THE MAY 19 BALLOT MEASURES

The State Legislative Analyst’s Office has prepared a summary and analysis for each of the six measures.

The Secretary of State has now posted the ballot summaries, arguments for and against, and other information.

Countdown: THE COMING BALLOT FIGHT + CONSTITUTIONALLY UNCONVENTIONAL

SacBee CAPITOL Alert | Shane Goldmacher

The political establishment is already starting to gear up for the budget-centric special election on May 19.

Here are the budget measures that will be on that ballot:

• Proposition 1A: Implements a spending cap based on the rate of growth from the last 10 years. If approved, it would extend the length of the taxes approved by the Legislature.
• Proposition 1B: Changes the state's education funding law -- Proposition 98 -- for supplemental education payments to local districts due to recent budget cuts.
• Proposition 1C: Borrows from future lottery earnings.
• Proposition 1D: Takes money from the First 5 Commissions -- aka Proposition 10 funds -- to help balance the budget.
• Proposition 1E: Takes money from the Mental Health Services Act -- aka Proposition 63 funds -- to help balance the budget.
• Proposition 1F: Prevents state-level elected officials from receiving pay raises in years when the state is running a deficit.

Gov. Arnold Schwarzenegger hosted a D.C. steakhouse fundraiser Monday. The money went to Schwarzenegger's California Dream Team PAC, which is gearing up its fundraising operation for the budget special election.

A $25,000 ticket bought a seat at the head table with the governor, according to the Associated Press, while $10,000 paid for "preferred seating" and photos. Cheap seats were available for $2,500.

 

WIGS OPTIONAL: A coalition of left-of-center and good government groups are sponsoring a Sacramento summit today on whether the time has come for a California constitutional convention.

That's an actual possibility afforded under state law that would allow the state to, in essence, chuck a good chunk of its constitution and start over.

As the Bay Area Council, which initially spearheaded the effort, says, "We believe it is our duty to declare that our California government is not only broken, it has become destructive to our future. It is time to repair our system of governance."

CALIFORNIA STATE PTA RESPONDS TO STATE BUDGET

PRESS RELEASE February 20, 2009 For Immediate Release

Contact: Carol Kocivar Vice President, Communications (415) 577-1125 communications@capta.org Alison apRoberts Communications Manager (916) 440-1985, ext. 106 aapRoberts@capta.org

 

California State PTA Responds to State Budget

SACRAMENTO - California State PTA President Pam Brady issued the following statement today in response to the budget adopted by state lawmakers and signed today by the Governor.

"This budget does not value the children of California. Instead, it puts on entire generation of children - and the state's very future - at risk.

"Some new revenues are part of this budget, and for that we acknowledge the Governor and legislators for recognizing the need to take a balanced approach to the state's budget crisis. Even so, the severe cuts that are included in the final budget threaten our state's commitment to a world-class education.

"These cuts are almost certainly going to drive California - already a dismal 47th - to the bottom among all states in per-pupil spending. That means cutting teachers, arts, classroom materials, counselors, nurses, small class sizes, and much more that children need to succeed in school and life.

"California cannot afford to go backward in its commitment to children and students, especially in challenging economic times.

"In the coming weeks, we will continue to analyze the details of the budget package, including several statewide initiatives that will be placed on the May 19 ballot as part of the budget deal.

"And California State PTA will continue to advocate for legislators and the Governor to develop a farsighted budget plan and process - a plan with vision, a plan that is a reflection of the hopes and dreams of the next generation, and a plan that is truly focused on the future of our state."

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everychild.onevoice.

The California State PTA has nearly 1 million members throughout the state working on behalf of public schools, children and families, with the motto, "Every child, one voice." The PTA is the nation's oldest, largest and highest profile volunteer organization working to improve the education, health and welfare of all children and youth. The PTA also advocates at national, state and local levels for education and family issues. The PTA is nonprofit, nonsectarian and noncommercial.

For more information about the California State PTA, visit  www.capta.org.

NO DAY 107, BUT COUNTING DOWN TO THE NEXT ELECTION

SacBee CapitolAlert: Shane Goldmacher | Capitol Alert Coordinator

Gov. Arnold Schwarzenegger today will sign the budget package that the Legislature passed early Thursday morning.

Then comes the list of line-item vetoes.

[smf: The gov signs at 1PM, the list of line item vetoes should be available after that. California government is only transparent after the fact]

Of course, as Jim Sanders reports in today's Bee, more money woes could be in the state's future as the economy continues to falter.

"If I could tell you what revenues are going to be in May, I would not be making this call from Sacramento -- I'd be making it from Las Vegas," quipped H.D. Palmer, a spokesman for Schwarzenegger's Department of Finance.

I'd bet the under on that.

The real drama of the weekend will be at the California Republican Party's convention, which descends on Sacramento this evening.

In terms of budget fallout, there's the pending resolution to censure every Republican lawmaker who voted for taxes.

But there's also early jockeying in the 2010 governor's race between Meg Whitman and Steve Poizner.

Both candidates have been very critical of the budget deal struck in the Legislature.

(Speaking of sharp words from gubernatorial candidates, check out Lt. Gov. John Garamendi say this week, "We have an infection here. And it's a Republican infection, and it's really spreading across this nation.")

VICTORY LAP? Schwarzenegger, meanwhile, won't be anywhere near the GOP activists. The governor is off to Washington this weekend, in preparation for next week's National Governors' Association conference.

He'll also appear on at least two Sunday talk shows -- ABC's "This Week with George Stephanopoulos" as well as CNN's Sunday show.

FURLOUGH FRIDAY: Believe it or not, it's been only two weeks since the first state worker furlough.

Photo credit: After the Legislature approved the state budget, Gov. Arnold Schwarzenegger removed the numbers from the "deficit clock," outside his Capitol office on Thursday, Feb. 19, 2009. Credit: AP Photo/ Rich Pedroncelli.

LAUSD BUDGET UPDATE AS OF 2/18/09

Subject to change based on updates from the State

from the office of superintendent Ramón C. Cortines

OVERVIEW

1. Based on current projections from the State, our projected district shortfall is between $600 and $700 million and the prospects do not look any brighter for future years. We also do not know if we will have class size or categorical flexibility, so we must prepare for the worst case scenario.

2. My philosophy for moving forward will be the same as the 2000 Plan adopted by the Board

a) Central offices are to be right-sized and to focus on core operations, monitoring and oversight

b) The local districts are to provide support and service to schools

c) The schools are the heart of our District and are where teaching and learning takes place

3. Federal Stimulus money will provide some temporary relief, since the money is for one time expenses (spread over two years). Flexibility and use of this money still has not been determined.

a) Although the stimulus money has yet to be finalized, I will recommend that the majority of any unrestricted resources to be set aside to protect the schools.

CENTRAL – RIGHT-SIZED

We will be streamlining the central office to ensure the majority of our resources are at the school site.

1. I have recommended a 30% reduction in most central offices. We are in the process of reviewing the budgets and discussing how to implement our decentralized governance model.

2. Further, I am considering a recommendation to reduce the work year for most non-school based employees. Besides providing substantial savings, it will emphasize that our highest priority is support of the local school.

3. We are also reviewing outside contractors with the goal of substantially reducing costs and administered accounts.

LOCAL DISTRICT OFFICES SUPPORT AND SERVICE TO SCHOOLS

Via the decentralization of the central office, the local district offices will be responsible for working with their schools to ensure each school receives the service and support they need.

