals, trying to convince the public that they’re still working to solve the impasse. This involves offering up more capitulations that should be anathema to a truly progressive state Democratic Party, including creating a state spending cap that would destroy a wide array of essential services. It also does nothing to reverse the Republican narrative that the entire budget debate comes down to taxation.

Or, they can hold strong and refuse – just like the Republicans – to pass any budget that doesn’t represent their vision for California.

Holding strong seems the obvious choice. The problem remains, however, that to the average voter, Democratic control of the Senate and Assembly means the budget failing to pass will be viewed as their fault. The media will do absolutely nothing to correct this fallacy. You can try to tell folks about the 2/3 majority rule until you’re blue in the face – when something doesn’t happen in Sacramento, people will continue to blame the Democrats.

So what can the state’s progressives do? Fight fire with fire.

They can come up with a slogan, a mantra, as pithy and powerful as ‘no new taxes,’ explaining why they’re refusing to pass a budget. And they can use it as their battle cry during this year’s budget fight. The opposition has turned the debate over the budget into a proxy war over taxes, and progressives must now utilize the same strategy. Instead of reacting to accusations of being fiscally irresponsible, it’s time Democrats went on the offense.

There’s a variety of slogans to choose from, as the budget battle represents a fight to save basic services that reflect the core values of many Californians. “Respect Our Children,” for example, as a spending cap would prevent the state from being able to afford baseline levels of spending on the state’s school system. “Protect Our Workers,” as a sales tax increase would hit the pocketbooks of hundreds of thousands of the state’s low-income workers hard. “Grow Our Economy,” as desperately needed funding for research and development in building new sectors in the state’s economy would disappear without increases in taxes. “Real Transportation Choices,” as without new revenue, state public transportation funding will be gutted.

The list could go on. What’s important is that Democrats should cease trying to pass a compromise budget when the people they’re negotiating with obviously have no intention of compromising. They should instead focus their efforts on convincing Californians that the reason they’re refusing to capitulate is to protect and defend the interests of the state’s residents.

While further intransigence from both sides means a budget solution won’t be reached any time soon, what have the Democrats have to lose? Yes, the state will face a cornucopia of problems should the stalemate continue. But the Democratic Party must work to convince the state that it’s the Republicans’ thoughtlessness towards children, workers, the economy and the environment that’s the cause of these problems - not the Democrats’ love of taxes.

The budget shouldn’t be about taxes. It should be about people. And it’s up to the Democrats to change the terms of the debate.

BeyondChron: San Francisco's Alternative Online Daily News

A State Without a Budget: Day 50 CALIFORNIA BUDGET IMPASSE PERSISTS AS GOP REFUSES INCOME TAX RISE

By JUSTIN SCHECK - Wall Street Journal

August 19, 2008; Page A3 - California's months-long budget standoff hit a low when an emergency State Assembly meeting failed to produce a compromise between Democrats and Republicans over how to compensate for a shortfall exceeding $15 billion.

At issue is the Democrats' proposal to make up for the deficit largely by increasing taxes on California's wealthiest residents -- a plan that Republicans oppose. In a vote Sunday, not a single Assembly Republican voted for the plan to raise $6.7 billion in revenue largely through income-tax increases. Republicans account for 32 of the assembly's 80 seats, but California requires that two-thirds of the legislature approve the budget.

"We're fundamentally saying 'no tax increases,'" said Mike Villines, the Assembly Republican leader. If the tax standoff continues, California state workers could have their pay reduced to minimum wage, and the state could be forced to take out high-interest loans to fund ongoing operations.

Similar conflicts over how to make up budget deficits in tough economic times could crop up in other states over the next year because of the housing crisis, said Kim Rueben, a fellow with the Public Policy Institute of California who studies state budgets.

Ms. Rueben said California is particularly susceptible to economic changes as it is heavily dependent on income taxes on the rich, thanks largely to limits on property-tax increases as well as a 2004 measure that imposed increased taxes on the wealthy. The Democrats' plan for more income-tax increases amounts to "exaggerating a tendency that's already one of the state's biggest tax problems," she said.

Assembly Speaker Karen Bass, a Democrat, said there is little choice because the state has already cut funding for programs and needs to find more revenue.

Both sides have been reluctant to accept Gov. Arnold Schwarzenegger's proposal for a temporary sales-tax increase.

"I'm very skeptical of any politician claiming they want a temporary tax," said Republican Assemblyman Chuck Devore. In the future, he said, legislators will argue that they have "grown accustomed to the tax and we need the revenue." Democrats said the sales tax places an undue burden on poor and middle-income residents.

Democrats say a sales tax increase would be regressive. That stance could be changing in the wake of Sunday's vote, which was preceded by a debate in which dozens of legislators aired their grievances.

Ms. Bass, in between meetings with Mr. Villines, said both parties are discussing a sales-tax increase with a built-in end date and several measures to close tax loopholes for the wealthy that won't amount to increases in the income-tax rate. For example, she said, Democrats and Republicans agree that a rule exempting out-of-state yacht purchases from state taxes could be changed.

She and Mr. Villines said they expect to reach a compromise sometime this week. The key to the latest talks, she said, was the Sunday debate. "Frankly, the catharsis was needed yesterday," Ms. Bass said on Monday.

Monday, August 18, 2008

A State Without a Budget: Day 49 ASSEMBLY DEMOCRATS BUDGET BILL FAILS + CALIF. GOP LAWMAKERS KILL DEMS $6.6B TAX PACKAGE + SACRAMENTO'S FUNDRAISING FOLLIES

• from the AP: "California is the last state in the nation on a July fiscal calendar to enact a budget. " • The LA Times editorializes: "The state budget is past due, so why are lawmakers spending time raising big bucks from donors?" • At a party Sunday afternoon a friend opined that "all the lawmakers, Republican and Democrat alike, should be tossed out". 4LAKids would like to second the motion.

Assembly Democrats Budget Bill Fails

BY Matthew Yi & John Wildermuth, San Francisco Chronicle Staff Writers

Monday, August 18, 2008 04:00 PDT - Sacramento -- A revised budget proposal by Assembly Democrats failed Sunday night in the lower house of the state Legislature during an unusual weekend session that quickly morphed into nearly five hours of finger-pointing that didn't end the 48-day budget stalemate.

The 45-30 vote fell well short of the 54 "yes" votes needed to satisfy the two-thirds majority required. And the lengthy session gave no indication the Democrats would get additional Republican votes needed to pass their spending plan.

"I'm definitely disappointed," said Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County). "But now that everyone has aired their feelings, (today) we can get back to work."

The speaker suggested it is time for Republican Gov. Arnold Schwarzenegger to "turn up the heat" in an effort to reach a compromise.

Aaron McLear, a spokesman for Schwarzenegger, said the governor will continue to push lawmakers to pass a bipartisan budget that he can sign.

Assembly Republican leader Mike Villines from Clovis (Fresno County) said he thought Sunday night's debate would help push the negotiations forward, but added: "What's important now is that they know we're not willing to (vote for) taxes."

Democrats presented what they billed as a compromise proposal that would close the state's $15.2 billion budget gap with a combination of tax increases and spending cuts.

"Nothing in this budget is easy," said Assemblyman John Laird, D-Santa Cruz. "I believe the cuts go too far in some instances, and I'm unhappy to see the reinstatement of the higher corporate tax rate and other taxes. But no one has put together a plan to balance the budget without significant new revenues."

But Republicans, holding tough to their "no new taxes" pledge, said the plan to raise $6.7 billion in new revenue by boosting taxes on Californians with taxable income of $321,000 or higher, increasing the corporate income tax and suspending some business tax breaks was never going to pass.

The proposed budget "runs the risk of putting California on the brink of bankruptcy, along with many of its citizens and businesses," said Assemblyman Roger Niello, R-Fair Oaks (Sacramento County). "We have a $15 billion deficit, thanks to the irresponsible budget choices by Democrats in this Legislature, spending on new programs and bigger government."

True compromise

Speaker Bass argued that the budget represented a true compromise. It dealt with many of the concerns of Schwarzenegger, keeping a number of the cuts the governor proposed, she said, as well as agreeing to make changes in the state lottery that would allow the state to take $10 billion for repaying state debts in fiscal years 2009-10 and 2010-11.

"We are ready with a compassionate, balanced budget that meets the governor's demands and will keep our economy strong, maintain our commitment to education and protect the state's most vulnerable citizens," she said in a statement before Sunday's session.

But Republican lawmakers argued that the Democrats' plan to double the size of the state's "rainy day fund" budget reserve wasn't anything like the spending cap the governor had demanded.

The Democratic proposal says that any revenue more than 5 percent above the state budget estimates would be moved into the reserve fund, until that fund reached 10 percent of the state budget. Any money beyond that could only be spent on one-time expenditures, such as debt repayment and one-time tax cuts.

GOP wants spending limit

Republicans called the plan meaningless, saying that the rules also allowed the Legislature to transfer the money out of the reserve fund on a simple majority vote.

"We need a spending limit to force the state to save money," said Assemblyman Chuck DeVore, R-Irvine.

The Republicans had proposed a state constitutional amendment to impose a "hard" budget spending cap that would have only allowed the budget to rise at the combined rate of the cost of living rate and the state's population growth, but it was killed in committee Friday in a party-line vote.

Republicans argued that the majority Democrats had virtually ignored them in putting together the budget plan, pushing aside their concerns and presenting them with the final budget proposal only a day before Sunday's session. But Democrats complained that the Republicans were far more willing to complain about the budget than offer suggestions of their own.

'It's time to get real'

"If the cuts we've proposed aren't deep enough, what cuts would you make?" asked Assemblyman Mike Feuer, D-Los Angeles.

But amid the name-calling and partisan rhetoric, there were signs that members on both sides of the aisle had had enough and wanted to see a serious effort to find a budget plan that both parties could live with.

"We need to be at the table right now," Feuer argued. "It's time to get real, it's time to get practical, it's time to get it done."

"We're sitting today giving a performance," agreed Assemblywoman Bonnie Garcia, R-Cathedral City (Riverside County). "I want to come up here and be a responsible adult. Let's just fix this."

With Sunday's failed vote, a new state budget could be a long time coming. The state Senate still hasn't weighed in with its own budget plan, but few are optimistic that any agreement is in sight.

Assemblywoman Loni Hancock, D-Berkeley, said she was "sick at heart at what we've had to cut," and suggested that Democrats might wait until after the November elections to reach a budget agreement, after Democrats had won some more Republican seats.

"That may be the only alternative," she said. Republicans "have not made any moves to be productive and resolve this crisis."

What's on the table

The new Assembly budget proposal has a number of changes from the spending plan approved July 17 by a joint Assembly-Senate conference committee. They include:

Budget reform: A constitutional amendment, which goes on the November ballot, would double the size of the state's "rainy day" reserve fund to 10 percent of general fund revenues.

