The California Chamber Releases its List of Job Killer Bills

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

Here we go again….more bills listed by the California Chamber of Commerce that could damage economic recovery and cause the loss of jobs in California. For a number of years, the CalChamber has listed bills that Chamber officials believe will restrict business and force job loss. The list of this year’s bills can be found here

The Chamber cited 33 bills in six categories. The categories are Barriers to Affordable Housing; Costly Workplace Mandates; Economic Development Barriers; Expensive, Unnecessary  Regulatory Burdens; Fuel Price Increases; and Inflated Liability Costs.

Why press for more burdens when jobs are needed to boost the economy and overcome the government deficit? But it happens every year. The CalChamber has been an effective agent in fighting to maintain job growth in California by bringing attention to these job killer bills.

Fortunately,  Arnold Schwarzenegger has been a good goalie in the governor’s office, blocking many of the job killer bills that reach his desk. As of last year, the Chamber had noted 108 Job Killer bills in the Schwarzenegger years. Thirty reached the governor’s desk and he vetoed 26 of them.

Let’s hope the governor continues to be a sharp goalie and protect California from losing more jobs during these difficult economic times.

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Standing in the Schoolhouse Doorway

Patrick Dorinson
Host of The Cowboy Libertarian Radio Talk Show in Sacramento

The budget theater continues on the grounds of the State Capitol with high school students protesting the Governor’s budget cuts and being exhorted on by the Superintendent of Schools Jack O’Connell. Watching this spectacle two things came to mind.

First, why weren’t these kids in school? And second, although we have been going through this exercise about education spending and proposed cuts during every budget season for I don’t know how many years, the problem never seems to get resolved. We keep spending more money with not much to show for it in turning out the kind of educated workforce our economy needs now and into the future. Although California kids should rank high nationally in how to skip school and protest since they get a lot of practice.

Maybe student performance is not strictly a money problem. And maybe we need to look at the public schools and introduce innovations that are paying dividends in other states like vouchers and school choice.

I can hear the California Teachers Association screaming now that this is a Republican plan to destroy the public schools and attack the teachers. But that is just the talk of a union that likes the current system,  is afraid of competition and fears the possibility that it could be successful.

In 2003, President Bush signed into law the D.C Opportunity Scholarship Program  that provides school vouchers for 2,000 children, most of whom came from disadvantaged backgrounds. It began as a 5-year pilot program, narrowly passed by a Republican Congress and has been threatened every year since, but the parents seem to like it. Every year, applications for the program have tripled and it is changing lives.

But most Democrats in Congress, including Senator Barbara Boxer and Speaker Nancy Pelosi, sided with their patrons in the Teacher’s unions. Senator Dianne Feinstein, however, exhibited real political courage and supported the plan. Scroll down in this statement and see what she said on the floor of the U.S. Senate in January 2004 regarding the D.C School Choice program

In 1957, Arkansas Governor Orval Faubus stood in the schoolhouse doorway of Little Rock’s Central High School and denied entry to African American students. President Eisenhower sent troops to ensure that those students could get the education they deserved. See what one of the beneficiaries of Eisenhower’s action has said by clicking here.

I will leave you with two questions.

Who is standing in the schoolhouse doorway now?

And for Senator Feinstein, if it is good enough for 2,000 school children of Washington D.C. who were trapped in failing schools, how about the thousands of schoolchildren of East L.A. trapped in failing schools?

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Reading Arnold’s Mind

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

People have been asking your blogger the following question: what’s the difference between working at the LA Times (I quit earlier this year) and being a fellow at New America? The answer is easy: technology. Because New America is a think tank, I have access to the Mind Reading Machine (MRM), a little-known device. This weekend, I got to use the machine for the time, and I decided to point it at the brain of Gov. Arnold Schwarzenegger. Last week was a big one for him and for California: a revised budget proposal that was widely panned, his renewed push to get his budget reform plan on the November ballot, and a state Supreme Court ruling permitting gay couples to marry in the state.

Here’s what the Mind Reading Machine spit up:

"You know when something good happens at the wrong time? I can’t admit this to anyone, but that’s how I think about this gay marriage ruling.