1. However, I am recommending that local district offices be cut up to 50%. I will expect my leaders in the local districts to work smarter to target services to the schools that need the most support.

2. While we have benefited from many ancillary programs that support our student population, we must now cut some of these programs to focus our limited resources on our core instructional program.

LOCAL SCHOOLS – WHERE TEACHING AND LEARNING TAKES PLACE

My approach is to build a school district from the classroom out, so that we can minimize the impact on teachers. The percentage of cuts will be the lowest at the school level, but given the cumulative size of our school budgets, the dollar amount will be large.

1. Since we don't have all of the necessary budget information from the State, we must be conservative by noticing a potentially larger number of certificated employees on March 15^th

a. All certificated administrators will be notified

b. Since central and local district certificated employees have rights to the classroom, we will need to notify some permanent teachers.

c. To ease the impact on our novice teachers, we have implemented an aggressive early retirement incentive program (ERIP)

NEXT STEPS

February 26^th: 2009-10 Budget Development process with recommendation for March 15^th letters

March –June: Hold public reviews of the budget to ensure we all agree on our priorities

Council of Great City Schools – Update on Stimulus Package 2/17/09

Disclaimer – details have not been finalized on how and when the funds will be allocated to LAUSD, especially the State Fiscal Stabilization funds

Overview of Federal Stimulus Package - Jeff Simmering

Five major types of aid to be expended over a 2 yr period (potential for flexibility to spread over 3 yrs)

1. Non Categorical Aid – State Fiscal Stabilization: $40B for education (broadly defined)
   1. Proportionally allocated based on split b/w K-12 and higher education state reductions
   2. Distribution of funds will vary state by state, but can be used to backfill state cuts
   3. Distributed on per capita basis
   4. Use of funds are based on ESEA, IDEA, Perkins, School modernization or repair
2. Categorical IDEA: $12.2 B ($11.3B traditional part B, $400M early Childhood, $500M infant and toddler)
   1. 50% of funds can be used to offset Spec Ed use of General Funds
3. Categorical Title I: $13B ($10B Regular, $3B School Improvement)
   1. Allocated by targeted and equity formulas
   2. 95% will be passed through to LEAs
   3. 1% used for State Administration
   4. 4% school improvement activities
4. Secretary Bonus or Incentive: states that have made good progress will be awarded $5B ($2.5 allocated on basis of Title I)
   1. Progress defined as states that are increasing equitable distribution of teachers, improved data systems, and improved assessments
5. School Construction Bonds - $22B tax subsidizes or bonding authority
   1. After you sell your bonds the interest that you pay will be given a tax credit
   2. Can be used as new construction and land acquisition

Council of Great City Schools estimate of stimulus for LAUSD (over two years)

- Title I: $398M

- IDEA: $168M

- Ed-Tech: $9.7M

- State Stabilization has not been determined

Key Takeaways for LAUSD

1. We will need to be flexible in our projections until we receive the final allocations from the State

2. We need to be conservative with our projected use of our funds, because we do not know the magnitude of the cuts that from the State

3. Stimulus funds are one time funds, so we can not rely on using them to cover ongoing expenses

4. Depending on the cuts from the State, we will use the majority of the funds to help schools offset some of their reductions

Day 106 | 6:17 AM: SENATE APPROVES BUDGET PLAN!

Senate approves budget plan

The state Senate voted early Thursday to approve a massive budget package of tax increases, spending cuts and borrowing to close a $40 billion deficit after granting major concessions to one holdout Republican senator.
Read More

 

• Maldonado's price for budget vote: 3 constitutional amendments

STATE HELD HOSTAGE

Sacramento Bee cartoonist Rex Babin

AM Alert - REPUBLICAN SENATORS FIRE THEIR LEADER: Hollingsworth in, Cogdill out

The Sacramento Bee CapitolAlert

Senate Republicans have a new leader today after the caucus ousted Sen. Dave Cogdill and replaced him with Sen. Dennis Hollingsworth shortly after midnight.

Despite speculation that Senate Republicans may ask to reopen budget talks, Senate President Pro Tem Darrell Steinberg insisted the change has absolutely no effect on his strategy to break the budget deadlock this week.

"We're going to maintain our focus towards solving the problem of getting one vote regardless of who the leader is," Steinberg said after his house took a recess around 1 a.m. "Leadership doesn't change the fact that there is no other idea put forward that would take $41 billion out of a budget deficit. And so, for me, it doesn't change anything."

After the Senate failed to approve the contentious tax hike bill, Steinberg made good on his threat to keep his members locked in for the night. He said he plans to resume talks later Wednesday with Sen. Dave Cox, R-Fair Oaks, and Sen. Abel Maldonado, R-Santa Maria, to see if either one will back the budget package.

"I would describe it as a bit of a discouraging day," Steinberg said of Tuesday. "Despite a lot of effort, and a lot of work today by our office, the governor's office, they're not there. But they have to be there eventually."

Schwarzenegger flew home to Brentwood around 9 p.m., a sign that the budget deal remained elusive Tuesday. His spokesman, Aaron McLear, said the governor plans to continue speaking to Cox and Maldonado on Wednesday.

Hollingsworth, an ardent tax opponent, made it clear that he continues to oppose the budget. When asked whether he wants to reopen the "Big 5" negotiations, he said he'd take a wait-and-see approach.

"I think the majority of my caucus doesn't want to see a tax increase passed in this particular package," Hollingsworth said. "But we'll see what happens in the next few minutes, the next few hours, the next few days."

AM Alert: BRING A TOOTHBRUSH

SacBee CapitolAlert- Shane Goldmacher

Photo: Sen. Abel Maldonado, R-Santa Maria, talks to the media about his budget vote outside his office on Monday Feb. 16, 2009. Credit: Brian Baer/Sacramento Bee.

After a marathon weekend, including an all-night session beginning on the evening of Valentine's Day , passage of the roughly $40 billion plan remains one vote short.

With the budget stalled, Gov. Arnold Schwarzenegger will send out layoff notices to 20,000 state workers today.

In his second emotional speech on the Senate floor in as many days, Senate President Pro Tem Darrell Steinberg announced Monday that the upper house will take up the controversial tax-hike legislation this morning at 10 a.m.

And if, as expected, the bill does not pass he will lock down the Senate.

"We will stay on this floor until we get it done," Steinberg declared just before 8 p.m. Monday. "Bring a toothbrush, bring whatever necessities you need to bring."

Monday's floor session capped a whirlwind weekend that will continue into the week.

Way back on Saturday evening, Democratic lawmakers went into session with high hopes that the six necessary Republican votes were in hand.

Democratic Sen. Lou Correa ultimately sided with his fellow caucus members after a measure to give Orange County an extra slice of the state budget pie was included in the budget.

Three GOP votes seemed assured in the Assembly. (With a little sweetener of a tax break to provide the Glendora Community Redevelopment Agency with millions of additional dollars beginning this year. That just happens to be in the district of Republican Assemblyman Anthony Adams.)

But the vote stalled in the Senate, with only GOP leader Dave Cogdill going up on an initial piece of the budget puzzle and Sen. Roy Ashburn, R-Bakersfield, abstaining.

That's pretty much where the budget process still stands -- one vote short.

Oh, lawmakers in both houses stayed past sunrise, as the 27th vote focus shifted from Sen. Dave Cox, R-Fair Oaks, to Sen. Abel Maldonado, R-Santa Maria.

(Watch Capitol Alert's video highlights of the all-nighter.)