Lottery: A November ballot measure would allow the state to change the way it operates the lottery, bringing the state at least $10 billion extra, beginning in fiscal 2009-10.

Revenue: Raises the tax rate for Californians with joint taxable income over $321,000 to 10 percent and to 11 percent for those making more than $642,000. Increases the corporate tax rate, but drops plans to roll back dependent credits for high-income taxpayers.

Cuts: Trims the prison reform plan by $270 million and moves public transit funds to pay for home-to-school bus transportation.

Calif. GOP lawmakers kill Dem's $6.6B tax package

By JUDY LIN – the associated press

August 18 - SACRAMENTO (AP) — California's Republican lawmakers on Sunday rejected a Democratic proposal for $6.6 billion in tax increases on the wealthy and corporations despite an offer to boost the state's rainy day fund. The failed vote now pushes California's budget impasse into its eighth week with no compromise in sight.

The 45-30 vote in the state Assembly was the first since the state began its new fiscal year July 1 without a budget. It came after four hours of debate during which 49 of the Assembly's 80 members spoke.

Democrats offered a revised tax plan that's smaller than the $8.2 billion package they initially proposed last month. Under the new proposal, Democrats called for imposing top income tax brackets of 10 percent on joint filers making more than $321,000 per year, and 11 percent on the portion above $642,000. The highest tax bracket is currently 9.3 percent.

The proposal also called for a temporary suspension on the net operating loss deduction allowed for businesses. And it reinstates a higher corporate tax rate.

Assembly Speaker Karen Bass, D-Los Angeles, characterized the package as a compromise because it contained both cuts and new revenues. She said her plan reinstates tax brackets that were last in place under former Gov. Pete Wilson, a Republican, in the 1990s.

The Democratic leader said the proposal included a constitutional amendment for increasing the state's existing rainy day fund from 5 to 10 percent of general fund revenues.

It also includes measures that would allow the state to borrow $10 billion from future lottery funds to generate more revenue. According to the Democrats' plan, lottery proceeds would go toward retiring debt and filling the rainy day fund beginning in the 2009-10 fiscal year.

GOP members, whose votes are needed for a two-thirds vote, said they refuse to burden people with taxes while the economy remains weak. California's unemployment rate is now 7.3 percent, the highest in 12 years.

It was unclear whether the state Senate planned to take up the Democratic plan.

Last week Republicans proposed a spending cap that would have restricted growth to population change and inflation. The plan was rejected by Democrats, who hold a majority in both houses.

Gov. Arnold Schwarzenegger has been unsuccessful in leading budget negotiations. Democrats recently backed off from a temporary 1 percent sales tax Schwarzenegger proposed.

Schwarzenegger has tried to add pressure to the talks by laying off more than 10,000 state workers and trying to roll back wages for about 175,000 other employees. Some would receive the federal minimum wage of $6.55 an hour under Schwarzenegger's order, which is being challenged by state Controller John Chiang.

California is the last state in the nation on a July fiscal calendar to enact a budget.

Sacramento's fundraising follies: The state budget is past due, so why are lawmakers spending time raising big bucks from donors?

LA Times Editorial

August 18, 2008 - It was bad enough that members of the Senate and Assembly gave themselves a vacation in July, when the state budget was already past due. What really rankles is how they have spent their evenings since rolling back into Sacramento.

After each fruitless day in the Capitol, they walk across L Street to one of the clubby watering holes or hotel ballrooms or quasi-swank restaurants -- or maybe a few blocks farther afield to a more exclusive spot -- to rub elbows with, and pick up checks from, influential donors.

To parents worried that schools may be defunded, or to the typical Californian wondering whether sales taxes are about to go up, this is budget season; but for lawmakers, this is fundraising season. It means little to elected officials that they don't get their paychecks while the state budget is past due, as long as they scoop up the important stuff -- political cash. That's the flow that needs to be cut off pending an adopted-and-signed spending plan. Political fundraising by state legislators and the governor should be banned when the budget is past due.

The Times has called for a fundraising blackout during the weeks just before and just after the end of the legislative session, when lawmakers are in their final bill-passing crunch and the governor is mulling whether to sign or veto. Gov. Arnold Schwarzenegger even vowed that he wouldn't collect money during that period, because doing so smacks of backroom deal-making. Legislation should stand or fall on its own merits; decisions to pass or not pass, to sign or veto should not be made while big bucks are being dangled by special interests trying to secure action on bills.

Those same corporate and labor interests gather when budgets are overdue. Like miniature devils with little pitchforks, they swarm cocktail parties to prick Republicans seeking reelection and urge them not to give an inch on taxes. They prod Democrats eyeing higher office, pressing them to give up nothing on programs. The lawmakers don't mind. The budget can wait, as long as the donations keep coming.

It is extremely unlikely that senators and Assembly members would vote to cut themselves off. Even Schwarzenegger reneged on his pledge. But Californians have every right to insist. This state has far too many initiatives, but a ballot measure that bans fundraising while the budget is past due may be just the thing to jab lawmakers back into negotiations.

A State Without a Budget: Day 48: ASSEMBLYMAN SWANSON: "California must stand for something. Education needs to be a priority."

By Hon. Sandre Swanson (D) 16th AD/Oakland — From the California Progress Report

Delivered on the Assembly Floor - Sunday, Aug. 17th: “Our debate on the budget has become very partisan, and having our debate I think is very important for the people of the state of California. The Republican speakers have mentioned on several occasions that the Democrats are interested in raising taxes.

Now, we are interested in a budget that speaks to priorities. I agree with many of the speakers who say Californians are hurting, unemployment is high, we’re in a down economy, we have a recession. we’re in a housing crisis. So, I agree we must act and do something.

The Republicans have offered a spending cap. Now we had a hearing on ACA 19 Friday, and I asked the honorable Vice-Chair, “If the spending cap was in place today, would the rules and the procedures offered in this constitutional amendment from the Republicans allow for us to address the housing crisis?

The answer is no.

Would it allow us to deal with the rising unemployment?

The answer is no.

Would it allow us to fund after school programs to deal with our growing dropout problems in the state of California?

The answer in the Republican plan is no.

One of the things we’re saying is that the Democrats are proposing a budget, and the budget stands for something. California must stand for something. Education needs to be a priority.

Now, let me just address this question of higher taxes. To the average Californian, are they talking about you? When they say they don’t want your taxes raised? I don’t think so. They’re talking about the people who would have to pay under this plan, who make $500,000 a year. They don’t want them to pay any more taxes. They’re talking about corporations, corporations that need to pay the rate they were paying in 1997, because it’s important for everyone to be accountable and to share responsibilities at this moment.

But what they’re not telling you is this: the average Californian, without the help of the State, will pay more. Because we’re talking about your priorities. They will pay more because you will have a parcel tax in your school district and you want your children to learn, so you’ll pay more. So we don’t act, we shift the burden to your school district.

They want us to cut health to the poor and the needy so that we don’t raise taxes in Sacramento, so we don’t get those who make $500,000 a year and those corporations to share. But does that give you any tax relief in your county and your town? No. Because those patients will show up in your county hospital in your trauma center and you have to raise money in your county, and again we’ve shifted the burden.

Now it’s time for some accountability and some truth-telling. This budget is before this house. This budget should be acted on not as Democrats and Republican, but as conscientious legislators who committed themselves to this Constitution to serve the needs of the citizens of this state.

Our people in this state are hurting. I say to you, all my colleagues, cast your vote. I say to the people of California, watch that vote. If you don’t like it, tell your legislator about it. We have to get on with a budget that serves the needs of the people of this state.”

Sunday, August 17, 2008

A State Without a Budget: Day 48 TODAY IN THE CAPITOL ...

  ASSEMBLY DAILY FILE

Sunday August 17, 2008 3.00 pm

ASSEMBLY FLOOR SESSION

CAPITOL CHAMBERS

BUDGET DAY

UNFINISHED BUSINESS                                         

CONFERENCE REPORTS PENDING                                        

Item 94
A.B. No. 1781-Committee on Budget (Assembly Members Laird (Chair)) et al.
An act relating to the Budget Act of 2008.

COMPLETE BILL HISTORY


BILL NUMBER  : A.B. No. 1781
AUTHOR	: Laird
TOPIC	: Budget Act of 2008.

TYPE OF BILL :  
                Active
                Urgency
                Appropriations
                2/3 Vote Required
                Non-State-Mandated Local Program
                Fiscal
                Non-Tax Levy

BILL HISTORY
2008
July 18	From printer.
July 17	From Conference Committee: With recommendation: That Senate
	amendments be concurred in and that the bill be further amended.
	Assembly (Ayes 2 ( Laird and Leno) Noes 1 (Niello)). Senate (Ayes 2
	(Ducheny and Machado) Noes 1(Dutton)). To print.
June 12	Assembly refused to concur in Senate amendments.  To Conference
	Committee.  (Ayes  1. Noes 66. Page  5705.)  Assembly Members Laird,
	Leno, and Niello appointed to Conference Committee.  Senators
	Ducheny, Machado, and Dutton appointed to Conference Committee.
June 9	In Assembly.  Concurrence in Senate amendments pending.  May be
	considered on or after June  11 pursuant to Assembly Rule 77.
June 9	Read third time, passed, and to Assembly.  (Ayes 22. Noes 14. Page
	4094.)
June 5	Read second time.  To third reading.
June 4	Read second time.  To third reading.  Read third time, amended.  To
	second reading.
June 2	Withdrawn from committee.  Ordered placed on second reading file.
May 15	Referred to Com. on  RLS.
May 8	In Senate.  Read first time.  To Com. on RLS. for assignment.
May 8	Read third time, passed, and to Senate.  (Ayes 44. Noes  0. Page
	5049.)
May 6	Read second time.  To third reading.
May 5	Withdrawn from committee.  Ordered placed on second reading file.
Feb. 7	Referred to Com. on  RLS.
Jan. 16	From printer.  May be heard in committee  February  15.
Jan. 15	Read first time.  To print.

	CURRENT BILL STATUS


MEASURE	:  A.B. No. 1781
AUTHOR(S)	:  Laird.
TOPIC	:  Budget Act of 2008.
+LAST AMENDED DATE  :  07/17/2008


TYPE OF BILL :  
                Active
                Urgency
                Appropriations
                2/3 Vote Required
                Non-State-Mandated Local Program
                Fiscal
                Non-Tax Levy

LAST HIST. ACT. DATE:  07/18/2008
LAST HIST. ACTION   :  From printer.
FILE	:  SEN CONFERENCE REPORTS AT DESK
FILE DATE	:  08/18/2008
ITEM	:	62

FILE	:  ASM CONFERENCE REPORTS PENDING
FILE DATE	:  08/17/2008
ITEM	:	94


TITLE	:  An act making appropriations for the support of the
	government of the State of California and for several
	public purposes in accordance with the provisions of
	Section 12 of Article IV of the Constitution of the
	State of California, and declaring the urgency thereof,
	to take effect immediately.