I’ve got no problem with gay marriage, of course, but up til now I’ve done a great job of avoiding the issue politically. Many Republican voters didn’t know my private views before the Supreme Court did its thing Thursday and I had to issue a statement saying I would uphold the court’s decision. I had everyone confused because  I came down hard on that big forehead [MRM EDITOR’S NOTE: forehead is an all-purpose insult favored by the governor], the mayor of San Francisco, for marrying those folks without any legal authority. If you look at what I said, I condemned him not for the marriages but for making up the law as he went along.

Of course, the right-wing knuckledraggers thought I was with them on the issue. What a bunch of foreheads! Don’t they know I spent my career in bodybuilding and Hollywood? Who do you think was buying those pictures of me in Speedos? I’ve gotten where I am today because of gay people. By the way, I’ve gotta remember to tell Clay to call my tailor to order 50 new suits for all the weddings I’m going to have to attend this summer. It’ll be a miracle if I have any time to negotiate the budget.

And the budget — specifically my budget reform proposal — is the real casualty of this gay marriage ruling. I’ve been working for months to try to set up my budget reform proposal (it’s got a fantastic rainy day fund) so voters will pass it in November. It’s so obvious we need to do it, but I’ve never been able to get the public to focus on the details and urgency of this. Budget reform is a complicated, technical subject full of subtleties. When I try to sell my proposal, it reminds me why I never made art films. I failed twice before on budget reform — right when I got into office, and with the unsuccessful Prop. 76 in the 2005 special election, which lost more money than Last Action Hero. Losing sucks.

It was already going to be difficult for me to win on budget reform before the gay marriage ruling. All my polling guys — the one my aides know about, and then all other guys I deal with directly and don’t tell them about — tell me I’m losing popularity. Getting enough attention to pass budget reform in November was already tough with all the voters focused on the presidential race and my friend McCain and that fellow who Maria likes and who Bloomberg says is cool. Forget the name– from Chicago, thinks he’s the Second Coming. So budget reform was a tough sell in November. It’s like a movie opening. You can have two hits open on the same weekend if you’re telling different stories. The presidential campaign was the national story. And my California counter-programming was going to be my budget reform thing. It would have been great, with messaging along the lines of me saving the world in crisis. You know, the usual. I had it set up beautifully, too. My budget reform proposal would give people the choice. Do my budget reform, or the sales tax goes up. That would get everyone’s attention.

But this gay marriage thing could screw all that up. That’s because the knuckledraggers got the signatures on an initiative for November to put some nonsense in the state constitution that marriage is between a man and a woman. Don’t they know marriage is between a Democrat and a Republican? Anyway, now that the court has made gay marriage legal, this initiative, which would undo the decision, is going to get all the attention that should have gone to my budget reform. And Republican voters I need to support budget reform are going to be mad at me because I’m against the anti-gay marriage initiative. By the way, the initiative is crazy. If it passed, half of Hollywood — the half that hasn’t already taken their productions out of state because of those bribes the other states are offering — will leave. The only Hollywood folks left in California will be me and Clint, and we’ll have to spend our dotage making buddy comedies full of bladder control jokes in abandoned sound stages in the Valley.

Anyway, where was I? Oh, yeah. The press didn’t want to write about budget reform, but they would have had to do if it were the big thing on the ballot. But now the gay marriage initiative will get all the attention. And no one will talk about budget reform, and if no one knows what the proposal is, they’re not going to vote for it. So the gay marriage initiative is going to get in the way of my last best chance for budget reform (not to mentioning reapportionment reform).  If I lose this time, I’m the lamest of lame ducks, and all those columnists at the Bee whose last names start with the letter W will write that I’m the biggest failure since Culbert Olson.

So those judges gave the right to marry to a lot of folks, which is nice. But they really screwed me."

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California’s Budget and the Presidential Election

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

Could a surprise flood of money appear in the California treasury due to the presidential campaign? It’s possible…although probably too late for this year’s budget even if the budget scrum rolls on through the summer.

An investment advisor in the Wall Street Journal looks into his crystal ball to determine what investors should do as they watch the battle for the White House. One key tax rate he suggests investors watch is the capital-gains tax rate.