Maldonado was a particularly curious case. Early Sunday morning, he told the San Jose Mercury News, "There's nothing they can give me that would make me vote for this budget."

He snapped at Schwarzenegger: "Where was he when I needed him?" -- a reference to his 2006 primary loss in which he hoped for the governor's endorsement. And he took a swipe at Cogdill, saying "There's a difference between managing a caucus and leading a caucus."

But hours later, he told The Bee, "I'm very concerned with the tax package...We're still working on that. Everything's fluid... I don't want my state to go off the cliff, OK? I don't want that."

By Monday, Maldonado enumerated a list of four demands...

Maybe closing this package will take a miracle-worker. Speaking of which, Captain Chesley Sullenberger, he of the famed Hudson River plane landing last month, will be in the Capitol today.

Schwarzenegger and first lady Maria Shriver will host a celebration honoring Sullenberger in the Capitol rotunda at 11:30 a.m.

CALIFORNIA STRUGGLES TO CLOSE A PROJECTED $41 BILLION DEFICIT: “The State of California — its deficits ballooning, its lawmakers intransigent and its governor apparently free of allies or influence — appears headed off the fiscal rails.”

 

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By JENNIFER STEINHAUER | NEW YORK TIMES

February 17, 2009 — LOS ANGELES — The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently free of allies or influence — appears headed off the fiscal rails.

Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.

After negotiating nonstop from Saturday afternoon until late Sunday night on a series of budget bills that would have closed a projected $41 billion deficit, state lawmakers failed to get enough votes to close the deal and adjourned. They returned to the capital late Monday morning only to adjourn until the afternoon, though it was far from clear whether they would be able to reach a deal.

California has also lost access to much of the credit markets, nearly unheard of among state municipal bond issuers. Recently, Standard & Poor’s downgraded the state’s bond rating to the lowest in the nation.

California’s woes will almost certainly leave a jagged fiscal scar on the nation’s most populous state, an outgrowth of the financial triptych of above-average unemployment, high foreclosure rates and plummeting tax revenues, and the state’s unusual budgeting practices.

“No other state is in the kind of crisis that California is in,” said Iris J. Lav, the deputy director of the Center on Budget and Policy Priorities, a liberal research group in Washington. The roots of California’s inability to address its budget woes are statutory and political. The state, unlike most others, requires a two-thirds majority vote in the legislature to pass budgets and tax increases. And its process for creating voter initiatives hamstrings the budget process by directing money for some programs while depriving others of cash.

In a legislature dominated by Democrats, some of whom lean far to the left, leaders have been unable to gather enough support from Republican lawmakers, who tend on average to be more conservative than the majority of California’s Republican voters and have unequivocally opposed all tax increases.

And then there is Gov. Arnold Schwarzenegger, whose budget woes far outweigh those of his predecessor, Gray Davis, whom he drummed from office in a 2003 recall that stemmed from the state’s fiscal problems at the time. The governor has failed to muster votes among lawmakers in his own party, whom he often opposes on ideological grounds, resulting in more scorn from Democrats.

Furthermore, Republican leaders in the Senate and Assembly who have agreed to get on board with a plan have been unable to persuade a few key lawmakers to join them. The package needs at least three Republican votes in each house, to join with the 51 Democrats in the Assembly and the 24 Democrats in the Senate.

For months Republicans have vowed not to raise taxes, which in California means no increase in either the sales, gas or personal income tax.

“It is a dramatic time,” said Darrell Steinberg, the State Senate’s president pro tempore. “The solvency of the state is on the line. It is really quite a system where the fat of the state rests upon the shoulders of a couple of members of a minority party. The system frankly needs to be changed.”

In the meantime, motorists are met with “closed” signs at Department of Motor Vehicles offices two days a month, environmental programs are left unattended, piles of dirt mark where highway lanes are to be built to ease the state’s infamous traffic congestion, school systems mull layoffs and counties prepare to sue the state for nonpayment of bills.

Last week, Mr. Schwarzenegger and the four legislative leaders concurred on a series of bills that included $15.1 billion in budget cuts, $14.4 billion in tax increases and $11.4 billion in borrowing, much of it subject to voter approval.

The Senate Republican leader, Dave Cogdill, said he thought he had all the votes needed to get the deal done in each house. But on Sunday, two Republican senators — Dave Cox, who was originally thought to be the last vote needed, and Abel Maldonado, whom Mr. Schwarzenegger had been able to woo into voting against his party in the past — said they would reject the plan.

Democrats, who had already given into Republicans’ long-held dreams of large tax cuts for small businesses and for some of the entertainment industry and a proposed $10,000 tax break for first-time home buyers, balked at Mr. Maldonado’s request that the legislature tuck a bill into the package that would allow voters to cross party lines in primary elections.

Mr. Maldonado, who is also seeking a constitutional amendment to prevent lawmakers from getting paid if budgets are late, defended his request that the open primary bill be included in the budget package.

“There needs to be good government reforms in this budget, and no member should be getting pet projects,” he said. “I think with an open primary, we would have good government that would do the people’s work.”

Sunday evening ended in frustration and exhaustion for lawmakers, who returned to work Monday facing the state’s uncertain future.

“My boss will continue to work toward a responsible budget solution,” said Mr. Cogdill’s spokeswoman, Sabrina Lockhart. “There are real risks and real consequences for not passing a budget.”

LEGISLATIVE LEADERS, SCHWARZENEGGER REACH TENTATIVE BUDGET DEAL

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Giveth+Taketh away: The plan would cut $8.6 billion in K-14 education funding, but under the deal lawmakers would ask voters to change state law to restore that money for schools.

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By Dan Smith and Kevin Yamamura | Sacramento Bee

Wednesday, Feb. 11, 2009 -- Legislative leaders and Gov. Arnold Schwarzenegger have reached a tentative deal to close the state's projected $40 billion budget gap, according to sources close to the negotiations.

Staff members are working out some drafting issues, one source said, but a vote is scheduled for Friday.

The plan includes $15.8 billion in spending cuts, $14.3 billion in taxes and $10.9 billion in borrowing, according to a budget outline obtained by The Bee.  

continues after jump

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Highlights Calif. budget proposal

By The Associated Press

Wednesday, February 11, 2009 -- Here is some of the language that emerged Wednesday as lawmakers and Gov. Arnold Schwarzenegger sought to forge a compromise on the state's budget deficit. Democrats want to bring a budget package to a vote on Friday.

Additionally, lawmakers were waiting to see how much federal money California would receive under the stimulus bill that appears headed to President Barack Obama's desk. It could change how much money the state would have to borrow to get through the next fiscal year.

Revenue:

• Raises between $12 billion over two years or $14 billion over five years through a variety of taxes. Under the proposal, the higher taxes would be in effect for two years. However, Republicans would allow taxes to stay longer — nearly five years — if voters approved a state spending cap.
• Increases the state sales tax by 1 percent for two years or five years.
• Raises the fee for licensing vehicles to 1.15 percent of market value, up from the current .65 percent. A portion of the fee will be dedicated to law enforcement.
• Adds a 12-cent gasoline tax.
• Imposes a one-time 5 percent surcharge on people who owe personal income tax in 2009.
• Reduces the amount taxpayers can claim on dependent care credit to the federal level of $100 instead of $300.

