Oregon Does Not Have the Answer for Initiative Reform
Legislators are on the look out for ways to reform the initiative process, either for the high-minded purpose of improving the process, or with a goal to limit direct democracy and re-claim the lawmaking function for themselves.
California is not the only state initiatives play a major role in policy making. Oregon often has more initiatives on the ballot than the Golden State so it was no surprise last week when a Senate Committee in Oregon held a hearing on a bill that would give power to the legislature to place a measure on the ballot to counter any initiative that was qualified by voter signatures. Supporters of this maneuver claim that voters would be given a choice on different approaches to the problem the initiative is designed to fix. They also argued that initiatives are often poorly drafted and the legislature and its staff, with experience in drawing up laws, would be able to present a better-constructed law to voters.
Billionaires and the No Campaign
The intriguing question about the May special election is whether either of the billionaire Republican gubernatorial candidates will spend money to defeat the measures they both publically opposed. Steve Poizner and Meg Whitman are weighing the politics of such a move, and looking ahead to January 2011 to determine whether they would be better off starting out their gubernatorial term with the current budget fix in place or to deal with the consequences of the measures defeat, whatever they may be.
The focus is mostly on Poizner because he has a history of spending heavily in initiative campaigns. He helped fund the unsuccessful redistricting campaign during the 2005 special election and, most notably, stepped up with big dollars to knock out the term limit change measure promoted by then Speaker Fabian Nunez and Senate President Pro Tem Don Perata that would have allowed them to remain in their leadership positions beyond the scheduled end of their terms.
The Phoenix Theory
This was originally published in Stephen Frank’s California Political News and Views
Many opponents of Proposition 1A believe that if the measure fails state government will melt down and arise like a phoenix from the ashes, reborn and remodeled in a positive way.
There is a lot that state government must do to change away from its 19th century model, including restructuring the tax code to promote growth, reconsidering regulations to offer a more business friendly environment, and introducing technology to create a more efficient government. However, changes will not come overnight.
One important consideration voters will have to make in deciding on Proposition 1A is to conclude if the cost of the measure is worth the price. The cost does not only include extending taxes for up to two years. The cost also includes what happens if Prop 1A and its accompanying measures fail.
Proposition 1F: The Sure Thing That Shouldn’t Be on the Ballot
To say that Proposition1F on the May 19 Special Election ballot is popular with the voters is an understatement of Tyrannosaurus Rex proportions. The only measure on the ballot to secure over fifty percent in the recent Public Policy Institute of California poll, it rang the bell at 81% approval. But, then the measure has a punitive effect on legislators, so there’s little surprise here.
The measure would prohibit the state commission assigned to setting legislators’ salaries from authorizing a pay raise any year the state budget is in deficit. Given that the legislative approval rating in that same PPIC poll hovered a little above the floor at 11%, the voters’ affection with the measure cannot be a surprise.
But, this sure thing proposition should not even be on the ballot.
This has nothing to do with Senator Abel Maldanado, who required this law change as part of a package of measures he wanted enacted before voting for the budget bill. My problem is with the commission setting the legislative salaries in the first place.
Failure to Sell San Quentin Reflects Deeper Problem
The fact that a bill by state Senator Jeff Denham to sell San Quentin failed to move forward from the Senate Committee on Public Safety yesterday indicates a deeper problem than the state managing this one piece of property.
Over the years, the state has acquired property as if it were a real estate magnate building an empire. California should not be in the real estate business. It should just hold property related to its essential functions and manage that property wisely.
While a prison is an essential state function, San Quentin is an example of poor management of resources.
The 157-year old prison on San Francisco Bay that houses Death Row inmates is in need of repair and expansion. However, the prison sits on prime real estate with magnificent views of the bay. As an investor once told me, there is only so much California waterfront property and this chunk of land would bring a princely sum in the marketplace. Denham estimates the sales price as up to $2 billion.