Capital gains taxes have led to bulging California budgets in the past. The boom of 2000 was in great part due to high tech entrepreneurs cashing in on their capital gains.

Another opportune time to cash in on capital gains might be at hand again because of the presidential contest. While Republican candidate John McCain says he wants to leave the present capital gains rate of 15% alone, both Democratic candidates Barack Obama and Hillary Clinton favor raising the capital gains tax rate.

With pundits claiming the presidency could fall to the Democrats, investors will consider what to do with any major capital gains they have earned. If, as the campaign rolls through the Fall, it appears the Democratic candidate has the upper hand, these investors might begin cashing out.

In California that could bring a temporary windfall. This might seem like a good reason, from a California perspective, to vote for the Democratic candidate. But, if that candidate does become president and raises the capital gains tax rate, future revenues to the treasury may slow to a trickle.

For both the short term and the long term, California should consider a capital gains cut of its own. Capital gains are currently taxed at the taxpayer’s full tax rate. Lowering the capital gains rate could free up some revenue immediately for the strapped California budget. More on that in some future post.

In the meantime, California investors will have to sit back and watch what the feds do.

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How will Court ruling impact Nov. 3 ballot items?

Public Affairs Consultant specializing in Issue Advocacy and Strategic Communications

The CA Supreme Court ruling to legalize same-sex marriages could be just what the GOP ordered. National support for Republican Party leadership ranks only slightly higher than support for measles, and John McCain has not yet succeeded in rallying the religious wing of his party.

But now religious conservatives have a mission and that is to overturn the court’s decision with a state constitutional amendment that will likely qualify for the Nov. 3 ballot. How will those voters (not to mention Democratic constituencies that oppose gay-marriages) impact the other items on the same ballot?

So far, several bonds will be on the Nov. 3 ballot including a $9.95 billion bond to fund a third of the long awaited High Speed Rail system as well as a $990 million bond to fund children’s hospitals. Here in Los Angeles, the community college district has placed a $3.5 billion bond on the Nov. 3 ballot, and LAUSD is considering a bond, too. If L.A.’s MTA board decides to place a half-cent sales tax increase for needed transportation projects on the same ballot, we’re suddenly talking about a lot of tax increases just as the economy is taking its toll on the middle class.

It appears that religious conservatives could have a significant role on Nov. 3 if the gay-marriage ban qualifies for the ballot. They could end up delivering California to John McCain and quashing several bonds that need all the support they can muster for passage.

I will be interested to see how both parties respond to the Court ruling and how the presidential candidates respond to California’s constitutional amendment to undo it.

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Vallejo’s Bankruptcy Shows Us What Is Wrong

Michael Shires
Associate Professor of Public Policy, Pepperdine University

Vallejo is a poster-child for what is wrong in California’s state and local government finance system.  The city of 117,000 in northern California had been flirting with bankruptcy this entire fiscal year, and was finally forced to declare itself bankrupt after months of failed contract negotiations with the city’s two largest employee unions-police and firefighters.

The city was facing a projected $16 million deficit next year on a budget of some $80 million and had already used up its reserves and almost all possible accounting gimmicks just to get to that point.  Even though the city undertook major service cuts last year and this year, there was still no room to accommodate the reduction in revenues that this year’s real estate collapse has brought on.  And it is not just the economy.  How can this be you might ask?

The problem lies in the breakdown of accountability at the local government level.  Basically, because people don’t understand the public finance system and how collective bargaining interacts with it, it is difficult for them to demand responsible budgeting from their public officials.  The complexity and confused meaning of many public finance concepts make it hard for the public to truly understand what is happening within their city’s budget and, as a consequence, makes it hard to know against which standard they should hold their elected officials accountable.

In Vallejo’s case, the city’s budget is dominated by police and fire expenditures which combined total 74 percent of the city budget.  Vallejo has one of the highest salary structures for public safety in the state and an overtime system that has lead to some employees making more than $200,000 in total pay.   With such a generous pay scale, one would expect some significant flexibility when things get tough.  And there has been some on their part as they deferred some already won raises until a later time.