Cuts:

• Reduces education spending by $8.6 billion over two years, likely forcing schools to lay off teachers, slash salaries and postpone spending on construction and textbooks purchases. However, the proposal would give districts greater flexibility in spending money that is normally dedicated to specific programs.
• Continues a two-day-a-month furlough for 238,000 state workers, trims overtime pay and eliminates Lincoln's Birthday and Columbus Day as paid state holidays, saving $1.4 billion.
• Cuts prison medical budget by 10 percent to save $181 million.
• Eliminates the state's annual cost-of-living increases for recipients of the state's welfare-to-work program known as CalWORKS to save $79 million.
• Eliminates the state and federal cost-of-living increase for seniors and disabled people receiving Supplemental Security Income/State Supplementary Payment for a $594.1 million savings.
• Unless the federal government provides extra state aid, the legislative leaders have agreed to make further reductions to the courts; Medi-Cal, the state's health insurance program for the poor; CalWORKS; in-home support for seniors; and other social service programs by $948 million.

Borrowing:

• Asks voters to approve a $10 billion plan to borrow against the lottery's future revenues over the next two fiscal years.
• Asks voters to temporarily shift $227 million in voter-approved funding from Proposition 63, the state mental health fund, to pay for a low-income child development program known as the Early Periodic Screening, Diagnosis and Treatment Program.
• Asks voters to redirect $608 million in First 5 money for early child development to other children's programs.

Budget reform:

• Imposes a limit on the amount the state can spend each year based on state revenue over the previous 10-year period. Money above that amount would be saved in a rainy day fund.

Protecting education:

• Asks voters to modify Proposition 98, the voter-approved minimum school funding guarantee, to protect education funding when state revenue rebounds after lean budget years.

Economic stimulus:

• Grants tax credits for small businesses, corporations that operate in multiple states and movie studios to encourage production within the state.
• Removes environmental hurdles for some transportation projects through 2010. Allows the state to expand partnerships with private companies on projects such as toll roads.
• Exempts environmental reviews for selling surplus state property.

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SACcBee continued

Leaders are counting on federal stimulus money as the package approaches closure in Washington. If California receives at least $10 billion, more than half of that money -- $5.5 billion -- would eliminate the need for a short-term loan, while $1.8 billion would eliminate taxes and $1.2 billion would eliminate spending cuts.

The plan would raise sales taxes by 1 cent on the dollar, increase income taxes across the board and hike the vehicle license fee from the current 0.65 percent of the vehicle's value to 1.15 percent. The taxes would last a minimum of two years. If the federal stimulus money arrives, the income tax increase would be reduced.

The proposal would cut the state's dependent credit in half, raising taxes for parents and those who take care of elders.

The deal asks the Legislature to approve whatever deal is struck between Schwarzenegger and state employee unions to save $1.3 billion, whether through furloughs or other means. Administration officials have been bargaining with labor unions over the governor's twice-monthly furlough plan, which began last week.

While businesses were unable to obtain rollbacks in labor provisions related to meal breaks and overtime pay, they scored victories on tax code changes. A major shift in how the state calculates each company's sales could save businesses an estimated $650 million in state taxes. Republicans also have asked for a $2,000 tax credit per each new employee hire.

The budget package relies on $10.9 billion in borrowing. State leaders are counting on a plan to borrow against future California Lottery revenues, which also would require voter approval. The lottery proposal, passed last year in the Legislature, estimated that California would receive $5 billion in the next fiscal year for budget relief, but it is unclear whether the state could obtain as much money given the economic downturn and tight credit market

The state would obtain another $5.5 billion in short-term loans with no defined way to pay it back by 2011. If the state receives more than $10 billion in stimulus money, it would not seek those loans.

The plan would cut $8.6 billion in K-14 education funding, but under the deal lawmakers would ask voters to change state law to restore that money for schools. The proposal also reduces money for California State University and the University of California by 10 percent.

Schwarzenegger would score wins on environmental changes to stimulate construction, under the plan. The proposal gives the state unlimited authority to use public-private partnerships for state transportation projects through 2017. It also authorizes a limited number of projects to use a process that combines the design and construction phases of projects, a change opposed by the state's public engineers' union. And the proposal exempts eight major state highway projects from environmental review while allowing for an expedited permitting process.

Legislative leaders met with Schwarzenegger until late Tuesday night and have tentative plans to convene today. Both Republican caucuses have scheduled lunch meetings.

Senate Republican leader Dave Cogdill said he could not guarantee votes, but told his members that the deal is as good as they're going to get. "I've negotiated it to the point where I think it doesn't get any better," he said today, emerging from a private GOP caucus. "We're waiting to see all the language and all of that so I'm not ready to commit who the votes will be at this point."

Other legislative leaders were more vague.

Asked to confirm a tentative agreement, Assembly Republican leader Mike Villines responded with a short e-mail saying simply: "Sorry ... I can't say anything buddy."

Senate President Pro Tem Darrell Steinberg, speaking to the Sacramento Press Club luncheon, said there was a "common framework" for a deal with some details to be worked out.

Assembly Speaker Karen Bass said, "We're very close and I'm optimistic that we'll have a vote before the week is over."

But Bass declined to confirm a deal, saying that language must be drafted and there are several "loose ends" to be tightened.

"I've been in this position now, it seems like every week for the last five weeks," she said. "And, you know, we get back in the room and something blows up."

As a trade off for new taxes, Republicans demanded that the deal include a limit on future state spending. Under the tentative agreement, the restriction would require the state to place money into a rainy-day fund after reaching a limit determined by state revenues over a 10-year period.

Voters would have to approve the spending limit, likely in a special election later this year, and it is particularly controversial among education groups who constantly seek more state money for schools. Concerned that the state's powerful teachers' union would try to kill the spending restriction at the ballot, budget negotiators included a provision that would extend the new taxes to five years if the spending cap passes.

Steinberg told the Press Club the spending cap would not include Proposition 98, the 1988 ballot measure that guarantees levels of state support for schools. School spending, he said, would still increase along with future revenues.

Economists have estimated that California could receive at least $10 billion in federal stimulus relief for schools and social services. That money could offset some proposed budget cuts in those areas, depending on how much California receives.

Steinberg said the state is counting on "significant" money from the federal government from the stimulus package that is approaching closure in Washington. That money, he said, could offset some proposed budget cuts, depending on how much California receives.

Republicans and Schwarzenegger also asked for business-friendly changes in environmental and labor laws, emphasizing that looser regulations would help the economy rebound in California. While sources said unions have been successful in fighting labor changes, the deal exempts some major state highway projects from environmental review to hasten construction.

Steinberg said a deal must be approved this week to head off postponement of 145 Caltrans projects, "massive" layoffs of state employees and a further lowering of the state's credit rating.

Asked if large-scale layoffs could be averted, Steinberg answered, "Things are moving in a positive direction."

The leaders have been especially tight-lipped about details of the budget elements, fearing too much advance knowledge will allow interest groups to mobilize and pressure lawmakers. One of the most powerful labor groups, Service Employees International union, launched an attack this afternoon after early reports of a deal.

"The cash crisis is real and needs to be solved with new revenues," said Courtni Pugh, SEIU executive director. "It is not an acceptable trade to fix this year's budget by destroying our future with deeper cuts made permanent by a budget cap."

A Teamsters official recently threatened to launch a recall against lawmakers who vote to approve a relaxation of labor rules. The California Republican Party next week will consider a resolution to censure any GOP lawmaker who votes to increase taxes.

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Jim Sanders, Shane Goldmacher and Aurelio Rojas of The Bee's Capitol Bureau contributed to this report.

