Fox And Hounds Blog

How Public Policy Can Help Restore State’s Fiscal Health

Allan Zaremberg — Fri, 21 Nov 2008 12:11:57 -0500

With the California economy contracting and the state budget deficit increasing, the Governor has appropriately called for swift and decisive action. Our policy leaders must carefully examine which program reductions and which revenue-raising proposals hurt our economic recovery, and what new measures will stimulate productivity, employment and the creation of wealth for all Californians.

The California Chamber of Commerce has recently commented on some of the proposed tax increases, but our state's fiscal health will never improve without a strong economy.

While the recession is global in reach, state public policy can make material improvements for California and, importantly, have an impact on how swiftly and strongly we will recover from this slowdown.

Car Tax Should be No More than 1%

Joel Fox — Fri, 21 Nov 2008 11:51:49 -0500

Talk in Sacramento is that a deal on the budget deficit has advanced along these lines: Return the vehicle license fee (the car tax) to the former level of 2% from the current tax on a car's value of two-thirds of 1% and put a population/inflation spending cap on the ballot.

Since the tax goes up before the voters have a chance to vote on the spending cap (probably in June; perhaps March) there is a risk that taxes will be increased but spending will not be capped. Spending interests will surely try to defeat a spending cap measure.

To off set this problem, any tax increase proposed as part of the budget solution should carry a sunset provision in case the spending cap fails at the polls. The sunset could occur at an agreed upon set time following the spending cap election.

Revehen Hits the Nail on the Head

Joe Mathews — Fri, 21 Nov 2008 11:48:26 -0500

Once in a while, I receive a message that hits me like a splash of cold water. And suddenly something complex becomes much clearer. For me, that message came via an email from an old family friend, the Rev. Verne Henderson. The complex thing was the country's economic crisis.

Revehen, as he's long been known, has spent a lot of time thinking about ethics, as a pastor, professor, and as a management consultant. He lives back in Boston these days. He's among the wisest and most thoughtful people I know.

Waxman In; Dingell Out

David S. White — Fri, 21 Nov 2008 11:46:38 -0500

In the exciting game of Musical Chairs starting in Washington with the changing of the guard from the outgoing to the soon incoming administration, there was a major development. Rep. Waxman is in at the helm of the hugely powerful House Committee on Energy and Commerce, and, after nearly 28-years, Rep. Dingell, buddy pal of the Big Three US Automakers, is out.

Can the feds bailout California?

Loren Kaye — Thu, 20 Nov 2008 11:52:44 -0500

Speaker Bass has taken the position that the Legislature has already made $10 to $12 billion in cuts over the past several years, and enough is enough. Therefore, her preference in addressing the budget deficit is "I want to do 50 percent revenue and 50 percent from the federal government." This is an understandable position from a Democratic Speaker, but is it practical? After all, with a twenty-month budget deficit pegged by the Legislative Analyst at $27.8 billion, could we expect Washington to deliver $13 billion or so next year just to California?

Life Imitating Art

Patrick Dorinson — Thu, 20 Nov 2008 11:42:21 -0500

Does anybody remember the 1993 movie "Dave"? It was a nice little movie starring Kevin Kline about a philandering President who has a stroke and goes into a coma while he is "in flagrante delicato" with a mistress. (Gee, I wonder who the model was for that character.)

Dave runs a small Washington D.C. employment agency where he helps those who need a job, sometimes even giving them money from his own pocket to help them get by. He bears a striking resemblance to the comatose President, and he is enlisted to "fill-in" for the President at the behest of a deviously evil White House Chief of Staff and Press Secretary.

Dave begins to take the job seriously, and when he tries to fund a homeless program that the Chief of Staff wants cut, he decides to call his nerdy accountant Murray, played by Charles Grodin, to come to the White House and help him look for savings in the Federal Budget so he can restore the funding.

The following is an exchange is between Dave and Murray. After the script excerpt I will tell you what this all has to do with the current mess in Washington and closer to home in Sacramento.

Lock ‘em in a Room

Joel Fox — Thu, 20 Nov 2008 11:29:13 -0500

Little progress seems to be made on the state's budget fiasco during the special session called by the governor. Now we have a new report from Beacon Economics, commissioned by California Forward, that fiscal matters are worse than we thought. The report says we are at the edge of a "fiscal cliff."

And, during this dire crisis where are some of our elected representatives? Wandering on "fact-finding" trips all over the globe.

The San Francisco Chronicle reported about two dozen lawmakers are traveling to places like India, China, and Hawaii. You can find a list of the wandering members in the Chronicle article.

Study Warns about Negative Effects of a Split Roll

Joel Fox — Wed, 19 Nov 2008 13:21:59 -0500

Sacramento Bee columnist Dan Walters today raised the question whether a split roll property tax increase will be considered to increase tax revenues. The split roll refers to the fact that all property is taxed the same under Proposition 13 (as it was before Proposition 13, by the way) but the roll could be split between business and residential property by putting different rules and thus a heavier tax burden on business property.

Walters points out that critics of Prop 13 have long claimed that business gets a break under Proposition 13. The theory goes business property changes hands less frequently than residential property, therefore is re-assessed less frequently and pays proportionately less.

A Beautiful Mess

Scott Harris — Wed, 19 Nov 2008 13:17:59 -0500

The biggest selling point of tyranny is its efficiency. Punishing dissent with death has a way of cutting back on all those nasty protests and boycotts. Freedom, on the other hand, is a messy business. The aftermath of the November 4th election - and specifically the reaction to the passing of Prop 8 in California (Constitutional amendment banning same-sex marriage) - highlights the beauty and the challenges of our system.

California is a strange and wonderful place. We are a mixture of a republic and a democracy, a marvelously forward-thinking and liberal state that at the same time repeatedly passes conservative ballot initiatives. We fight hard to elect our representatives in Sacramento and work equally hard to circumvent them with a growing number of ballot initiatives. We are governed by a mixture of often conflicting local, state and federal laws, ballot propositions and initiatives, court rulings, appeals and reversals.

This Bail Out Needs a Bail Out

David S. White — Wed, 19 Nov 2008 13:07:52 -0500

We are hearing a fair share of reversals of position lately from federal government officials administering the Bail Out program we now so inelegantly call TARP - Troubled Assets Relief Program, like we could simply throw a big tarpaulin over the whole mess and be done with it. Among other things, we now have an Op Ed piece by Treasury Secretary Paulsen in the November 18 NYT (‘Fighting the Financial Crisis, One Challenge at a Time') and various testimony before Congress about what in the world is going on with all that money Congress appropriated during the hair-on-fire emergency mindset of last September.