Text of AB 1781, as amended

Analysis of AB 1781. as amended

A State Without a Budget - Day 48 - NO END IN SIGHT FOR BUDGET BATTLE

By Steven Harmon | Contra Costa Times Sacramento Bureau

Subday, August 17, 2008 - SACRAMENTO — A vote will be held today on the state budget, but East Bay lawmakers don't expect the standoff — now in its 48th day — to end any time soon.

Heading into today's 3 p.m. Assembly session, a wide chasm still divides Democrats and Republicans on the major sticking points in negotiating a budget that must pare down an estimated $15.2 billion deficit.

"I think it's a 50-50 chance this could go into September," said Assemblyman Sandre Swanson, D-Oakland, "because some of us are not willing to balance the budget on the backs of children, and Republicans have not abandoned their cuts-only approach."

Assemblywoman Loni Hancock, D-Berkeley, accused Republicans of pursuing a goal of "starving" government and of being "intransigent" in holding out for more spending cuts while avoiding any tax increases.

"It all depends on what Republicans are going to do — whether they're willing to compromise at all," she said, "or if they're bound by their Grover Norquist pledge to demand a cuts-only budget."

Assemblyman Guy Houston, R-San Ramon, was equally doubtful that Democrats will concede on their demands to raise taxes on the wealthy — those making $320,000 or more — as a way to protect state services.

"There are zero votes for this budget," said Houston, the only Bay Area Republican. "The issues haven't changed and there's not one iota of the two sides deviating from their positions. The

Click Here!

purpose of (today's) session is to show Republicans are not cooperating."

Republicans, who are in the minority but hold the key votes in a system that requires a two-thirds majority in both legislative chambers to approve a budget, have remained steadfastly opposed to increasing taxes. They also insist that a budget agreement must include a constitutional amendment to require a spending cap in future budgets.

Democrats insist that the deficit can't be made up through program cuts alone, though they say they're offering more spending cuts and fewer taxes in today's budget plan. Their initial budget called for $10 billion in taxes, largely on the wealthy.

Secretary of State Debra Bowen extended the deadline from Friday to Monday for lawmakers to produce measures intended for the ballot. But unless there's a broader agreement on the budget, it is a long shot lawmakers will agree on reform measures.

Assembly Democrats rejected a GOP budget reform measure, ACA19, at a committee hearing Friday, another signal that the two sides remain at loggerheads in negotiations.

Assemblyman Mark DeSaulnier, D-Concord, said he's ready to reach across the aisle on the budget and on ballot measures that have been stumbling blocks in negotiations.

"It's time for reasonable people to come up with a compromise and produce a budget," DeSaulnier said. But both sides, he said, need to "soften their ideological" positions on budget reform, and possibly a $9.3 billion water bond that Republicans are pushing to get on the November ballot.

Democrats have already moved more than half way, said Assemblywoman Mary Hayashi, D-Castro Valley, offering to institute a rainy-day fund that salts revenues away from good economic years to be used for down years.

"A rainy-day fund is a huge win for Republicans," she said. "That's what they say they want. We're willing to work with them to figure out how we could get the votes to get it done. I'm hopeful something could get done (today), but I'm prepared to continue negotiations with them until we have a budget that makes sense for all Californians. But we're not going to accept their cuts-only approach."

Hancock said she's "very reluctant" to support more spending cuts and fewer taxes, but said she would do it "because of the urgency of the situation. But we're dealing with a very intransigent and irresponsible minority. We can't go any further than this. Any additional cuts would decimate education, transportation, environmental protection."

She said she'd be willing to hold out through the fall elections so that Democrats could see if they could get closer to a two-thirds vote after the election.

Houston said he has offered a continuous appropriations bill to allow state services to run uninterrupted during the budget stalemate. Democrats' opposition to it, he said, shows they are willing to stall long enough that people start feeling the pain of the budget standoff.

"They feel if they make it really bad, Republicans will have to cave," he said. "But our caucus is unified. The only frustration is we didn't do this (have a vote on the budget) six weeks ago, because that's usually the point where everybody starts rolling up their sleeves and negotiating."

Hayashi said she hopes the public has patience while lawmakers sort out their priorities.

"We want people to understand that we're not holding out for the sake of holding out," she said. "We're trying to protect seniors, education and all the things Democrats care about."

Saturday, August 16, 2008

CALIFORNIA BUDGET GIMMICKS: The latest idea to close the state's shortfall involves the wrong kind of tax code manipulation.

Editorial From the Los Angeles Times

August 16, 2008 — Seven weeks into the new fiscal year, the scrum in Sacramento over the California budget continues unabated. How the Legislature and Gov. Arnold Schwarzenegger will close the $15-billion-plus gap between anticipated tax revenues and the cost of ongoing programs remains in doubt, as numerous ideas -- some harebrained, some not -- continue to be tossed into and out of the mix.

One proposal backed by Democratic lawmakers would raise an estimated $1.1 billion from businesses by delaying the deduction of net operating losses (costs that exceed revenue) for three years. At the urging of some corporate lobbyists, Schwarzenegger recently offered a counterproposal: After the three-year moratorium lifts, businesses would be able to deduct their 2008 losses from the taxes they paid in 2006 and 2007, entitling them to hundreds of millions of dollars in rebates.

The biggest beneficiaries of the proposal would be companies that ran up large profits in 2006 and 2007, then saw their fortunes plunge in 2008. Let's see, who might that be? How about the lenders that grew rich off subprime and other risky mortgages before their what-me-worry approach to underwriting caused an explosion in foreclosures. Say, for example, Countrywide Financial Corp. (now owned by Bank of America).

Given how radioactive these firms have become, it's hard to find anyone defending the proposal publicly. Yet there is ample precedent for letting businesses write off losses retroactively. The federal government has long allowed companies to "carry back" a current year's losses and deduct them from the federal taxes they paid for the three previous years. By contrast, California permits companies only to "carry forward" losses, which they can deduct from taxable profits over the subsequent decade.

We're not big fans of the government using the tax code to sway behavior, mainly because such efforts tend to be ineffective and prone to abuse. We'd prefer a simple, fair tax code that merely raises the revenue needed to pay for government programs and services. Yet there's a solid rationale for letting companies carry losses into the future: It encourages larger (and, potentially, riskier) investments that take years to recoup. Pharmaceutical companies, bio- engineering ventures and microchip manufacturers are prime examples of companies making large bets on profits that won't soon be realized.

No such benefit would come from letting companies recoup losses retroactively, however. Instead, it would encourage a less-productive kind of risk-taking by giving companies more protection against the pain caused when a profit-inflating bubble suddenly bursts. Lawmakers should be figuring out how to put the state budget on a steadier path, not helping lenders recover from their subprime bender.

Friday, August 15, 2008

A State Without a Budget :: Day 46 LATEST GAMBIT IN BUDGET IMPASSE | CALIFORNIA EMBROILED IN BATTLE OVER BUDGET | ASSEMBLY SPEAKER PLANS BUDGET VOTE SUNDAY

Latest gambit in state budget impasse

Matthew Yi, San Francisco Chronicle Sacramento Bureau

Friday, August 15, 2008 — The Legislature is likely to vote Sunday on a new version of the Democrats' budget that includes more spending cuts and fewer tax increases than their previous version, Assembly Speaker Karen Bass said Thursday.

But the budget is not expected to garner the required two-thirds majority vote in the Legislative houses because no Republicans have indicated they will vote a spending plan that hopes to help erase the state's $17.2 billion budget gap by raising taxes, GOP leaders in the Assembly and the Senate said.

California has been without a budget since the new fiscal year began July 1, and Gov. Arnold Schwarzenegger and Democratic-controlled Legislature so far have failed to reach a compromise spending plan.

Bass, a Democrat from Los Angeles County, said she and Senate President Pro Tem Don Perata, D-Oakland, intend to coordinate floor sessions of both houses so the budget vote can be held at the same time. Bass said she is 80 percent sure the vote will happen Sunday.

Perata was less sure about the Sunday vote.

"There's some confusion, and we haven't decided that yet, but the point of it is that we've been negotiating for months, and it's time to put up the product of those negotiations, and if they fail, Republicans can come up with their stuff," Perata said.

Republican leaders in both houses said they welcome a public debate on the floors of the Senate and the Assembly.

"Whatever they want to bring to the floor so that we can vote 'no' to taxes and move these negotiations forward so we can get done is fine with me," said Assembly Republican leader Mike Villines from Clovis (Fresno County). "But we will be voting 'no' on Sunday."

Senate Republican leader Dave Cogdill from Modesto said he believes such a debate and vote are healthy, even if the budget doesn't get approved.

"I hope that will engage us in the process and help Democrats and the governor realize that we're not going to support a tax increase," he said.

Aaron McLear, a spokesman for Schwarzenegger, said the governor "believes what the (Democrats) put on the floor should have bipartisan support. He'll continue to push for that compromise until we get a budget."

Neither Perata nor Bass gave much detail on what the new budget will look like, saying their staffs were working on final details of the plan. Republicans say they were told they would be given a copy of the new budget by late today or Saturday.

Bass said it will include changes in the form of a rainy-day fund as well as additional spending cuts and a tax package that is less than the $10 billion package previously proposed, which focused mostly on taxing wealthy residents and corporations.

She would not say whether Schwarzenegger's proposal for a temporary increase of 1 cent per dollar in the state sales tax will be part of the budget plan.

Republican lawmakers and Schwarzenegger have been demanding budget overhauls that also include a spending cap and giving the governor power to make midyear cuts, plans that Democrats have rejected.

The Assembly Budget Committee is scheduled today to hear the Republicans' budget bill, which includes a spending cap based on population growth and inflation rates. The bill is not expected to survive the committee, which is controlled by Democrats.

Still, both sides agree that significant budget changes would require voter approval in November, and Secretary of State Debra Bowen has indicated that Saturday will be the last day the Legislature can approve measures for the November ballot.

Bass said Bowen told her Wednesday that the deadline could be extended to Monday.

"It is critical that we take action before Monday, because the Democrats have taken budget reform very seriously," Bass said.

But the time pressure of trying to place a measure on the November ballot is not enough for Republicans to approve something they don't believe in, Villines said.

"What do we care about going to the ballot for? A phony rainy-day (fund)? It's nothing Republicans would vote on," he said.

State budget 101

Here are answers to some frequently asked questions about the state budget process:

Q: When is the budget supposed to be enacted?

A: The governor must submit a budget to lawmakers by Jan. 10, and the Legislature is required to approve the budget by midnight June 15 for the fiscal year that begins July 1.

Q: What happens if it isn't done by July 1?

A: Some payments cannot be made if the state does not have a budget. They include funding for some special education and remedial summer-school programs, and wages for state employees not covered under the federal Fair Labor Standards Act, such as lawmakers, legislative staffers, constitutional officers and political appointees.