DEAL REACHED ON $789 BILLION STIMULUS PACKAGE

Zachary Coile, San Francisco Chronicle Washington Bureau

The final package, likely to be approved by week's end, will be less generous to California than the House version of the bill. But the state will still reap tens of billions of dollars for education, infrastructure, health care costs and other programs.

 

Thursday, February 12, 2009 -- House and Senate leaders, under intense pressure from President Obama, buried their differences over competing economic stimulus bills Wednesday and agreed to a $789 billion package aimed at jump-starting the economy.

The final package, likely to be approved by week's end, will be less generous to California than the House version of the bill. But the state will still reap tens of billions of dollars for education, infrastructure, health care costs and other programs.

At least 12 million California taxpayers will see their payroll taxes cut, although lawmakers trimmed the tax cut from $1,000 to $800 for couples earning up to $150,000, and from $500 to $400 for individuals making up to $75,000.

A $15,000 tax credit for new home purchases, which home builders and real estate interests pushed to revive the housing market, was pulled from the bill. But car buyers will be able to deduct the sales tax they pay on a new vehicle.

The deal was announced in embarrassingly awkward fashion. House Speaker Nancy Pelosi was noticeably absent when Senate Majority Leader Harry Reid stepped to the microphones Wednesday afternoon to say, "The difference between the Senate and House versions we've resolved."

But, in fact, they hadn't.

Pelosi and other House Democrats, including Martinez Rep. George Miller, were still negotiating over key provisions, including trying to boost the amount of money for school construction. White House Chief of Staff Rahm Emanuel, who helped broker the deal, was called in to iron out the differences.

Money for education

By late afternoon, Obama had issued a statement praising the deal. Pelosi stepped out of negotiations briefly Wednesday evening, saying the delay had allowed her to nail down a promise of more money for education.

"We have come to an agreement with the Senate as to how we'll go forward, and I think people are pretty happy about that," she said. "We had to make sure that the investments in education were there."

Lawmakers said the deal would restore about $10 billion in a fiscal stabilization fund for the states, which was cut in half by the Senate. Under the Senate bill, California would have received about $4 billion, and that share could grow by about $1 billion under the compromise.

Governors would be allowed to use the money to modernize public schools but not build new ones.

The deal showed the immense clout of three Republican senators, Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania, who demanded that the price tag be kept under $800 billion. The three moderate GOP members also fought for, and won, more tax cuts and more infrastructure spending.

Spending, tax cuts

The final bill is a mix of about 65 percent spending and 35 percent tax cuts, with roughly $150 billion devoted to spending on highways, bridges, water systems, electricity transmission lines, broadband expansion and other infrastructure projects.

"I'm particularly pleased that we have produced an agreement that has a top line of $789 billion," Collins said. "It is a fiscally responsible number that reflects our efforts to truly focus this bill on programs and policies and tax relief that will help turn our economy around."

But some House Democrats were unhappy with the way the deal was negotiated with the Senate. Rep. Barbara Lee, D-Oakland, chairwoman of the Congressional Black Caucus, said she was upset that tax provisions kept growing even as spending programs to help those hard-hit by the recession were shrinking.

"I'm very disappointed at how the Senate negotiations have gone. ... You have two or three members of the Senate negotiating the bill for the whole country," she said.

Details are unclear

Details were still sketchy Wednesday night, but Lee said she was pleased to hear some money had been restored for education and for a program to help communities buy foreclosed properties.

"We want to support the president. We know this is not a perfect package," she said. "We were very disappointed it didn't go further in the negotiations in alleviating suffering ... but we understand the political realities of what is taking place."

The final bill includes a $70 billion provision to keep the alternative minimum tax from hitting upper-middle-class taxpayers, a provision the Congressional Budget Office said would do little to stimulate the economy.

But the measure also provides $14 billion for one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions, all of whom are seen as likely to spend the money quickly.

House Republicans denounced the deal. House Minority Leader John Boehner, R-Ohio, said, "It appears that congressional Democrats have made a bad bill worse by reducing tax relief for working families to pay for more wasteful government spending."

Stimulus compromise

Highlights of a nearly $789 billion version of President Obama's economic recovery plan agreed to by Democrats and moderate Senate Republicans. Additional debt costs would add about $330 billion over 10 years. Many provisions expire in two years.

Spending

-- Aid to poor/unemployed: $40 billion to provide extended unemployment benefits; $20 billion to increase food stamp benefits.

-- Direct cash payments: $14 billion to give one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions.

-- Infrastructure: $46 billion for transportation projects; $8.4 billion for mass transit; $8 billion for construction of high-speed railways and $1.3 billion for Amtrak; $4.6 billion for the Army Corps of Engineers; $4 billion for public housing improvements; $6.4 billion for clean and drinking water projects; $7 billion to bring broadband Internet service to underserved areas.

-- Health: $21 billion to subsidize insurance premiums for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $19 billion to modernize health information technology systems.

-- State aid: $5 billion to help states defray budget cuts.

-- Education: $54 billion in state fiscal relief to prevent cuts in state aid to school districts, with up to $10 billion for school repair; $26 billion to school districts to fund special education and the No Child Left Behind law for students in K-12; $17 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start.

Taxes

-- New tax credit: Approximately $115 billion for a $400 per-worker, $800 per-couple tax credits in 2009 and 2010.

-- AMT: About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009.

-- Home buyer credit: $3.7 billion to repeal a requirement that an $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Aug. 31, unless the home is sold within three years.

THREE TOUGH STEPS TO FISCAL SANITY IN CALIFORNIA

George Skelton, Capitol Journal | LA Times

February 9, 2009  -- From Sacramento -- California state government is collapsing. It has been for years, actually. Something needs to change drastically.

As President Obama remarked last week at a congressional Democratic retreat: "If you're headed for a cliff, you've got to change directions."

Sacramento is sliding fast toward the cliff's edge.

The state can't pay all its bills. Can't sell bonds to finance public works. Can't even afford, Gov. Arnold Schwarzenegger says, to keep most of its doors open two Fridays a month.

The chief culprit: The Legislature's inability to pass a state budget on time. Frustrated local governments and schools can't plan. Private vendors selling to the state get stiffed. Worst of all, the Capitol politicians ultimately panic, punt the state's fiscal mess into the future and pass a fraudulent budget.

Rather than cutting spending and raising taxes slightly to escape a looming deficit, the lawmakers have passed gimmicky budgets with cooked numbers that soon dig the state into an even deeper hole. And that's where we are today: in a $42-billion pit. Even with a recession, that's ridiculous.

I've harped on this for years, thinking that surely one day California would wake up.

The Legislature can't produce an on-time budget -- honest or phony -- because of the archaic requirement for a two-thirds majority vote of each house. Only two other states, Arkansas and Rhode Island, have such a monstrous hurdle. And, unlike California's, their legislatures are lopsidedly dominated by one party.

The California Legislature requires some minority party votes for a budget -- currently three Republicans in each house. And virtually all Republicans regard a vote to raise taxes as ideological blasphemy. More important, they consider it potential political suicide, fearing they'll be challenged from the right in a primary election.

So give the Republicans a break. Relieve them of any responsibility to vote for budgets and taxes that rip their souls and imperil their careers.

Here's my solution to the budget procrastination:

* Lower the vote requirement for a budget to 55%. That's still a supermajority, but one that's practical given California's increasing diversity of people and interests represented in Sacramento. A budget then would need 44 votes in the Assembly and 22 in the Senate, rather than 54 and 27. Democrats normally could handle that by themselves.

