Author: Joel Fox

On Monday, I recapped in short snippets how we got to this point in the budget debate. Today, more depth on the sad story of the state budget.

While legislative Republicans have been widely blamed for sandbagging the Governor’s January proposal to ask voters to extend taxes, there has been scant attention paid to the fact that the most significant opposition to the Governor’s plan has not been from Republicans or business, but rather from the public employee unions – particularly SEIU and CTA.

When the Governor initially suggested a June special election to extend the sales, income and VLF taxes enacted as part of the 2009 budget compromise (supported by many businesses), many in the business community – and even some legislative Republicans – indicated support for the extensions and vote, if they were part of a comprehensive, bi-partisan solution that included fiscal reforms. While labor publicly indicated vague support for the Governor’s plan, behind closed doors the public employee unions were, by most accounts, aggressively pushing back against the Governor’s special election.

Legislators are making themselves into history professors
again and that is probably not a good thing. Days before the Assembly Education
Committee meets on SB 48, which would require school textbooks to include the
role and contributions of lesbian, gay, bisexual, transgender Americans, and
persons with disabilities, the Department of Education released the 2010
National Assessment of Educational Progress, which reported that only 12% of
high school seniors have a firm grasp of the nation’s history.

How are the two issues connected? As eminent historian,
David McCullough recently told the Wall
Street Journal, one of the problems resulting in the poor understanding of
history is that, "History is often taught in categories – women’s history, African
American history, environmental history…."

The categories come from political meddling. California law
provides a long list of groups required to be treated in textbooks. The Los
Angeles Times editorialized
against SB 48, stating, "Years ago, California made the wise
decision to have experts draw up a balanced social studies curriculum that
became a model for schools nationwide. Legislators aren’t improving education
in the state by stuffing the curriculum with new politically correct
requirements…."

The governor said, we need to fix the state’s fiscal
condition with half tax increases and half spending cuts. He wanted a tax
election in June.

The Republicans said NO. The Republicans said they made a
pledge not to raise taxes.

The governor said they should not stick to the pledge.

The governor said he would negotiate with some Republicans
to put reform measures on the ballot along with taxes.

The Republicans offered an initial list of 53 variations of
reforms.

The governor said NO.

The Democrats and public unions said the people should just vote
on tax extensions.

Polls came out and said the tax measures would probably
lose.

The Republicans said let’s vote on taxes and reforms.

The Democrats and public unions said NO.

The Democrats and unions said the people didn’t need to vote
on taxes, that’s the legislature’s job.

UPDATE: Governor Jerry Brown has vetoed the budget presented to him less than 24 hours before. In his veto message Brown said, "I am vetoing it today because I don’t want to see more billions in
borrowing, legal maneuvers that are questionable, and a budget that will
not stand the test of time."

As my original commentary for today that follows below the break argued, this budget was crippled from the start and faced many lawsuits. Brown did the right thing.

More on the governr’s veto message from the Sacramento Bee here.

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This isn’t the first time someone gets paid for sloppy work.
Looks like the legislature (read Democrats) passed the budget by the deadline
meaning under the provisions of Proposition 25 legislators will get paid. However,
the budget is made up of gimmicks, previously failed budget proposals and
almost certain illegal taxation.

No one knows the decision that Governor Jerry Brown will
make on this budget. John Wildermuth yesterday on this site drew
a picture of the governor’s difficult choices.

But if Brown signs the budget, expect lawsuits on the
revenue raising pieces.

Following the budget passing both houses, Jon Coupal,
president of the Howard Jarvis Taxpayers Association tweeted, "How can this stuff be legal?  Hi Ho,
Hi Ho, it’s off to court we go."?

As legislators and the governor see the budget deadline
before them, Democrats are reportedly patching
together a budget that will not require tax increases, relying on budget
gimmicks from the past.  If that kind of
budget passes, expect Brown to get Republican votes to put taxes on a fall
ballot as long as reforms are included.

However, in a role reversal, reforms could become the hurdle
to a special election if public employee unions object.

At a news conference yesterday, Governor Jerry Brown urged
Republicans in the legislature not to be led by talk radio hosts, bloggers or
Washington ideologues. He did not say public employee unions should not lead
Democrats.

It’s important to know where the unions are on the overall
deal Brown has been trying to hammer out with some Republicans to put both tax
extensions and reforms on the ballot.

With the term limited mayoral run of Antonio Villaraigosa
coming to an end next year, a number of possible candidates are lining up to
test the waters in a quest to become Los Angeles’ next mayor. Two potential
major candidates are successful businessmen: developer Rick Caruso and
investment banker Austin Beutner.

I had an opportunity to see both men in action last week.
Beutner attended a small gathering of the Valley Vote Board of Directors while
Caruso was also in the San Fernando Valley speaking to a couple of hundred
members of the United Chambers of Commerce.

Both Caruso and Beutner have spent some time in government.
Caruso served on Los Angeles commissions including the city’s police
commission. Beutner worked as Mayor Villaraigosa’s deputy mayor for economic
and business policy, but also worked for the U.S. State Department in Russia
helping the former Soviet Union transition to a market economy.

Anyone interested in storytelling might want to pull up a
chair in the state senate gallery and listen to a battle of stories — about
taxes. Dueling emails are circulating requesting stories of woe from those who
either see the end of the temporary taxes as the road to local budget
devastation or the continuation of those same taxes as hardship for taxpayers.

The storytelling fest started with a request from the office
of senate president pro tem Darrell Steinberg. He wants stories from school and
local law enforcement officials on how they will be devastated if the tax
extensions do not occur. The email read in part: The pro Tem is asking all
Senators to call their Sheriffs and the Superintendents of the school districts
in their Senate districts and get short letters from each of them, describing
the cuts they will have to make, worst case scenario (if the Senate must pass a
budget without continuing existing revenues).

A major hang-up on the budget deal is whether taxes should be extended until the people can vote. However, unanticipated revenues revealed last month should make the tax bridge unnecessary if the vote occurs in a few months.

An election probably would not happen until the beginning of autumn at the earliest and the governor wants to build a tax bridge until the election occurs. Republicans have balked at the idea of continuing taxes beyond their expiration date at the end of the month.

As things are shaping up, the voters would be presented with a package of proposals that include continuing or re-establishing the expired taxes – depending if the tax bridge is built – a short term spending reform and some public sector pension changes.

Assembly
Speaker John Perez assured attendees at California’s Small Business Day that he
was confident the legislature would meet it’s constitutional deadline to pass a
budget by June 15. Perez’s optimistic message was wrapped around a concern for
California’s fiscal woes. However, he did not get into the partisan bickering
that has gridlocked the budget debate.

The speaker
did acknowledge the state’s unemployment problem saying the legislature’s principle
task was to create jobs. He pointed to some tax credit legislation as proof of
that effort.

The speaker
said the recession has laid bare flaws in California’s economic system but did
not offer specific remedies. He simply said now was the moment to protect
California’s legacy of entrepreneurship that goes back to the Gold Rush days.