Q: Why must the state have a budget?

A: The state Constitution requires it, and a budget is necessary to provide funding for key operations of state government, including education, health care, transportation and social services.

California Embroiled in a Battle Over the Budget

Francine Orr/Los Angeles Times, via Associated Press

Wendell Prude, left, a union leader, with state workers protesting at Gov. Arnold Schwarzenegger’s home in Los Angeles.

By JENNIFER STEINHAUER | New York Times

August 15, 2008 - LOS ANGELES — Each August in California, there are several givens: Succulent heirloom tomatoes will overflow in farmer’s markets. A fire will rage somewhere. And state lawmakers will fight over the budget, weeks after the deadline for its closing.

Most states have a fiscal year that begins on July 1. California is the only one of those that has yet to hammer out a budget, as legislators wrangle over how to close a budget gap of roughly $15 billion.

In response, Gov. Arnold Schwarzenegger signed an order on July 31 temporarily cutting the pay of roughly 176,000 state workers to the federal minimum wage of $6.55 an hour, and ordered nearly 10,000 state workers to be laid off.

As each day has passed without a budget, the governor, a Republican, has grown increasingly testy, denouncing lawmakers almost daily and insisting that he will veto any legislation — even that which he avidly supports — until a budget is approved. He has also said he will limit his own travel, perhaps bypassing the Republican National Convention in early September, during which he is expected to speak.

Sacramento has produced an on-time budget only four times in the last 20 years, and has been known to snake the process into September. Democrats, who control the Legislature and who seek a temporary increase in the sales tax to plug the budget gap, are at odds with Republicans, who want to cut services.

State Controller John Chiang, a Democrat, has said he would not abide by the pay-cut order because it could open the state to lawsuits and harm workers. As a practical matter, in fact, the state’s computers are too antiquated to deal with a payroll change. Mr. Chiang’s office has been sued by the Schwarzenegger administration, though to what effect remains to be seen.

“It is very hard for Schwarzenegger to get a preliminary injunction, because he has to demonstrate irreparable harm,” said Jonathan Zasloff, a law professor at the University of California, Los Angeles, and an expert on the state’s Constitution. “What’s the irreparable harm in paying salaries to workers that they will eventually get as soon as there is a budget?”

The governor has said he would reimburse workers for their full pay once the Legislature completes a budget.

California is among many states with budget troubles caused by the economic slowdown. In June, as most states ended their fiscal years, 20 states reported budget gaps, according to the National Conference of State Legislatures. California’s gap is worse than that of most other states, but not as large a percentage of the budget as a state like Arizona, which has also been hurt in the housing slump. A national economic slowdown and the foreclosure crisis, and resulting decreases in several forms of state taxes, have combined to make it so.

But California’s problems are both more severe, and, perhaps more intransigent, than those of other states. The state is among the worst-hit in the foreclosure crisis, and a record number of California homeowners were met with foreclosures last quarter. There were 121,341 mortgage defaults, up 125 percent from the second quarter of 2007, according to DataQuick Information Systems.

“Clearly, foreclosures have been a significant challenge,” said Arturo Pérez, a principal of the fiscal affairs program at the national legislatures conference.

California is also one of only three states to require a two-thirds majority in the Legislature to pass a budget, a particularly challenging requirement at a time of large deficits. Further, the state relies on income taxes rather than property taxes for most of its revenues, a difficult formula in tough times.

And the structure of the state’s budget — which is heavily based on borrowed money and peppered with numerous mandatory spending requirements approved by voters — makes it all the harder to balance.

The state has already cut its Medicaid reimbursement rate by 10 percent and deferred payments to vendors. Mr. Schwarzenegger has called for reductions of 10 percent across the board for most departments, and an increase in the sales tax may also be in the offing.

Outside of the layoffs, the pinch is being felt statewide. Vendors that have been cut off from the state are in a worse position this year than in previous years, because the tightening credit market makes it harder to get the short-term loans they need to get through the state’s budget impasse.

Nina Nolcox, who owns Graceful Senescence, which provides nursing care and therapy to the elderly in South Los Angeles, has already cut her payroll to deal with the 10 percent Medicaid cut and cash deferrals from the government in June.

This week she got her last check from Sacramento until the budget is signed. Roughly 70 percent of her business comes from clients paid for by state programs. Cuts to her staff’s hours, she said, are next.

California Assembly speaker plans a budget vote Sunday

By Kevin Yamamura and Jim Sanders - Sacramento Bee

Friday, August 15, 2008Assembly Speaker Karen Bass said Thursday she plans to force a budget vote Sunday, though lawmakers have no deal to end a stalemate that has lasted nearly seven weeks into the fiscal year.

Republicans and Democrats remain divided over whether to use new taxes, cuts or borrowing to resolve a $15.2 billion shortfall in a $101 billion general fund budget. If lawmakers convene Sunday, it would mark their first budget floor vote this summer, 48 days into the fiscal year.

Lawmakers want to register a vote by this weekend to meet a deadline set by Secretary of State Debra Bowen for placing measures on the November ballot. At least two components of budget negotiations require voter approval: a long-term change in budgetary policy and a plan to borrow against profits from an expanded California Lottery.

Many see the deadline as negotiable, however, and believe a Sunday vote may be the first of several floor exercises before a final deal is struck.

Bass, D-Los Angeles, said lawmakers plan to vote Sunday on a modified version of the Democratic conference committee plan, which relied on tax increases on the wealthy.

Senate President Pro Tem Don Perata said his chamber would hold a vote "probably Sunday," though he grew more tentative about those plans late Thursday.

Perata, D-Oakland, said Thursday that lawmakers remain divided over whether to use taxes or borrowing to balance the state's budget shortfall. But he said he is on the same page with Gov. Arnold Schwarzenegger on long-term budget changes that establish a stronger reserve fund but do not tie spending to population growth and inflation, as GOP legislators want.

"That's not an issue anymore," Perata said. "We've worked that out. I think it's to his satisfaction. It's to our satisfaction. I don't know how the Republicans feel about that. Most of them wanted a very hard cap."

Assemblyman Roger Niello, R-Fair Oaks, vice chairman of the Assembly Budget Committee, said the governor's budget plan would be unacceptable to his Republican colleagues, at least six of whom are necessary to pass a budget in the Assembly.

"That is not a reliable reserve," Niello said. "Our caucus believes the only way to have a reliable reserve, a real rainy-day fund, is to limit the growth of spending when revenue growth is strong."

Thursday, August 14, 2008

A State Without a Budget :: Day 45 BUDGET PLAN COULD BE A MAJOR BOON TO SUBPRIME LENDERS

The Closed Loophole That Keeps on Giving: Subprime lenders could get bigger than usual tax breaks if the proposal, which is snarling budget talks, goes through. The idea is to offset a three-year suspension of write-offs, backed by Democrats.

By Evan Halper- Los Angeles Times Staff Writer

August 13, 2008 — SACRAMENTO -- — One reason California still has no state budget is a closed-door dispute over a tax proposal that could be a multimillion-dollar boon to banks that engage in subprime lending.

The proposal, according to legislative sources and industry lobbyists involved in the private budget talks, was brought to the table by the Schwarzenegger administration at the urging of lenders and other corporate interests. The proponents argued that it would help offset costs to businesses that could result from other tax changes under consideration.

The plan would allow many large financial companies that are currently enduring record losses to eventually receive tax breaks millions of dollars greater than are currently available to them. Subprime lenders would be among the largest beneficiaries because they experienced a large boom followed by a bust.

Businesses that have had more modest revenue swings might not benefit at all.

"This is all about bailing out the subprime lending industry," said Jean Ross, executive director of the California Budget Project, a nonprofit that advocates for low-income Californians in the state budget process. "They will have checks written to them by the state of California if this goes through."

The budget stalemate is now more than six weeks old. The new fiscal year began July 1, and neither the Assembly nor the Senate has voted on a spending plan. The negotiation over how businesses are allowed to write off losses -- part of a larger debate about taxes -- is among the latest sticking points and one that threatens to keep lawmakers from reaching a deal.

It stems from a Democratic proposal to close the budget gap by suspending loss write-offs for three years, saving the state $1.1 billion a year. The counter-proposal crafted by the business groups would put the more generous tax breaks in effect once the suspension ended.

The new tax breaks would ultimately permit financial institutions to use this year's losses to claim refunds against large tax bills they paid in 2006 and perhaps 2005, years when they had record profits. Business lobbyists who support the tax breaks point out that companies can already claim them on their federal taxes.

Administration officials refused to comment on the proposal.

"The governor continues to urge Republicans and Democrats in the Legislature to reach a compromise," said administration spokesman Matt David. "He believes the legislators understand that we are running out of time."

Officials at the California Bankers Assn., a trade group that represents 85% of the state's banks, would not comment on details of the proposal but said businesses should get something in return if lawmakers take away their tax credits.

"We do feel it is important for businesses and any taxpayer to be made whole," said Beth Mills, an association spokeswoman.

Most lenders have eliminated or scaled back their subprime loan offerings. But that would not prevent them from claiming big refunds under the proposed changes. The cost to the state would be $420 million in 2010 if the refunds were claimed by all the companies entitled to them, according to state fiscal analysts.

Senate Leader Don Perata (D-Oakland) said through a spokeswoman that he would not sign off on the proposed incentives. "Democrats would not ever agree to any provision that would benefit subprime mortgage companies," said Lynda Gledhill.

And Republican lawmakers say privately that they would not even consider voting to suspend the existing write-offs -- they view a suspension as a $1.1-billion tax increase -- unless companies were entitled to the expanded refunds as part of the package.

"I can't comment on what's being discussed in budget negotiations, but Republicans won't support anything that hurts our economy," said Assembly Republican Leader Mike Villines of Clovis.

Some business groups engaged in the discussions said they would prefer simply keeping the existing tax break for small businesses.

Scott Hauge, president of the trade group Small Business California, suggested that lawmakers exempt from the Democrats' proposed suspension any firms with gross annual receipts of under $5 million.

Hauge noted that large companies, which make up a relatively small share of California's businesses, claim the bulk of existing tax breaks. Even if small businesses continued to use existing write-offs, the state would still save $880 million of the $1.1 billion that Democrats seek, he said.

Wednesday, August 13, 2008

A State Without a Budget :: Day 44 SCHWARZENEGGER PUSHES FOR BUDGET WHILE HOSTING GOVERNORS CONFERENCE

¿what carbon footprint?

Vittorio Hernandez - AHN News Writer

August 13, 2008 1:50 p.m. EST — Sacramento, CA (AHN) - California Gov. Arnold Schwarzenegger will spend Wednesday shuttling back and forth between giving the state budget a push in Sacramento and opening the 26th Annual Border Governors Conference in Los Angeles.

Aside from the meeting of governors, the conference also features a 3D showing of "Terminator 2" at Universal Studios and a private dinner at the governor's Brentwood mansion.