* Also drop the two-thirds vote requirement for taxes to 55%, with one caveat: All the new revenue must be used to help balance a status-quo budget -- not a penny for spending increases above inflation and population growth.

* If they still don't pass a budget by the July 1 start of the new fiscal year, the lollygagging lawmakers forfeit their pay and per diem for every day the spending plan is late. For most, that would be a hard hit. Legislators make $116,208 a year; house leaders get $133,639. Per diem is $173 tax-free each day -- even weekends -- while the Legislature is in session.

Sever the governor's pay, too, although Schwarzenegger is so wealthy he doesn't take his $212,179 salary. He does, however, mooch off special interests for Sacramento lodging, as have previous governors. That's because California doesn't provide an official governor's residence. Pretty tacky.

The concept of prodding lawmakers in the wallet is endorsed by Schwarzenegger. "If the people's work doesn't get done, I think the people's representatives shouldn't get paid," the governor said in his State of the State speech.

That should ensure an on-time budget.

I'm not totally convinced it would be good public policy. It would be unfair to legislators who vote for budgets and aren't rich. Moreover, we shouldn't be blackmailing lawmakers to pass bad budgets just to keep their pay.

But it's time to be drastic. And I am convinced it would be good politics. It could be just the inducement the electorate needs to approve a ballot measure finally eliminating the unworkable two-thirds vote.

A similar ballot measure, without the tax limit caveat, was killed in 2004 by a nearly 2-to-1 vote. But since then, the voters have become more acutely aware of Sacramento's ineptness. They may be ready to rethink the notion.

As reader Andrea e-mailed me last week: "Soon people will take to the streets with pitchforks and torches if these clowns don't get to work."

A recent statewide poll by the Public Policy Institute of California found, for the first time, that a majority of likely voters -- 53% to 41% -- think it's a good idea to lower the budget vote threshold to 55%. The poll also found that only 9% approve of how the Legislature is handling the budget-tax issue; 84% disapprove.

Some GOP leaders have said privately that they could support a majority-vote budget rule if the two-thirds requirement remained for taxes. Then Democrats alone would be accountable for spending priorities, giving the GOP a potential election issue.

Yes, it's time to let the majority party rule and to end gridlock.

Sen. Mimi Walters (R-Laguna Niguel) has proposed a constitutional amendment that would revive a pre-1962 law: A budget could be passed on a majority vote if it didn't increase spending by more than 5%. That would amount to a spending cap.

Sen. Abel Maldonado (R-Santa Maria) has introduced a measure that decrees: "No budget, no pay, no per diem." He knows it will never pass the Legislature.

"It's the only bill where I get bipartisan opposition," he says. "If you want the Legislature to work together, you put in a bill that cuts their pay."

Cut off their allowances if they don't do their chore? Yeah, that is treating them like children. But like many parents with undisciplined kids, we're at the end of our rope.

First, however, we should make the chore doable.

96 DAYS…

from Sac Bee Capitol Alert

9 Feb - Believe it or not, it's been 96 days since Gov. Arnold Schwarzenegger called a special session to address California's historic budget shortfall.

The wait for a budget fix continues.

Workers in both houses of the state Legislature have today off, recognizing Lincoln's Birthday a few days early. They'll also have next Monday off for Washington's Birthday.

Leadership says key budget staff will still be working.

CALIFORNIA’S @ ROCK BOTTOM: If California wants its share of federal largesse, Sacramento had better get its act together, fast.

Editorial From the Los Angeles Times

February 6, 2009 -- California is now the Wile E. Coyote of states. Our governor and lawmakers have dickered and dawdled all of us off a cliff, but we're trying desperately to resist the realization that there is no ground beneath us. Our legs  are pumping and our eyes are on Obama administration stimulus packages and bailout money on the far, sunny slope, and we might just reach them if we don't acknowledge that the bridge is out, or that we've run off the road, or that our Acme wings have failed. Once we notice that we're hanging in midair, we'll fall.

Too bad for us, but Standard & Poor's has already noticed. It said this week that California is a monumentally bad bet for investors, presumably because the state lacks both the will to adopt a budget and the ability to raise enough tax money to guarantee it will pay back all those bonds voters keep approving; S&P now ranks California 50th among states in credit ratings.

If ratings agencies recommend California as the last choice for bond buyers, how attractive could the state look to Washington? President Obama and Congress want federal dollars to go to work immediately, so they hardly could be blamed for guiding those dollars to states with governments that pay contractors with Federal Reserve notes rather than IOUs, with budgets that balance, with governors who lead and legislatures that function. Take a look -- that's not us.

Gov. Arnold Schwarzenegger has identified "shovel ready" projects lined up for federal cash. But they will fall behind similar projects ready to go in states where governors and lawmakers are not arguing about permits and approvals, and where state treasuries are solvent so state dollars can go to work. The State Children's Health Insurance Program, reauthorized and expanded and signed by Obama on Wednesday, means $1.5 billion in funding for California's much-needed Healthy Families program only if the state is functioning sufficiently to run it. Federal aid for Medi-Cal will be wasted if California fails to produce its state match.

So it's hard not to pretend that Obama will ride to the rescue because of all the campaign fundraising and phone calling by true-blue California Democrats.

A budget vote is set for next week, and with any luck, California will once again join the ranks of functioning states, but powerful people here keep tripping over their own cleverness. Two cases in point: the recent warning by a union official that he will target Democrats for recall if they cut the wrong things from the budget, and the pronouncement by state GOP official and blogger Jon Fleischman that Republicans who vote to increase taxes will be censured. With folks like these pulling the levers of power, the best way out of the recession may be to invest heavily in Acme.

FRIDAY BUDGET UPDATE: The state of emergency in the State of Emergency

From Wikipedia, the free encyclopedia: A state of emergency is a governmental declaration that may suspend certain normal functions of government, alert citizens to alter their normal behaviors, or order government agencies to implement emergency preparedness plans. It can also be used as a rationale for suspending civil liberties. Such declarations usually come during a time of natural disaster, during periods of civil disorder, or following a declaration of war (in democratic countries, many call this martial law, most with non-critical intent). Justitium is its equivalent in Roman law.

from SacBee Capitol Update

Feb 6 -- The news Thursday was that Senate leader Darrell Steinberg said a vote was upcoming next week. No deal yet, as the negotiations continue behind closed doors.

That secretive process is being pretty well criticized here, here, here, here and here.

Asked if there would be any time for public input before any sort of deal is rammed through the Legislature, Steinberg expounded:

"Certainly, the public has the absolute right to review what we do eventually put forward. And our members certainly do as well. We're going to afford the public, our members that full opportunity," he said. "On the other hand, this is an emergency. We're going to balance those two concerns."

THE CONE OF SILENCE

 “The one safe bet seems to be that there will be no public hearings and no opportunity for public input on major decisions that will shape California for years, if not decades, to come.”

Jean Ross | California Budget Project

Wed, 4 Feb 2009 22:34:00  - Some of you may wonder why, and even be frustrated by the fact that, we haven’t been blogging about the status of budget negotiations. That’s because a virtually impenetrable cone of silence has descended upon the Capitol. Secrecy in budget negotiations is nothing new. However, the level of secrecy around budget negotiations that reached a new high last summer has been far surpassed by the lack of information in the current negotiations. While rumors fly daily - often several times a day - as to when a vote on a budget deal may occur, these rumors are neither confirmed nor denied by those truly in the know.