Lessons from the Last California Constitutional Convention
There has been growing talk of convening a constitutional convention to deal with the budget and other California governmental problems. Governor Arnold Schwarzenegger and would-be governor Gavin Newsom have both endorsed the idea. How a constitutional convention would take shape is a great unknown.
The Bay Area Council, a business group that is spearheading the constitutional convention effort, has noted on their website that a lot of rules would have to be worked out. One is how delegates would be chosen. Three suggestions on the website propose that delegates can be elected, apply for the job, or be chosen like juries are selected.
With so much mystery on the workings of a constitutional convention, I thought it would be interesting to look back at the last time California put on a constitutional convention. That convention took place between September 1878 and March 1879. Delegates met for 127 days (over a 157 day period) although the act establishing the convention declared that, “no compensation shall be allowed delegates after the expiration of one hundred days.”
Bonds Sell; Campbell Responds
Investors gobbled up California’s general obligation bonds the last couple of days and that could be a positive indication that the market might look favorably on California’s fiscal fix.
On Monday, I suggested that the sale of general obligation bonds offered by the state would be an early test of investors’ attitude toward some Special Election ballot measures.
Proposition1C in particular, the lottery modernization measure, needs Wall Street to plunk down billions to help balance the budget with payoff to investors from lottery proceeds down the road.
Treasurer Bill Lockyer sold around $2.5 billion more in bonds than he originally anticipated putting on the market. About half the bonds were taken by individual investors, the other half by institutional investors. Relatively high interest rates accounts for some of the bond sale success. However, the successful offering also indicates that investors have positive feelings about California’s economic stability. That could bode well for Prop 1C if the voters support it in May.
Prop 1A’s Spending Cap is Not Phony
Opponents charge that the spending limit contained in Proposition 1A is phony and deceptive. The claim is based on three points. First, that the limit can go up anytime there is a tax increase. Second, that the spending limit isn’t real because the governor by simple executive order can draw down funds from the rainy day fund. Third, that the measure is deceptive because it is tied to a two-year extension in tax increases, which was not revealed in the ballot argument.
The Prop 1A opponents certainly have a legitimate gripe with the last point. The spending limit measure comes with a cost, which should be spelled out to voters. The legislators who controlled the ballot argument process did not do that. Once the cost is expressed, however, then the question should be asked of the voters: Is what they are getting in a spending limit worth the price? In an earlier article, I laid out reasons why finally getting a spending limit is important to the fiscal sanity of the state.
However, the spending limit itself is not phony. Opponents are incorrect in charging the governor can undo the limit by fiat. And, like talking about the spending limit without discussing the tax extension, stating that the limit can be raised with a tax increase doesn’t tell the whole story.
Bond Sale An Early Test for Budget Reforms
Today, state treasurer Bill Lockyer will begin offering $4 billion worth of California general obligation bonds for purchase by California citizens. On Wednesday the bond sale will open for institutional investors. If successful, the bonds will initially back a $500 million payment for infrastructure improvements. The bond sale could give an early indication on how some of the budget reform measures, including one on the May Special Election ballot, are being considered by both investors and California taxpayers.
The bonds are being offered at a time when the Wall Street ratings agencies are taking a sour look at California’s fiscal health. Last week, the Fitch Ratings service downgraded California’s general obligation bond rating from A+ to A, which now ranks the lowest of all 50 states. Standard and Poors Rating Services had knocked down the state’s bond rating to A in February.
The President and the Governor
Okay, help me understand the political happenings in Los Angeles yesterday when the president came to town and was greeted by the governor at a town hall meeting.
President Obama spoke positively about the initiatives supported by Governor Schwarzenegger in California’s May special election. The main initiative creates a spending limit. So the president is praising the idea of a spending limit at the time he is offering record setting trillion dollar budgets and enormous spending packages through his stimulus program.
At the same time, Governor Schwarzenegger heaped warm praise on the president and his handling of the economy. Part of the president’s economic package includes tax cuts for many Americans. Governor Schwarzenegger’s recently passed budget included tax increases for all Californians.
I guess that’s why they call it political science. You need some scientific formula to figure all this out.