Schwarzenegger would fly his private jet between the state capital and the conference, which will run until Friday.

The governor said if California's budget, seven weeks overdue, remains by end of August, he will miss the Republican National Convention which opens Sept. 1 in Minneapolis.

On Tuesday, the governor said, "I will not make any commitments... I will not go on vacation. I will not leave the state. I will not do anything until I have a budget."

Aside from dividing his time between solving the budget crisis and socializing with the border governors, Schwarzenegger also has to attend to a lawsuit he filed against state controller John Chiang, who did not implement his order to temporarily reduce salaries of state workers until the budget is approved. California employees have also filed a countersuit against the governor.

Because of the impasse, the San Francisco Chronicle suggested that until the budget is passed, the wages of all California legislators and appointive officials be withheld.

A State Without a Budget :: Day 44 PERATA SAYS HE HAS BUDGET DEAL WITH SCHWARZENEGGER, NEEDS GOP VOTES

By Jim Sanders - Sacramento Bee

Posted 10:52 am PDT Wednesday, August 13, 2008 - Senate President Pro Tem Don Perata said Wednesday that Democrats have negotiated key points of a compromise state budget with Gov. Arnold Schwarzenegger and that he considers negotiations over.

"I think we've, frankly, gone about as far as we can go," the Oakland Democrat said.

Perata said the compromise plan includes a major concession by Democrats -- a spending cap to limit annual state expenditures.

Republicans have been insisting on a spending cap as part of any budget pact.

"The question continues to be, are there Republican votes for it?" Perata said of the compromise plan.

The ball is in Schwarzenegger's court, he suggested.

"A Republican governor should have some sway over Republicans," he said.

Perata said he had not yet seen draft language of the compromise.

Other key elements of the compromise plan include a temporary 1-cent increase in the state sales tax and a rainy-day fund to sock money away in boom years.

Perata did not elaborate on details of the proposed spending cap, but said it was intended to break the current standoff with Republicans.

"We've said to the governor, 'What do you need in order to move forward?' So we've negotiated on that point," Perata said.

"I'll guarantee you that there won't be anybody in the house that's going to be happy with the conclusion. But it is a compromise -- new revenues and program cuts, and no borrowing."

Perata said the negotiated proposal does not grant the governor authority to make midyear budget cuts if the economy nosedives.

"We've always said that we're not doing anything that gives away the legislative responsibility for appropriating money in the budget," he said.

Assemblyman John Laird of Santa Cruz, a Democrat who serves as a point man in the Assembly on budget issues, declined to comment on Perata's characterization of the negotiations.

Perata said the next step is to place the compromise spending plan before the Senate for a vote.

He said that no vote will be taken today, however, and that he did not want to call for a vote if the proposal was certain to die.

Passage of a state budget requires a two-thirds vote in each legislative house.

"When we go (for a vote), we're going because it's a budget that the governor can get some votes for," Perata said.

Bakersfield Rep. Roy Ashburn left the door open Wednesday to voting in favor of a compromise plan. At least two GOP votes are needed in the Senate.

Ashburn said he has been talking with the governor's office, and that his understanding is that the compromise would include a temporary sales tax increase -- that would last for several years and then revert to a permanent tax reduction -- as well as solid budget reform and an economic stimulus package.

The stimulus package would provide tax advantages meant to "help create jobs and stimulate the economy," Ashburn said.

"This is a proposal that I'm interested in looking at, and we will see if this, in fact, is what is brought to the Senate for consideration," Ashburn said of what he understands the budget compromise to be.

Ashburn said he feels no pressure to close ranks with GOP dissenters.

"The people have sent each of us here to do a job," he said. "And I think establishing the fiscal health of California is about the most important job that legislators have right now."

Assembly Republican Leader Mike Villines, R-Clovis, said Perata overstated the extent to which his negotiated plan would blunt future spending. Though GOP lawmakers are open to concessions to Democrats if the budget includes a spending cap, Villines said Perata's negotiations with the governor have not accomplished that goal.

"There is no spending cap," Villines said. "It'd be a phony cap, if anything. And I've seen it all. It's all for a rainy-day fund, which is a good start. But it's not a hard spending cap that would solve the problem. You can characterize it anyway you want, but it is what it is."

Perata says he has budget deal with Schwarzenegger, needs GOP votes - sacbee.com

The news that didn't fit from August 24th

uh oh! There has been a mistake and the the news that didn't fit from August 24th has been moved HERE.

A State without a Budget :: Day 44 FUZZY OUTLINE OF BUDGET DEAL EMERGES

Dan Walters, Sacramento/Modesto Bee Columnist

August 12, 2008 10:55:04 PM — It's still a long way from being fully cooked, but the fuzzy outline of a deal on the much-delayed, deficit-ridden state budget is becoming visible as the deadline for placing measures on the November ballot draws near.

Secretary of State Debra Bowen says Saturday is the deadline, but Capitol types believe it could be stretched a week or two. And the deadline, whenever it may be, is an important ingredient in any budget deal, because at least one of the pending elements would have to be placed before voters.

The central element is what Gov. Arnold Schwarzenegger calls "budget reform" – some new constitutional provisions aimed at preventing future fiscal problems by creating a "rainy day" reserve and giving governors more authority to cut spending when revenue falls short.

He's willing to trade some new taxes – especially a temporary boost in sales taxes that would raise about $6 billion a year – for those reforms, even though Republican legislators balk at new taxes and Democrats don't like spending curbs.

"We believe they need to come out of their partisan corners," Schwarzenegger spokesman Aaron McLear said Tuesday, adding that if there's no deal before the ballot deadline, there will be a "total meltdown."

It's apparent that if Schwarzenegger can reach agreement with Democrats on reforms to be submitted to voters, plus other details, he would then work on two Republican senators to vote for the deal, thus giving it the required two-thirds majority, and if that happens, it would ramp up pressure on Republican Assembly members to agree.

It's assumed that Republican Sen. Abel Maldonado of Santa Maria would go along; he broke ranks with other Republicans last year on the budget. And when Bakersfield Sen. Roy Ashburn indicated to a radio talk show host on Monday that he might be open to a deal that included taxes, despite the GOP's no-new-tax pledge, the speculation meter soared and conservative radio talkers and bloggers immediately raised the alarm.

"We are going to have to see what the total package is," Ashburn said. "What the governor proposed I am not sure can be characterized as a tax increase."

There are obviously a lot of "ifs" attached to the scenario, and with the ballot deadline looming, there's not a lot of time to get it done.

It's at least noteworthy that this year, Schwarzenegger is doing something that he eschewed during last year's version of the annual budget battle – getting his hands dirty by trying to pick off individual Republican legislators rather than relying on the GOP leadership to deliver.

Whether the governor can make it happen is still uncertain, if for no other reason than his credibility in the Capitol is not very high, given his tendency to draw lines in the sand and then immediately erase them.

Republicans remain fearful that he'll promise a tough budget reform package, but then cave in to Democrats as he has in the past, leaving only the new taxes in place.

The Modesto Bee | Dan Walters: Fuzzy outline of a California budget deal emerges

Tuesday, August 12, 2008

A State Without a Budget :: Day 43 THE DIFFICULTIES OF DEALING WITH CORNERED WOUNDED PARTY ANIMALS

By Frank D. Russo - California Progress Report

The image that is coming into focus on the California budget is unmistakable. California Republican legislators are behaving like a pack of wounded cornered animals—and they are always dangerous. They have little to lose and no responsibility for governing. And the two-thirds rule requiring a supermajority to pass a budget and their irrelevancy on most other matters as a shrinking minority party provides the mechanism for what is being acted on out the state of our legislature’s floor.

Remember when Congressional Republicans overplayed their hand in the 90’s and tried to shut the federal government down? That cost the Republicans votes and public support. You can see the parallels with today’s news about what is happening in our own state.

First, a comment to an article on these pages from a conservative who writes in from time to time:

“The GOP has nothing to lose in shuting [sic] the CA government down. You can't demonize a party already boxed in.

“All the more reason for the budget issue to get settled sooner over later. The GOP is not going to raise taxes. The sooner the Dems recognize this, the sooner they can begin to cut, slash, and burn to get the budget balanced.”

And from today’s Chronicle, comes an editorial: "Self-inflicted budget wounds," with this analysis:

“But the biggest losers of all - at least from a political sense - may be the Republican legislators who have barricaded themselves behind a no-tax pledge that has made it impossible to emerge from this mess with their credibility intact.

“They clearly do not have the stomach to make the cuts that would allow a balanced budget without new revenues. As it is, they are complaining about the ruling Democrats' reductions to health-care reimbursements and certain law-enforcement programs. The Republicans' trial balloons about borrowing from funds that are supposed to be set aside for local government would shred any remaining illusion about being a party of fiscal responsibility. …

“The Republican governor has laid out a template for a compromise. The biggest obstructionists are in his own party -and they appear to be their own worst enemies.”

This is similar to what Noreen Evans, Chair of the Assembly Democratic Caucus is saying as we approach day 43 of stalled budget negotiations:

“The countdown continues. The Republicans’ failure to produce a budget proposal shows contempt for the people of California. We have gone 42 days with nothing but 'bait and switch' tactics.
“Instead, Republicans introduced a constitutional amendment - ACA 19 - that completely fails to address California’s immediate budget crisis. It makes our budget beholden to Grover Norquist's neo-conservative agenda. It encourages continuous budget crises that would force massive cuts to key California priorities, such as education, health care, and safety nets for the poor. Just as President Bush's war on terror has no end in sight, neither would this amendment’s war on our state’s finances.
“By refusing to pencil out an alternative budget proposal of their own, Republicans are delaying the compromises that lead to a bipartisan budget agreement. This is leading California to the brink of shutting down. Their commitment to this approach presents Californians with a simple choice: shut down now or shut down later."

Think this is pablum from a newspaper in left leaning San Francisco and a Democrat in the leadership of the Assembly? Take a look at what usually Republican sources are saying.

Mike Madrid is the former political director for the California Republican Party and press secretary for the Assembly Republicans. He has an interesting article from former Assembly leader Bill Leonard on his blog, California City News, which is devoted to local government. Check out: “Former Assembly GOP Leader Speaks Out About Republican Attempts To Borrow Local Government Money:”
“Last week I commended the Senate Republicans for offering solid solutions to our state budget problem and pointed my readers to a website featuring those ideas. Then I learned that Senate Republican Leader Dave Cogdill had been talking about the idea of borrowing local government funds to help bail out the state. This is a bad idea. The state has a poor record of using local government money, including funds set aside for transportation and policing, for state purposes, leaving local governments holding the bag. Voters grew tired of the theft and passed ballot measures requiring the state to keep its hands out of the local cookie jar except in emergencies. …

“So, the idea is to borrow money that voters appropriately intend for use by their cities, then borrow more money to pay that back and then hope that enough people gamble in the future to pay that back. It is crazy talk, but if my friends in the Senate Republican Caucus honestly believe if it is a viable budget option, then their web page touting their budget ideas should at least mention it.”