The one safe bet seems to be that there will be no public hearings and no opportunity for public input on major decisions that will shape California for years, if not decades, to come. The taxes and spending cuts that are likely to be included will no doubt be drawn from some combination of the Governor’s proposals and plans supported by Legislative Democrats in late 2008. However, there are increasing signs that additional measures, such as a “hard” spending cap and sizeable tax cuts for the state’s largest corporations, may also be part of the package. The cone of silence has been particularly airtight with respect to “add ons” such as these. No details have been made available to rank and file lawmakers or the public that would enable a critical assessment of the impact they might have on current and future budgets.

 

more from CBP:

• Another Urban Legend

  Posted: Fri, 06 Feb 2009 01:26:40 +0000

  A recent comment on our blog post reminded us of a persistent, but factually incorrect, rumor frequently heard in state policy circles - that rich people are leaving California in droves for states with lower personal income tax rates. Curious to find out whether this was actually true, CBP staff dove into data provided by [...]

 

• The Personal Income Tax Is Not the Problem

  Posted: Wed, 04 Feb 2009 01:16:37 +0000

  One of the frequently cited causes of California’s budget crisis is “revenue volatility” - the fluctuations in state income tax revenues that occur when income tax collections, primarily taxes collected on capital gains, rise and fall during boom and bust periods. In fact, a key goal of the Governor’s Commission on the 21st Century Economy [...]

• Congress Poised To Approve Children’s Health Coverage Bill

  Posted: Sat, 31 Jan 2009 00:13:03 +0000

  After more than one year of waiting - and two vetoes by former President Bush - Congress is poised to approve a bill that will help California significantly increase the number of children with health coverage. The House and Senate have approved bills to renew, or “reauthorize,” the State Children’s Health Insurance Program (SCHIP) with [...]

• A Proposed Hard Cap on Spending Is Misguided

  Posted: Wed, 28 Jan 2009 22:04:48 +0000

  We’ve been swamped lately at the CBP with budget-related work. That’s why we’re just now getting around to posting this op-ed written by CBP Executive Director Jean Ross that appeared in the Los Angeles Times yesterday. In the op-ed, Jean examines a Republican proposal to place a hard spending cap on the ballot in exchange [...]

• Sowing the Seeds of Future Budget Problems

  Posted: Tue, 27 Jan 2009 00:27:59 +0000

  Press reports and the rumor mill suggest that lawmakers may be close to reaching agreement on a deal that attempts to address most, if not all, of the state’s $40 billion budget gap. A reasonable voter might wonder why, in the face of an impending cash flow crisis, reaching an agreement is so difficult. One [...]

• California Stands To Receive Nearly $20 Billion Under House Economic Recovery Plan

  Posted: Fri, 23 Jan 2009 01:43:06 +0000

  Our colleagues at the Center on Budget and Policy Priorities (CBPP) have released preliminary analyses of the state-by-state impact of the House Economic Recovery Plan. The CBPP estimates that California would receive $11.1 billion from provisions that would increase the federal government’s share of Medicaid spending (Medi-Cal in California) in the current and next two [...]

• Limiting California’s Future - An Elaboration

  Posted: Thu, 22 Jan 2009 19:30:07 +0000

  We received a number of good questions on yesterday’s post. Explaining the impact of a hard budget cap is a tough thing to do in a blog post! The $31.2 billion figure is the difference between budgeted 2008-09 General Fund spending and the level of spending that would be allowed under a cap similar to that [...]

• Limiting California’s Future

  Posted: Thu, 22 Jan 2009 00:25:49 +0000

  Republican lawmakers have called for the Legislature to place a “hard spending cap” on the ballot in return for Republican support of a tax increase to help close the state’s budget gap. First, it is important to note that California already has a hard cap in the state’s constitution. In fact, we’ve had one since [...]

LAUSD SELLS NEARLY $1 BILLION IN BONDS, DESPITE STATE’S WOES

Tom Petruno | Money & Co. blog | LA Times

6:09 PM, February 4, 2009

One day after California's credit rating fell to the lowest of any state, investors on Wednesday stepped up to buy $950 million of tax-free bonds from the Los Angeles Unified School District.

The sale suggests that demand for municipal securities remains relatively healthy, even for debt of issuers that could be adversely affected by California’s budget woes.

The voter-approved LAUSD bonds, which will finance school building projects, were sold in terms from one to 25 years. The annualized tax-free yield on the five-year issue was about 2.69%. The 10-year bond's yield was about 3.84%.

By contrast, market yields on 10-year state general obligation bonds have been around 4% in recent days.

"We're pleased with the interest rates, given the state of the state," said Tim Rosnick, a finance officer for LAUSD.

LAUSD, which has a remaining backlog of $11 billion in infrastructure bonds to issue, has a higher credit rating than California. Standard & Poor's rates the district "AA-minus."

S&P cut the state's debt grade to "A" from "A-plus" on Tuesday, citing the continuing budget impasse in Sacramento. California had been tied with Louisiana for the lowest credit rating among the states, but now is all alone at the bottom.

The state's grade still is above the "BBB" rating it had from mid-2003 to March 2004, amid the last big budget debacle. That was when Gov. Gray Davis was recalled, which brought Gov. Arnold Schwarzenegger to power.

“I actually had a speech but then I said to myself, why am I giving a speech?”

    

      “So let me just quickly say that it is very important that we solve our $42 billion problem. This is a problem that is bigger than any problem we have ever had in this state and this is why we should not just approach it by coming up with certain solutions for this fiscal year and then solve, after the May Revise, the next fiscal year but to go and solve the whole $42 billion problem in one shot.

     “Now, what that means, basically, is we will be doing something historic because, as you know, in my State of the State Address I said that the legislators are always late with the budget and that I actually recommend that we should stop paying them for each day they are late and they go past the constitutional deadline and also stop paying and giving them per diem money. So now we have a situation where we actually have a chance to have a budget five months before the constitutional deadline and that's what I'm shooting for. Now, even though everyone says you're crazy and this will never happen but I never go and listen to those kinds of naysayers because I believe anything is possible.”

- Governor Arnold A. Schwarzenegger to the Sacramento Press Club 1/28/09

CALIFORNIA BOND RATING DROPS LOWER THAN ANY OTHER STATE’S

 

Standard and Poor's cites the budget impasse and near-empty treasury. Meanwhile, interest groups show growing resistance to possible compromises by legislators on labor issues and taxes.

By Jordan Rau and Patrick McGreevy | From the Los Angeles Times

February 4, 2009 -- Reporting from Sacramento — California's bond rating was downgraded below that of every other state Tuesday by a major Wall Street rating agency, as lawmakers trying to resolve the state's financial problems faced growing resistance from powerful interest groups.

Citing the state's prolonged budget impasse and its nearly empty treasury, Standard & Poor's lowered its rating on $46 billion in general obligation bonds, which investors usually consider one of the safest investments because they are backed by taxpayers.

By reducing California's bonds from an "A-plus" to an "A" rating, the agency declared that it now considers even the debt of Louisiana -- whose credit had been ranked equally with California's -- a more trustworthy investment. Most states are rated "AA" or "AAA."

"Our rating recognizes our view of the lack of political progress around the budget negotiations that we believe is serving to exacerbate the state's current and projected cash position," Standard & Poor's wrote in its report.

Even as the agency chastised the state, Gov. Arnold Schwarzenegger and legislative leaders intensified their negotiations to close the state's projected $42-billion budget gap. After a 90-minute afternoon meeting, Senate President Pro Tem Darrell Steinberg (D-Sacramento) emerged from the governor's office and told reporters that "there are a few remaining issues."

