Cost Overruns from Coast to Coast

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

I grew up in Massachusetts, and recently I’ve been reading stories about government projects in my home state that would be familiar to anyone who follows government in California. They deal with cost overruns of major public programs. Let’s be fair and say there are cost overruns in private as well as public efforts, as anyone who has remodeled a house knows.

However, what made me take notice of these cost overrun stories is that one had to do with a big infrastructure project and the other had to do with the Bay State’s effort to implement a universal healthcare system.

California is involved in many infrastructure projects, but may get behind a massive proposal if the voters approve Proposition 1 on the November ballot to support a $10-billion high-speed rail. And, anyone following California politics knows that last year was supposed to be the Year of Health Care Reform. The governor’s pet project was derailed, but perhaps only temporarily. Rumor has it he wants to resuscitate the program as soon as the budget is resolved—whenever that occurs.

Thinking about these California proposals I read these recent reports about Massachusetts with trepidation. That big infrastructure project in Boston — the most expensive highway project in United States history is facing – you guessed it, a cost overrun. And, the Massachusetts health-insurance-for- everyone plan is up and running and one of the first things state officials noticed was – it cost more than expected.

Read more

The Minimum Wage Gambit: Deja Vu

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

When Governor Arnold Schwarzenegger announced that he would sign an order to pay state employees at federal minimum wage until the budget is resolved, I got that Yogi Berra feeling: It’s déjà vu all over again.

You see, the court ruling that the governor is relying on came out of a lawsuit I filed a decade ago during another budget crisis in 1998. The case of the Howard Jarvis Taxpayers Association vs. State Controller Kathleen Connell was intended to pressure legislators into coming to terms with the budget. We contended that the state constitution prohibited any spending in the new fiscal year without the authorized budget in place.

A Los Angeles judge agreed, ordering Controller Connell not to pay employees or contractors. The next day, the Legislature passed an emergency spending plan that allowed the employees to be paid.

Read more

Jump into the Pool – the Small Business Insurance Pool

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

This morning’s column by the Sacramento Bee’s Dan Weintraub tells the impressive story of small businesses creating the heart and soul of the new California economy. The spirit of entrepreneurship and the desire to be your own boss is leading many workers to set up their own shops.

As Weintraub points out in the article, “firms of five employees or fewer now represent nearly 90 percent of all businesses in California” and these firms are growing at a rapid pace. Indeed even the smallest of firms, sole proprietorships increased by 24 percent from 2000 to 2005 to more than 2.5 million.

But along with this success story comes the question of how so many workers in small businesses deal with exploding health care costs? According to the National Conference of State Legislatures, only 47% of firms with three to nine employees offer health care insurance. Sole proprietors often skip health care as an expense they cannot handle.

Read more

Don’t Let the Water Crisis Get Bad Enough

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Yesterday on this site, Senator Dave Cogdill argued that it is “absolutely essential … that we pass a comprehensive water bond now.” In response, Jon Fleischman on his popular FlashReport website argued that the cost of the bond will be too high if it comes out of the legislature with an environmental agenda from a “Sierra Club wish list.” Instead of acting on a legislative measure now, Jon proposes we wait until the situation gets “bad enough” and then put forth by initiative a cheaper, more directed bond measure dealing exclusively with water storage and conveyance.

It is hard to argue with Jon’s analysis of how money has been ill spent in Sacramento. Government officials have been irresponsible in not adequately funding infrastructure to serve the water needs of the people. But I have problems with his conclusion that we allow the situation to get “bad enough” in hopes that the people will pass a leaner bond measure sometime in the indeterminate future.

While some would argue it is a principled stand to vote against a water bond that doesn’t exclusively provide for more water storage, watching principle crash into reality will not solve the pending water crisis.

Read more

Gay Marriage, the Peripheral Canal … and Bo Derek

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Catching up on a number of items at week’s end …

The Field Poll indicates a close election on Proposition 8, the gay marriage elimination amendment. The poll says as of now 51% oppose the amendment and 42% favor it. Surprisingly, the highest percentage of opposition to this measure was the baby-boomer generation, although by only a close 2% over the 18-29 year olds. Fox & Hounds blogger Joe Mathews has opined that gay marriage will eventually be accepted because of the strong support for the issue by the younger generation, yet here are the baby-boomers leading the way.