Still not convinced? From the very conservative and Republican site, Fox and Hounds, Founded by Joel Fox of Howard Jarvis Taxpayers Association fame, an article today by Michael Shires, an associate professor of public policy at Pepperdine University: “3D Failure -- How the GOP Is Losing California.” Here’s a teaser:

“California’s Republican Party is losing ground dramatically across the state. In the Fresno Bee, John Ellis describes how it is even failing in one of its last bastions of power-—the Central Valley. There are three dimensions to the collapse of the party of Ronald Reagan in the Golden State, and all three reflect a collapse of leadership at the highest levels.

“First, there is an abject failure to reach out to the youngest voters in the state. …There is a near-total absence of youth and energy in the party’s outreach plans.

“Last week I was at the Ventura County Fair and the Republican Party and Democratic Party booths were across from each other. The contrast was harsh. The GOP had three life-sized cutouts of Reagan, Bush and McCain and was manned by two white elderly volunteers sitting behind their desk. It was very quiet and bland. The Democratic booth had banners, color, flashy give-aways, campaign posters, buttons, bumper stickers and a young, ethnically-diverse staff aggressively stepping out and speaking to passersby. Which of these is more likely to tap into the energy of our youth?

“Then there is the outreach to the Latino community. …In a state (and eventually a nation) where the population is increasingly Latino, a party characterized by such attitudes will eventually become extinct. …

“Finally, there is the consequence of a crumbling, disorganized state GOP infrastructure and leadership—the exodus of conservatives, both fiscal and conservative. Almost anywhere you turn in conservative communities, people who hold the conservative values of the Republican Party are fleeing the state to other parts of the country where being a Republican is still “politically correct….”

“California is becoming younger, more Latino and more secular. The GOP has completely missed these three trends and is now reaping the consequences of a leadership structure that, for 20 years has struggled to keep the status quo. Now is the time for the Party to completely rethink all three of these dimensions and step forward to rightfully claim the legacy of Lincoln and Reagan. But something has to change and soon, or else it won’t matter—there won’t be much of a Republican Party left.”

Republican voter registration in California is decreasing at the same time Democratic registration if increasing. While they still have more than a third of the votes in both houses of the California legislature, they are not going to be in the majority and may well lose seats in the November election as the young and others flock to vote for Obama for President. All they can do is obstruct, throw stones from the sidelines, refuse to come up with a responsible plan of their own, and threaten to shut the government down.

Need I say more?

The Difficulties of Dealing With Cornered Wounded Party Animals on the California Budget - California Progress Report

Sunday, August 10, 2008

A State Without a Budget: Day 41 SCHWARZENEGGARS HAM - HANDED BUDGET MOVES

Willie Brown in the San Francisco Chronicle — Willie brown is that willie brown

Sunday, August 10, 2008 - Gov. Arnold Schwarzenegger's handling of the budget impasse reminds me of a guy who goes deer hunting with a shotgun.

You blast and blast away, but you don't hit anything.

His call to roll back workers' pay to minimum wage until the Legislature comes up with a budget - bad idea. His refusal to sign any bills until the budget is done - no big deal.

What Schwarzenegger needs to do is take the legislative leaders into a room and not let them out until they have something that at least looks like a budget. Next, put the budget up for a vote to see who is for it and who is against it. That's when you take out the gun and start sharpshooting votes one by one.

A promised judgeship here. A new DMV office there. A state park in this district. A bill signing there. A cut here, a tuck there, until you have lined up the eight or nine votes needed for a two-thirds majority.

And this talk about raising taxes up front - not smart at all. Taxes are a closer, not an opener. You don't put something that onerous on the table until the very last minute. You wait until everyone can see that what they want is within their grasp - and all they have to do is hold their noses and pull the trigger.

But instead, Arnold is just blasting away. He may scare up the forest, but it's not going to bag him any deer.

Schwarzenegger's ham-handed budget moves

Sunday, August 3, 2008

THE END OF SCHOOL FINANCE AS WE KNOW IT: A Brief History, and a New Direction

Commentary from EdWeek By Paul T. Hill & Marguerite Roza —Illustrations by Laura Costas for Education Week

Originally published April 30, 2008, but still good today

Since the late 1960s, school finance has been a field unto itself. But the past may give clues to a much different future.

After Arthur E. Wise, in his influential 1968 book, Rich Schools, Poor Schools, suggested that unequal school funding could be interpreted as a denial of children’s equal-protection rights, the Ford Foundation invested millions in a research and litigation initiative. Scholars documented inequalities in spending, particularly between rich and poor districts in the same state, and lawyers filed suits in 45 states seeking changes in the states’ funding policies.

It was all about the money.

Though school finance scholars and litigators hoped that new funding would lead to more-effective schools for poor children, they did not worry about how the money would be used. Such decisions were left to educators.

Decisions about funding, spending, and educational programs all need to be made together, and all based on evidence about results.

Educators, though, regarded issues of funding and spending as purely technical and legal matters, not their concern. Decisions were driven by court orders, regulations, school board politics, fixed commitments to staff members, and collective bargaining. Superintendents had little leverage over spending. Principals handled only small “pin money” accounts. And teachers had no discretion at all.

But in the early 1990s, forces in the field began to eat away at the isolation of school finance. Successful lawsuits led to higher and more-equitable funding for school districts; yet, outcomes for disadvantaged students did not change much in the process. In some cases (Kansas City, Mo., for example), big money was flagrantly wasted. Many urban districts that got extra money continued spending disproportionately on students in higher-income neighborhoods’ schools. Critics noted that school finance lawsuits did little to benefit the poor students in whose names they were brought.

Education leaders came to see the consequences of leaving finance to others. Superintendents in Seattle, Oakland, Calif., and elsewhere lost their jobs because they did not know how much their districts were spending, and had run up big deficits. Superintendents were astounded, too, when research from the Center on Reinventing Public Education showed that spending patterns often undermined announced district priorities. Superintendents could announce new reform strategies, but spending was still driven by local political deals, collective bargaining agreements, regulations, and court orders.

In the late 1990s, pressure to bridge the gap between school finance and efforts to raise school performance grew. Most states, and ultimately the federal government, adopted standards-based reform laws that pledged to hold schools accountable for student learning. School programs and spending patterns were, at least in theory, to be judged on their benefits to children.

Following this line of reasoning, school finance lawyers argued that equity no longer was enough. They invoked a new financial principle, “adequacy.” States, they claimed, have an obligation to spend an adequate amount, defined as whatever it takes to educate all children to high standards. Scholars, in turn, worked up estimates of adequate spending, a task that proved to be very difficult, since no one had ever achieved the outcomes whose costs were to be estimated. Results were chaotic, often varying by billions of dollars for particular states. Yet courts in many states accepted the adequacy principle, and ordered huge spending increases.

Adequacy lawsuits were the beginning of the end for school finance as an independent field. Big-money court orders in such cases raised state spending by as much as 2 percent, and in some cases even higher, but had about the same effects as the earlier, equity-based settlements. Once districts got the extra money, they used it to increase pay for the same employees and buy more of what they were already buying. Some individual schools did find imaginative uses for the new money (thus proving that extra spending could pay off), but such improvements were rare and isolated.

School finance researchers such as Allan Odden tried to rescue the adequacy principle by arguing that court orders should mandate productive uses of the extra money. But the possible mandates identified by Odden’s research, such as lowering class size and spending more on teacher training, did not eliminate existing misuses of money. Although using extra money for such purposes can, under some conditions, measurably improve test scores, none of these reforms comes anywhere near the goal of eliminating racial and income-based gaps in student achievement.

In the early 2000s, people from outside the school finance community realized that reaching the goal of high standards for all would require a rethinking of how every dollar—and everything dollars buy, from teacher work to student time—was used.

Tom Vander Ark, a former superintendent who then headed the Bill & Melinda Gates Foundation’s education initiative, commissioned a study that would totally re-examine the linkages that connect how much is spent, what resources are purchased, and student learning. With Gates support, Jacob E. Adams Jr., a professor at California’s Claremont Graduate University, founded the School Finance Redesign Project, whose charge was to look for ways of ending the separation of school finance and educational improvement.

After five years and more than 30 sponsored studies, the redesign project has confirmed that money is used so loosely in public education—in ways that few understand and that lack plausible connections to student learning—that no one can say how much money, if used optimally, would be enough.

Accounting systems make it impossible to track how much is spent on a particular child or school, and hide the costs of programs and teacher contracts. Districts can’t choose the most cost-effective programs because they lack evidence on costs and results. The system does not support experimentation. So, we know very little about the effectiveness and cost of alternative instructional models.

We do know that schools with greater spending flexibility—in foreign countries and, here at home, in the private and charter sectors—spend more on teaching and less on support services and specialists than do U.S. public schools. Some public school teachers and principals innovate, but many of the innovators hide what they do, fearing charges of noncompliance.

Under these circumstances, how do legislators know how much to spend on public education? And how do educators know how best to spend the money they get?

The only honest answer is that, today, they can’t know these things—not because the answers aren’t there, but because our school finance system has made it impossible to find them. Yes, we can understand the links among funding levels, uses of funds, and student results, but not if the uses of funds are hidden, or hopelessly complicated, or if educators are kept in the dark about costs and trade-offs.

Decisions about funding, spending, and educational programs all need to be made together, and all based on evidence about results.

School finance can no longer be the province solely of scholars and litigators. Teachers, administrators, and principals can no longer be oblivious about the uses of funds. They need to know what other uses could be made of the same funds, and to feel a clear obligation to pursue the best uses possible.

How can we change the ways we fund education to make such things possible? The final reports from the School Finance Redesign Project, coming out this summer, will explain in detail. To summarize, the system must be:

• Transparent about how funds are used, right down to the classroom and student level.

• Open to analysis linking student characteristics, teacher attributes, instruction provided, costs, and student results.

• Flexible in light of needs and results.

• Contingent, with resources going to schools, teachers, and programs that produce student results, and, by implication, being moved away from less effective uses.

• Open to unprecedented experimentation, with new ideas on new uses of time and money, including trade-offs between teacher work and instructional technology.

A financing system based on these principles can discover new and more productive uses of existing funds. Such a system might also discover greatly more productive ways of educating children that may cost a lot more than existing methods. Then, elected officials can make informed decisions about how much to spend on education.

If public education is to accomplish goals that have never been met before, educators must search for new ideas, try out new models of teaching and learning, and always be ready to abandon a less productive practice in favor of a more effective one.

Policymakers must let this happen—not by imposing new constraints, but by eliminating rules that prevent experimentation and adaptation. States must stop attaching funds to things that should be changeable in light of evidence, such as particular instructional programs, administrative units, or teacher slots. State legislatures and school boards should attach money to students, and account for both spending and results at the student level. This means either eliminating categorical programs or turning them into “weights” in a pupil-based funding scheme.