Voters in Vallejo are legitimately concerned.  They see dramatic declines in city service levels in response to changes in the economy at the same time they see the stories of not only some 292 city employees receiving salaries in excess of $100,000, but even a departing employee who receives a paycheck totaling $435,638.   To top it off, this same employee was rehired by the city to be their spokeswoman for the city’s bankruptcy.

Average citizens are asking themselves why their employers don’t print big checks to their employees when they leave the company and the answer is obvious-because it doesn’t make sense.   How and why does this happen in the public sector?   The answer is-because no one is looking closely at what happens.  The system is so confounded and convoluted that few understand the rules, let alone the outcomes.  And lest anyone figure this is just Bay Area hijinks, LA’s employee union have just proposed their solution to the City’s financial problems:  pay them to retire.  The problem is not the unions, but rather the rules that we have allowed to be put into place.  It is time for a common sense review of the ways that our public finance system stacks the deck at the local level.  Vallejo’s troubles are a great laboratory for seeing some of these issues first-hand.

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Yahoo-Microsoft merger could provide a true competitor to Google

Chandra Sharma
Political Communications, Redistricting and New Media Strategist

Billionaire financier Carl Icahn recently launched a proxy battle to oust Yahoo’s board of directors, responsible last month for rejecting a merger deal with Microsoft, in an effort to restart negotiations with the tech giant. Many of those opposed to a Microsoft-Yahoo merger have framed the potential partnership as one that would only benefit Microsoft, whose search technology has struggled since its inception.

Yahoo, however, stands a lot to gain from a partnership with software provider Microsoft, and this becomes apparent when one begins to understand the primary difference between #2-ranked Yahoo and its primary competition, Google. While both companies provide industry-leading search engine technology and other mainstays such as free email systems, they are clearly dissimilar in their primary objectives.

Yahoo, both currently and throughout its history, has been a content provider. From its news and finance service, to games, job listings, sports coverage, etc, the company’s focus is clearly built upon its ability to provide original online media. While Google has the ability to aggregate similar content, none is original – the company instead draws such content from outside sources; Yahoo’s ability to deliver in this field has likely been its saving grace in maintaining its #2 ranking among search providers.

Google, in fact, is not a content provider at all, nor has it ever tried to be. They are, in fact, an applications provider, and thus far are the most successful developer of web-based applications on the Internet. The robust applications backend that Google provides has allowed the once basic search engine to evolve into a powerhouse that many feel is the online equivalent of Microsoft in their ability to develop and promulgate their web services platform.

How would you compete with a company like Google? Enter Yahoo-Microsoft. With Yahoo bringing its search technology and content to the table, two areas in which Microsoft has historically struggled, the tech giant would be free to focus on developing an online applications infrastructure to rival that put forth by Google.

A merger between the two companies, if executed properly, would truly benefit both Microsoft and Yahoo. And inevitably, the competition that the new search megalith would create with Google would benefit consumers as well, as a revitalized Yahoo could once again prove a true competitor to Google, thus forcing both sites to improve the services they provide in an effort to stay ahead.

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A Nanny State? Not with this budget!

Political Consultant specializing in issues management and strategic research

Reporters, academics, lawmakers, and other great thinkers are debating the most complex elements of Governor Schwarzenegger’s May Revise, in particular borrowing against the state lottery or increasing the sales tax to help eliminate the budget deficit.

But there are other aspects of the May Revise that will even more immediately impact lives, and we should be talking about that too.

Under the proposed budget, monthly payments to foster families would drop from $530 to $477.  That means that children who already lack a home, a family support system, any sort of constancy, will be devalued once again.

There are already far too few people willing to be foster parents.  This budget proposal tells them – and their would-be foster children – that their well-being is worth even less in a budget crisis.

I drove a savvy foster child to and from a career day event yesterday…even the slickest politician wouldn’t have the nerve to try to convince her that there are simply no other ways to fill the budget shortfall.  And the thousands of foster children who are moved from home to home, school to school wouldn’t believe it anyway.

These kids already know that after being abused, neglected and/or abandoned, they really couldn’t expect to be spared from the budget cuts that must be made.