There will probably be a number of ballot proposition issues that will go down to the wire in November. Given that the Field Poll says at this point Sen. Obama is ahead of Sen. McCain by 24% in the presidential race, wouldn’t it be ironic if what drove voters to the polls in California this historic election year was not the presidential election but ballot issues?

Read more

Our High Tax, Big Spending, Job-Killing Formula is Not Working

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

I hope legislators taking this week off are reading the newspapers. A number of articles serve as a barometer to California budget troubles. Simply stated, California taxes a lot, spends a lot, doesn’t seem to have much to show for it and jobs and taxpayers are leaving the state.

California gets much of its revenue from allowing business to flourish and to provide good jobs. But by making California an expensive place to do business we are driving the job makers away.

This Oakland Tribune article reports on the Auto Club closing three call centers in Northern and Southern California eliminating 900 jobs. Why? Because according to a spokeswoman from the California State Automobile Association: "It costs more to do business in California than in other states. Moving our call center operations to states outside of California gives us an opportunity to reduce our operating costs."

And with those jobs go the taxes that would have ended up in California government coffers.

Its not just 900 jobs that are leaving. Today’s Wall Street Journal editorial states that between 1996 and 2005, "1.3 million more Americans left than came to California. And the people who are leaving are disproportionately those with higher incomes…"

Read more

Schwarzenegger won’t be headed to D.C. just yet

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Joe Mathews believes, based on Gov. Arnold Schwarzenegger’s comments on ABC’s “This Week” with George Stephanopoulous, that the governor might consider accepting a position as energy-environment czar in an Obama administration and leave the governorship early.

I don’t think Lt. Gov. John Garamendi should be packing boxes just yet.

Governor Schwarzenegger would be abandoning his supporters in the business community who have worked tirelessly for him if he makes such a move. Often, the Schwarzenegger veto pen is the only thing that stands between the liberal California Legislature and new regulations and fees hoisted on business. A Governor Garamendi would be more accepting of new requirements on business.

Read more

Schwarzenegger/Feinstein Water Bond is Worthy of Consideration

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Water is the lifeblood of California and action needs to be taken to ensure we will have enough water to satisfy the needs of the people and to keep the economy humming. The water bond plan put forth by Governor Arnold Schwarzenegger and Senator Diane Feinstein yesterday is a good proposal worthy of consideration.

California has experienced drought-like conditions for a number of years. In addition, the nearly 50-year old state water infrastructure did not anticipate a population of 38-million people and more.

Improving the water project is one of the crucial improvements the state must undertake – and soon. Conservation is part of the plan but will not be enough to satisfy water needs.

Make no mistake about it, water is vital for economic activity, and not just for farms and corporations but for small businesses and to maintain many jobs. Without adequate water supplies, construction jobs, housing, fishing and other business projects cannot go forward. That’s the way Governor Pat Brown saw it when he put forth the California water project in 1960.

Read more

A Budget Proposal Tower of Babel

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

California operates in a Tower of Babel when it comes to discussing the state budget. When one side does not understand the words and phrases of the other the budget mess is impossible to solve.

Yesterday, the Democrats conference committee released a budget plan that proposes tax increases of $8.2 billion. In the press release issued with details of the plan the Democrats claimed:

The Conference Committee budget is a balanced approach. It closes tax loopholes and rolls back tax breaks for corporations and the wealthy.

Balanced? There is nothing about spending cuts in that paragraph, only raising taxes.

Read more

It’s Prop 13’s Fault—Property Taxes are UP in L.A.

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Everything in California is Proposition 13’s fault – how many times have we heard it? But here’s one time it’s true. Property taxes went UP in Los Angeles County last year … and its Proposition 13’s fault! That’s what the Los Angeles County Assessor Rick Auerbach says in releasing property assessments for the county. In fact, the property tax increase exceeded expectations. While 5% was predicted, property taxes actually climbed 6.9% this year. Here’s a short piece about it in today’s Los Angeles Times.

Read more