Public officials have a choice: They can control the uses of funds via mandates, or they can learn what instruction actually costs and what options are possible. They can’t do both. The system we have, in which funding decisions and the real work of education are kept separate, might become more expensive, but it won’t get better.

Paul T. Hill and Marguerite Roza are scholars the Center on Reinventing Public Education at the University of Washington, which managed the School Finance Redesign Project.

Friday, August 1, 2008

LAUSD GOVERNMENT RELATIONS UPDATE

LAUSD Office of Legislative & Governmental Affairs

July 31, 2008

News: The Budget

Still Waiting…

It is now a guessing game on when to expect a vote on the budget bill, Assembly Bill 1781, with expectation being that it will take place this or next week. However, nobody really knows when anything of significance is going to happen… something could happen in an hour, next week, or weeks from now.

At this point, we have covered the Governor’s Proposed Budget, then the May Revision, and last month there was a recap of all up to that point. Rather than continually reiterate the same, now we’re hearing more regarding the “climate” of the discussions. The State Legislature is supposed to be on a summer recess until August 4th according to its calendar, but because of the budgetary situation, they really have not gone on a break.

Legislators continue to work in anticipation of a bi-partisan agreement on the State Budget, which is presently on the floors of both houses. So far, we have heard how the Republicans began the process steadfastly insisting there should be cutting of spending rather than levying of taxes, and how the Democrats favored the opposite. Presently, there has been talk that this mood has changed, and that now there has been more of an acceptance of the idea of expanding the sales tax base. Regardless, the clock is ticking, and the month of August is critical because this is when cash flow becomes more of an issue.

Everyone is now aware of the Governor’s cutting state workers’ pay to minimum wage until the passage of the budget; in fact, he signed just today Executive Order S-09-08 to halt payments to vendors for this fiscal year, and withhold payroll to state workers (in addition to other items) until the budget passes. Understandably, this has created an uproar, and State Controller John Chiang has publicly said he will not be complying with the Order.

Many believe the Governor’s action is to pressure lawmakers to finish work on the budget. Additionally, lawmakers are being further influenced by their constituents. Major educational organizations and unions are encouraging their membership to contact their local representatives to vote for the budget bill. Statewide notices have gone out from the State PTA and California School Employees Association.

Our district lobbying effort has remained the same, exemplified by our shift from emphasizing the effects of cuts to promoting what we estimate is a good budget proposal as put forth in Assembly Bill 1781.

Federal Update

Reauthorization of No Child Left Behind (NCLB) Is DC’s No. 1 Issue

Staff from the Office of Legislative and Governmental Affairs (OLGA) spent a few meeting-packed days in discussions with Congressional and governmental relations staffs of the following committee and organizations:

• Congressional Education and Labor Committee: Separate meetings with chief

Democratic and Republican consultants

• National Education Association (NEA)

• National Parent Teachers Association (PTA)

• National School Boards Association (NSBA)

• Office of Governor Arnold Schwarzenegger

• American Association of School Administrators (AASA)

• Council of Great Cities Schools (CGCS)

• Office of Congressman Xavier Becerra

• Office of Congresswoman Maxine Waters

It was an informative and productive time, and the following is a summation of discussions had with the individuals from the above list: Federal funding will remain at present levels because of the weak economy. Also, the war in Iraq continues to draw heavy expenditures away from education and health and human service needs. Some organizations, specifically AASA, are seeking a complete new enactment of NCLB without reference to existing law.

Also, individual lobbying efforts are emphasizing the need to no longer refer to the reauthorized legislation as NCLB, and to start using Elementary and Secondary Education Act (ESEA) as the title.

Within the reauthorization, the contentious issue that has arisen is pay for performance. NEA is adamantly opposed while Congressional members, including leading Democrats, are pressing for some type of pay for performance to be included in the ESEA reauthorization. Congressional staff members are interested in the collection and use of student testing data and its applicability to ESEA reauthorization. The level of sophistication of data collection, to the level of individual classroom student performance, is being linked to pay for performance proposals.

Staff of the National PTA office is focusing on the parent engagement provisions of the ESEA reauthorization. The discussion with these staff members extended to the potential for incorporating parent education as a component along with engagement. OLGA is sending the PTA staff copies of the curriculum that is used in adult education parent education courses to support the parent’s role with their children’s education.

While meeting with the Education and Labor Committee staff, OLGA staff was made aware of their plans to have Richard Simmons, notable exercise and fitness proponent, testify on the present problem of obesity in today’s K-12 schools. Subsequently, the news coverage and testimony by Simmons in essence emphasized that youth physical activities are being minimized or nonexistent because of the pressures to have academic performance as driven by NCLB.

Federal Issues of Interest

Child Nutrition – We expect the child nutrition law to be reauthorized in 2009. In preparation,District staff developed priorities for inclusion in a new bill. Areas of concern include:

• Eligibility, access, and funding improvements

• Nutritional standards

• Competitive food sales

• Technology and innovation advancement

• Commodity food program

• Mealtime management

We are working with other entities to encourage Congressional support for a measure to give USDA authority to set national nutrition standards for all foods and beverages available outside of school meal programs anywhere on campus during the school day.

Definition of Homelessness – Approximately 75% of the homeless children and youth in Los Angeles do not qualify for Department of Housing and Urban Development (HUD) assistance because of a narrow definition of homelessness. That provision disallows services to families and youth who are temporarily staying in the housing of others because they have nowhere else to go or in a motel. We met with Congresswoman Water’s staff and allied organizations in gaining support for the Homeless Children and Youth amendment to the McKinney-Vento Homeless Assistance Act reauthorization legislation, which would align the HUD definition with the education definition of homelessness. The measure is in the Subcommittee on Housing and Community Opportunity, chaired by Rep. Waters.

Poison Pill Removed from Foreclosure Prevention Act – The Foreclosure Prevention Act, signed by the President on July 30, created a new standard deduction for homeowners who do not itemize their deductions on their federal income tax filings. Single persons who do not itemize will be able to deduct up to $500 of their property tax bills, and families will be able to deduct $1,000. The legislation earlier contained a provision that the deduction would be available only if the local jurisdiction did not raise its property tax rate between April 2008 and December 2009. That would have had negative implications on homeowners within the LAUSD and any other school district that approved or sold bonds or certificates of participation, and could have adversely affected support for the November bond. The LAUSD joined with allied organizations in successfully opposing this provision. It was stripped from the final version of the bill.

Higher Education Act Passed by Congress – On July 31 both houses of Congress passed a compromise bill to reauthorize the Higher Education Act for the first time in ten years. The measure includes provisions to simplify and increase post-secondary grants, consolidates three teacher education programs, and raises the standards for teacher education programs. The President is expected to sign the measure.

State Update

Legislation – Priority Bills

At this point in the legislative process, the Office of Legislative and Governmental Affairs (OLGA) has turned its focus to “priority” bills. All bills introduced are initially reviewed for applicability and pertinence to education and LAUSD, and this may well be more than five thousand bills. The OLGA often tracks more than one thousand in any given year. As time passes over the course of the legislative calendar many bills never make it to the final steps of the process – whether on account of being pulled by the author, failing to pass Committees, or being vetoed by the Governor. Priority bills still alive and sponsored (or co-sponsored) by LAUSD are:

AB 2077 (Fuentes) – The California English language development test. This bill would require the annual assessment of the California English language development test (CELDT) to be conducted during a 3-month test period commencing with the day upon which 65% of the instructional year is completed. The bill would require the State Department of Education to biennially release sample questions from the CELDT for the purpose of instruction and to provide the score a pupil achieves on the CELDT to the parent or guardian of the pupil in English and, if available, in the language reported on the home language survey. The bill would require that the score be provided in a format that utilizes terminology that is easy to understand and includes an explanation of the purpose of the test, the pupil's score, and the intended use of that score by the school district.

SB 658 (Romero) – School facilities. This bill shall exempt a school district from increasing school building capacity by the number of pupils reported by the Superintendent of Public Instruction to the Office of Public School Construction for that grade level pursuant to Section 42268 starting with the 2007-2008 enrollment year. In addition, the bill proposes to reduce the level of funding under the Operational grant Program by 20% each year beginning in 2008-09 FY and transferring those funds to the California Department of Education to administer the charter school facility program pursuant to SB 740, per the Governor’s veto message.

SB 1369 (Cedillo) – Pupil nutrition: free and reduced-price means: application. This bill will allow school districts that have knowledge of an active Medi-Cal case for a child to suppress that application at the school’s option. This would have the effect of expediting Express Enrollment in Medi-Cal or Healthy Families for many students, providing them with much needed healthcare services. Forty to Eighty percent of the applications for Medi-Cal received from school districts by counties are for children who already have active Medi-Cal cases. Implementing a procedure to limit the number of these applications forwarded to the county for processing will significantly decrease resource outlays required by counties. The result of this improved process would enable counties, especially large ones such as Los Angeles, to accelerate and increase capacity for student enrollment.

AB 2056 (De Leon) – English learners: California High School Exit Examination. This bill would authorize school districts to use the funds apportioned pursuant to these provisions to provide the intensive instruction and services also to pupils who are enrolled in grade 10, 11, or 12 and have failed one of both parts of the high school exit examination and to pupils who are enrolled in grade 9 and are at risk of not passing one or both portions of the high school exit examination. The bill would specify the order of priority for providing this intensive instruction and services to these additional pupils.

AB 1163 (Krekorian) – Adult Education. This bill increases the cap on adult education entitlement expenditures for approved distance learning programs, as defined, from five percent to fifteen percent. Proposed amendments have been discussed with the Department of Finance would add language that will ensure the accountability of these alternate delivery programs.

B 2390 (Karnette) – State teachers’ retirement: postretirement earnings. This bill would extend current exemptions from retiree earning limits until June 30, 2010. The recruitment of experienced teachers and school administrators to fill vacant classroom and administrative positions, particularly in Deciles1-3 schools, continues to be a challenge for school districts. Despite targeted efforts to recruit highly qualified teachers, there continues to be a shortage of credentialed teachers in math, science and special education. In order to comply with the staffing requirements of the Williams settlement and other state and No Child Left Behind mandates, school districts must take action to ensure that schools are staffed with fully credentialed, experienced teachers and school administrators, particularly in Deciles1-3 schools.

AB 2002 (DeLeon) – Public works: payments. This bill proposes doubling the penalties levied against those contractors or subcontractors who violate the prevailing wage laws under Labor Code Sections 1775 and 1776. Additionally, the bill would hold the contractor liable for violations made by the subcontractor if the contractor had knowledge or should have known of the subcontractor’s negligence.