Let’s tell them this: As soon as they are emancipated from the foster care system at 18 years old – many still without families – they will be eligible to play better, more exciting lottery games. With bigger jackpots!

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Is there a Gay Marriage Stimulus?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

The California Supreme Court has just ruled, 4-3, against California law that bars same-sex marriage. This is a profound moral and personal question for people, and I respect views on both sides. (To put my own bias on the table, my reaction to the ruling was to feel joy for people who may now be able to marry those they love. The right to marry seems to be crucial to any notion of individual freedom).

But moral choices have economic dimensions. And one question the ruling triggered in my mind is economic. I don’t mean to be crass, but could California profit through the legalization of same-sex marriage? Would the state become a draw for gay couples? Would those couples bring more wealth to the state, start more businesses, add to the tax base? Or do they consume services that negate that effect?

Asking economic questions about difficult social issues is not out of bounds. (Think back to the initiative campaign about stem cell research, and the argument that by permitting this research, California would gain economic advantages). It’s also worth noting that, in defending civil unions and domestic partnerships, policymakers have often argued that a ban on such unions or domestic partnerships would hurt businesses in the state or city considering the ban, because companies wouldn’t be able to recruit the best employees, regardless of sexual orientation.

By the same token, I wonder: would California and its businesses gain a unique advantage by being one of the few places that gays and lesbians could marry? I think it would be great to see a serious, hard-number study to find out the answer. (If someone already has done one, please let me know).

And if gay marriage would be good for the California economy, the public needs to hear that argument. It’s highly relevant at a time of budget crisis and recession, and with an initiative campaign this fall to add a ban on same-sex marriage to the state constitution.

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The Deukmejian Gambit

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

The key to Gov. Schwarzenegger’s new budget plan might be
called the Deukmejian Gambit. And throw in some Jerry Brown, too.

A short history….In 1983, Governor George Deukmejian faced a
large deficit, although smaller in proportional terms than the one faced today
by Gov. Schwarzenegger. Deukmejian put forward a plan that included no tax
increases. There were the usual howls and protests. Other ideas were floated,
including—get this one—creating a state lottery to generate funds. A few
years later a state lottery was created and now this governor wants to borrow
against it to raise immediate cash.

Finally, a deal was struck between Deukmejian and the
legislature. A 1-cent sales tax increase would trigger if there was a shortfall
of tax receipts at a certain time.

The gamble was that the economy would improve. Gov.
Schwarzenegger is using the 1-cent sales tax trigger in a slightly different
way. It is a back-up plan to insure revenue will be there if voters reject the
idea of borrowing against the lottery. The sales tax would be in place for up
to three years unless the deficit is erased in shorter time. This governor is
also hoping for a swelling economy to bail out the deficit.

Let’s state clearly that tax increases during economic
downturns will dig us deeper into the hole. Let’s also state that mandates and
automatic spending formulas should be trashed.

Looking at the political realities of what might happen in
this year’s budget debate after all the yelling and saber-rattling, the refusal
to make cuts or to support anything that looks like a tax increase,
Schwarzenegger may have found some ground for compromise.

Why do I think so? He
is proposing no general tax increase in an election year, something even
Democrats will come to appreciate…..however, a promise of a tax increase to
come if things don’t improve….and, the hope that things will improve.

Could the
revenue situation improve in a few months? Maybe. Tax revenue is a bit higher
this April and prognosticators are predicting an upturn in early 2009. Perhaps
it will come earlier. Historically, the sales tax trigger back-up plan worked
for Deukmejian when tax receipts improved as he waited out the crisis and the
trigger was never pulled. Then there is the same human nature that is at work
in the legislature all the time….passing the problem on to the next generation
of lawmakers.


One last thought. How does Jerry Brown figure into this?
Remember, Deukmejian took over from Brown and a budget deficit was left on the
new governor’s doorstep as a sort-of welcoming gift. Deukmejian had to face the
deficit his first few months in office. If the Deukmejian Gambit doesn’t work
for Schwarzenegger as well as it did for Deukmejian himself, and other fixes
are not put in place, the next governor could inherit a real deficit mess —
and that next governor may well be Jerry Brown.

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