Senate minority leader Dave Cogdill (R-Modesto) cautioned that "we're still in discussions" and "it's too early to tell" when a deal might be reached.

With buzz of a potential agreement growing in recent days, activists were taking aim at rank-and-file legislators, threatening to jeopardize the political careers of any who supported a deal the activists opposed.

On Monday, the California Labor Federation summoned Democratic legislators to the union's office in Sacramento. There, they reiterated organized labor's opposition to Republican demands for changes in some workplace rules governing when employees take breaks and when they are paid overtime. About 30 lawmakers attended the meeting, said union officials and legislators.

"It was an important meeting for us to have," said Assemblyman Alberto Torrico (D-Newark). "There were issues that labor was concerned about." He called the proposed changes "a nonstarter."

Art Pulaski, executive secretary-treasurer of the federation, said in an interview that there were "no explicit or implied threats" of retaliation against Democrats during the meeting. But he said some lawmakers were elected only because of heavy support from labor. "I think that's less likely to happen if they vote" to weaken labor protections, he said.

Chuck Mack, secretary-treasurer of the International Brotherhood of Teamsters, Local 70, had been more blunt Friday in a conference call with reporters, saying unions "have to send a message to legislators that there are consequences to this."

"If we've got to marshal our resources, if we've got to engage in recalls, then we are going to have to do that," Mack said.

The California Teachers Assn., another union that plays a critical role in helping Democrats get elected, launched a statewide TV campaign this week against cuts in education money that the ads maintained "could permanently increase class sizes."

On the Republican side, Jon Fleischman, a conservative blogger and state party official, proposed Sunday that the party censure any legislator who votes for higher taxes. His will be considered Feb. 20 at a party convention in Sacramento, he said.

"In just one day, I have already heard from almost 200 state central committee members expressing support," Fleischman wrote Tuesday on his blog, www.flashreport.org.

The "John and Ken Show," a Los Angeles radio talk show, posted on its website photos of the GOP legislators who have not publicly reaffirmed their opposition to taxes. The photos showed just the legislators' heads -- on stakes.

The Legislature's two minority leaders, Cogdill and Assemblyman Mike Villines of Clovis, were among those whose disembodied heads were pictured. Along with the photos was the admonition that conservatives "tell them to stand firm on no new taxes or else!"

Other skirmishes over the budget crisis continued Tuesday across Sacramento.

Two state employee unions filed an appeal to overturn a court ruling that allows Schwarzenegger to furlough 238,000 state workers for two days a month. Union representatives said they did not expect a decision before the first furloughs take effect Friday.

State Controller John Chiang, who joined the unions' position in the lawsuit, promised last week to implement Sacramento County Superior Court Judge Patrick Marlette's order. On Tuesday, he asked the judge to decide whether the ruling also applies to the 16,000 employees who work for such statewide elected officials as the controller, the attorney general and the lieutenant governor.

The immediate impact of the credit downgrade is not clear. California cannot arbitrarily default on its debts, because the state Constitution requires that debt principal and interest be paid as promised. But a lower credit rating can lead investors to demand higher interest rates on new bonds the state sells for infrastructure projects, or short-term loans when the state is low on cash.

Currently, financing for $4 billion in public works projects is on hold because the state lacks money and investors won't provide any more while California's fiscal issues remain unresolved.

Times staff writers Tom Petruno, Evan Halper and Marc Lifsher contributed to this report.

FOLLOW THE LEADER: The federal stimulus package should serve as an impetus to state legislators to fully fund the education system.

By Senior Editorial Board | The Daily Californian Online

The Daily Californian is an independent, student-run newspaper serving the UC Berkeley campus and its surrounding community, publishing Monday through Friday during the academic year and twice a week during the summer. Established in 1871, The Daily Californian is one of the oldest newspapers on the West Coast and one of the oldest college newspapers in the country.

Tuesday, February 3, 2009 - Year in and year out, the fate awaiting California's education system has been the same-cut after cut after cut. State legislators, though alleged believers in education as the greatest investment for the future, have yet to demonstrate that belief with adequate state funding.

Last week, the federal government acted on that belief when the U.S. House of Representatives passed President Obama's $819 billion stimulus package, a much-needed jolt designed to create jobs.

The package could translate into millions of dollars for California's public schools and higher education systems, the University of California and the California State University.

If passed in the U.S. Senate, those critical funds will go towards infrastructure on university campuses, saving jobs in California's school districts and a $500 boost to the maximum Pell Grant award amount.

This significant show of support for education, especially in a time when funding is being cut left and right, is something we firmly stand behind and hope to see become a priority in Obama's administration.

The funding, unfortunately, can only go so far. Bill Huyett, superintendent of Berkeley schools, has already said that because of state funding decreases, the federal funds won't be enough to dramatically improve the quality of education.

Furthermore, although the package's provisions for financial aid and research could help the university greatly, state budget cuts are still projected to continue.

As of Sunday, $13 million in Cal Grants are being delayed by the State Controller's Office, plus millions of dollars in tax refunds-a move that is certain to hurt thousands of UC students dependent on those funds.

Rather than eliminating the need for state funds, the stimulus package reinforces the importance that funding for education should carry; state legislators ought to take a cue from the President and Congress and immediately resolve to pass a budget that prioritizes education.

$19.5 MILLION NEEDED FOR SCHOOL LUNCH PROGRAM

 

Op-Ed by Jack O'Connell & Tom Torlakson | San Francisco Chronicle

Friday, January 30, 2009 - Even in our nation's darkest hours, we have worked to make sure every child has enough to eat. That's why during the Great Depression visionaries instituted the school meal program that has helped to feed our neediest children, generation after generation.

But today, as more and more hungry children turn to the school lunch program for their only meal of the day, California's program is in danger of collapse. We must act quickly.

Struggling families count on the program during tough economic times, and these days, the need has exploded. California's school meal program provided 28 million more meals last year than in 2007 - a 4.5 percent surge.

We've seen an acceleration of the trend this year as our economy worsens. Just since the beginning of the school year, schools have experienced a 12 percent increase in meal demand, according to state Department of Education surveys. Typically, our school system experiences only a 1 percent difference per year.

It's distressing that budget cutbacks are being considered in the program, which quite literally costs only pennies per day for each child that receives a meal, of which the state provides fewer than 28 cents per meal. That includes the 6 cents we added so that fresh foods can be included in a meal that traditionally has contained deep-fried foods and too many starches and fat because these are the cheapest foods. The federal government pays the rest - between $2.17 and $2.57 for every free or reduced-price meal served.

Before the holidays, the state Department of Education announced that California's school meal program is projected to run out of funding before spring break. If this happens, the state will be unable to reimburse school districts on a per meal basis as required by law and districts will be forced to dip further into their barebones budgets to cover the difference. To ensure this doesn't happen, we will be working to dedicate $19.5 million in the state budget to simply continue the program. Study after study tells us that adequate nutrition is essential to learning. Children who eat a well-balanced diet have better test scores and perform better in school, and have lower absentee rates and fewer discipline problems.

When our needy students go without lunch, our entire country suffers. This became a national security issue during the Great Depression, when the military had to turn away scores of young men from service because of health issues relating to malnutrition. Today, our ability to compete is at stake.

As we grapple with how to close our enormous budget shortfall, the last thing we should do is turn our backs on everything we know about nutrition, hunger and our children.

Jack O'Connell is the state superintendent of public instruction. Tom Torlakson represents Contra Costa County in the state Senate.