Events

Assembly Education Chair to be Santa Monica/Los Angeles Legislator Early this month, Assembly Speaker Karen Bass appointed Julia Brownley (D-Santa Monica) as Chair of the Assembly Education Committee for the next two-year cycle of state legislation beginning January 2009. The Assembly Education Committee has the responsibility of judging and acting on the policy implications of legislation affecting education. Assembly Member Brownley brings an experienced background to the Education Committee as evidenced by having served 12 years on the Board of Education of the Santa Monica-Malibu Unified School District. Also, for the past two years Ms. Brownley has chaired the Assembly’s Budget Subcommittee on Education. Ms. Brownley’s field of employment is in Marketing Management. On an added note, Los Angeles Assembly Member Kevin de Leon will be the Chairman of the Assembly’s Appropriations Committee, meaning that both policy and fiscal committees affecting education will be chaired by legislators representing parts of our school district.

State Board of Education Acts on Algebra Requirement, NCLB Corrective Action Plans, District’s ROC/P Waiver, and Charter School Appeal At its meetings on Wednesday, July 9th and Thursday, July 10th, the State Board of Education took action on a number of substantive items as described as follows:

• No Child Left Behind (NCLB) Corrective Action Plans: The Board officially received the corrective plans of the State’s program improvement districts, of which Los Angeles is one. California Department of Education (CDE) staff reported to the Board that the 53 school districts required to submit plans did so. Between now and the September State Board of Education meeting, CDE staff will review the plans and present their recommendations. State Superintendent Jack O’Connell and Board members discussed the related necessity to pass legislation allowing for the expenditure of $19 million in federal funds to support the corrective action efforts. To date legislation has not passed because of the differences between Senate Leader Don Perata and the Governor on the policy issue of how much discretion the State Board of Education may have in determining the corrective actions of school districts.

• Algebra 1 Test Requirement: Pursuant to a directive from the Governor, the State Board of Education approved the policy that will require 8th graders in California to be tested on Algebra 1 to comply with NCLB testing requirements. The directive was a surprise to interested parties that had been working on the policy, and thought they had consensus on an alternative option focusing on Algebra Readiness.

• District’s Regional Occupational Centers/Programs (ROC/P) Waiver: The Board approved the District’s waiver request to delay for one year the implementation of Assembly Bill 2448’s requirement that its ROC/P high school:adult student ratio be 70:30 percent.

• Board Denies Appeal of Charter School Revocation: Today’s Fresh Start Charter School’s appeal to overturn its revocation by the Los Angeles County Board of Education was denied. This action sends the interesting signal that this State Board is not providing a blanket approval to overturn charter school revocations by local school districts and county offices of education. Also, it needs to be noted that this Board has at least two members who are major charter supporters and operators.

Fifth Legislative Liaison Meeting Held by the Office of Legislative and Governmental Affairs on Friday, July 11, 2008

With the best attendance to date, 35, the 5th meeting of this group was held. In attendance were representatives from a cross-section of Board offices, District divisions, employee organizations including Administrators Association of Los Angeles (AALA), and parent groups. As a first, the governmental affairs office of the City of Los Angeles sent a representative (we believe that the city’s representation at these liaison meetings is important since the Mayor’s office is guiding the activities of 20,000 students through the partnership schools). As established, we started at 3:30 p.m., meeting in the A-level cafeteria, and ended promptly at 4:30 p.m.

The topics we covered included the following:

• State budget

• State Board of Education actions, inclusive of corrective action plans and Algebra testing

• District sponsored bills

• Appointment of Julia Brownley to Assembly Education Committee Chair • Appointment of Kevin de Leon as Chair of the Assembly’s Appropriations Committee

Office staff member Alan Helfman also conducted an exercise on communicating, supporting, and sponsoring legislation. For our next meeting on Friday, August 1st, we are examining ways to have local district and charter school representation at these legislative liaison meetings.

To minimize scheduling conflicts with other District activities, these meetings are held on the first Friday of the month with a time certain starting at 3:30 p.m. and ending at 4:30 p.m. These meetings are open and invited parties include Board offices, parent groups, community representatives, certificated and classified unions, AALA, ACSA, and sectors of the District including Local Districts, Divisions, and major units.

Information on the meetings: When: First Friday of the Month August 1, September 5, October 3, November 7, and December 5

Where: Beaudry Building Cafeteria (A level) Time: 3:30 p.m. to 4:30 p.m.

Upcoming Events

August 4th: State Legislature Reconvenes and moves towards end of session work with August 31st as the ending date for legislative work. • August 6th: Superintendent and Parent Leaders to lobby legislature in Sacramento.

2008 State Legislative Calendar

· July 3 Summer Recess begins upon adjournment, provided Budget Bill has been passed (J.R. 51(b)(2))

· July 4 Independence Day observed

· August 4 Legislature reconvenes from Summer Recess (J.R. 51(b)(2))

· August 15 Last day for fiscal committees to meet and report bills to the Floor (J.R. 61(b)(14))

· August 18 - 31 Floor session only. No committees, other than conference committees and Rules Committee, may meet for any purpose (J.R. 61(b)(15)).

· August 22 Last day to amend bills on the Assembly floor (J.R. 61(b)(16))

· August 31 Last day for any bill to be passed (Art. IV, Sec. 10(c), (J.R. 61(b)(17))

· Final Recess begins upon adjournment (J.R. 51(b)(3))

· IMPORTANT DATES OCCURRING DURING FINAL RECESS 2008

· September 30 Last day for Governor to sign or veto bills passed by the Legislature before September 1 and in the Governor’s possession on or after September 1 (Art. IV, Sec.10(b)(2))

· November 4 General Election November 30 Adjournment Sine Die at midnight (Art. IV, Sec. 3(a))

· December 1 12 a.m. convening of the 2009-10 Regular Session (Art. IV, Sec. 3(a))

· 2009 January 1 Other than urgency measures, statutes passed in 2008 take effect (Art. IV, Sec. 8(c))

GOVERNMENT RELATIONS UPDATE IS PRODUCED BY THE OFFICE OF LEGISLATIVE & GOVERNMENTAL AFFAIRS, LAUSD 333 SOUTH BEAUDRY STREET, 20TH FLOOR, LOS ANGELES, CA 90017 TEL (213) 241-2600 FAX (213) 241-8954 DAVID BREWER III, SUPERINTENDENT SANTIAGO JACKSON, DIRECTOR

Sunday, August 31, 2008

Sac Bee Capitol Alert | posted by Shane Goldmacher

Saturday, August 30, 2008

By Mary Anne Ostrom and Lisa Vorderbrueggen | Bay Area News Group | San Jose Mercury-News

Raw Video | August 30: Governor Says Budget No. 1 Priority KCRA TV/Channel 3 | Sacramento

By George F. Will - The Washington Post

It may all come down to a whole lot of borrowing – again

Democrats' shift could crack budget impasse

By Dan Smith - Capitol Bureau Chief - The Sacramento Bee

By Dan Walters - SACRAMENTO BEE COLUMNIST

Friday, August 29, 2008

Capitol Alert/ Sac Bee | Published 4:29 PM Friday, August 29, 2008 by Shane Goldmacher

Capitol Alert/ Sac Bee | Published 1:29 PM Friday, August 29, 2008 by Shane Goldmacher

Capitol Alert/ Sac Bee | Published 12:48 PM Friday, August 29, 2008 by Amy Chance

CAPITOL ALERT/SAC BEE: Posted by Dan Walters on August 29, 2008 11:49 AM

It is unclear whether the proposal has the support of any Republicans.

By Evan Halper, Los Angeles Times Staff Writer

Thursday, August 28, 2008

By Frank D. Russo - California Progress report

by Dan Walters from the Sacramento Bee - published Wednesday, August 20, 2008 ...and still true today

GENERAL FUND SPENDING

IS STATE SPENDING OUT OF CONTROL?

BIGGEST CONTRIBUTORS TO SPENDING GROWTH

30 YEARS OF BUDGET PROBLEM MILEPOSTS

FROM THE CALIFORNIA progress report

By Dan Walters - Sacramento Bee Columnist

Wednesday, August 27, 2008

By JULIET WILLIAMS – Associated Press

Tuesday, August 26, 2008

Monday, August 25, 2008

The Associated Press | san Jose Mercury News

The LA Now Blog in the LA Times -- from Veronique de Turenne

Confronted by realities, Schwarzenegger turns to tax hike: With the state budget 56 days overdue, the governor explains his shift on taxes.

George Skelton, LA Times

Related Content

Sunday, August 24, 2008

Editorial from La Opinión | Translation by La Opinión

By Kimberly S. Wetzel - Contra Costa Times/San Jose Mercury News

Saturday, August 23, 2008

By Andrew McIntosh - Sacramento Bee

Their time away from the Capitol coincides with the Democratic National Convention, but one official says that has nothing to do with their decision not to hold sessions.

By Michael Rothfeld and Nancy Vogel, Los Angeles Times Staff Writers

By JULIET WILLIAMS, Associated Press Writer from San Francisco Chronicle

By JULIET WILLIAMS, Associated Press Writer from San Francisco Chronicle

Friday, August 22, 2008

Matthew Yi, San Francisco Chronicle Sacramento Bureau

Thursday, August 21, 2008

Op-Ed by Jim Wunderman in the San Francisco Chronicle

by Casey Mills, Beyond Chron/San Francsisco --

No matter what budget Sacramento comes up with, California voters will probably increase the deficit in 10 weeks.

By Mark Paul Op-Ed in the LA Times

By ROBERT DIGITALE | Santa Rosa PRESS DEMOCRAT

Wednesday, August 20, 2008

Borrowing proposals involve diverting money specifically set aside by voters for local governments, road and other transportation projects, mental health programs and early childhood education.

By Evan Halper, Los Angeles Times Staff Writer

California is the only state that gives no educational benefit to National Guard members.

By Nancy Vogel, Los Angeles Times Staff Writer

Tuesday, August 19, 2008

In which the Governator threatens to keep the Democrats in Sacramento for the Democratic convention ...even though it's the Republicans that are holding up the budget! How Republican of him.

L.A. NOW BLOG | LA TIMES

by Casey Mills, BeyondChron.com - San Francisco's Alternative Daily News

By JUSTIN SCHECK - Wall Street Journal

Monday, August 18, 2008

Assembly Democrats Budget Bill Fails

BY Matthew Yi & John Wildermuth, San Francisco Chronicle Staff Writers

True compromise

GOP wants spending limit

'It's time to get real'

What's on the table

Calif. GOP lawmakers kill Dem's $6.6B tax package

By JUDY LIN – the associated press

Sacramento's fundraising follies: The state budget is past due, so why are lawmakers spending time raising big bucks from donors?

LA Times Editorial

By Hon. Sandre Swanson (D) 16th AD/Oakland — From the California Progress Report

Sunday, August 17, 2008

By Steven Harmon | Contra Costa Times Sacramento Bureau

Saturday, August 16, 2008

Editorial From the Los Angeles Times

Friday, August 15, 2008

Latest gambit in state budget impasse