Flim and Flam
Only hours after being sent a package of tax increase bills by the Legislature, Governor Arnold Schwarzenegger held a news conference yesterday to announce that he would reject the Democrats’ flim-flam. The flim was the unlawful tax increases. The flam was the parody called “economic stimulus.”
The Governor said the package “fell short on every single level,” and in particular called out the obvious lack of reforms that would aid the state in recovering from the economic recession. He indicated that the package did not include economic stimulus provisions that were needed, including relaxed state workplace rules and streamlined environmental laws to expedite public works projects. The Governor’s summary of the Legislative economic package: “It actually doesn’t do anything and it makes it more difficult, actually, to do certain projects.”
The Governor also indicated his displeasure with raising taxes on working families during an economic downturn. In fact, the tax increases approved by the Legislature are a slap in the face to voters, who (1) rejected Proposition 56 in 2004, which would have eliminated the two-thirds vote requirement for state tax increases, and (2) rejected Proposition 87 in 2006, which would have imposed an oil severance tax similar to the one approved by the Legislature yesterday.
The Governor appropriately called the Legislature on its attempted subterfuge. Now it’s back to the negotiating table to navigate a solution that keeps faith with voters, the Consitution and the fragile California economy.
The loser in the Budget Crisis: The Ballot Initiative
Here’s one significant loser in the current California budget crisis: the power of the ballot initiative.
California is the only state where, under the constitution, a law or amendment enacted by ballot initiative may not be altered without another vote of the people. That gives the state the most powerful initiative process in the world. But it turns out that an international financial crisis, coupled with a anticipated budget shortfall of more than $40 billion, can put a crimp in that power.
In their desperation, legislators of both parties are attacking initiative power. This week’s proposal by Democratic legislative leaders, Senate President Pro Tem Darrell Steinberg and Assembly Speaker Karen Bass, is not merely an attempt to avoid the state’s two-thirds requirement for raising taxes. It really may set up an end run around Prop 13, which established that two-thirds requirement. If the gambit works (and it says here that it makes good political sense), the legislation could be challenged in court. And it’s quite possible that a judge could create a loophole around Prop 13’s two-thirds rule.
One Silver Lining on the State Budget Shines Through, With Thanks to the Governor
With all of the talk of political dysfunction and Constitutional Conventions amidst a gathering budget storm and deepening recession, there is at least one good deed from 2008 for which Governor Schwarzenegger should be applauded – with one stroke of a pen, he stopped a multi-million dollar backdoor raid on the General Fund and local government revenues in September when he vetoed SB 974, the Container Tax.
For those unfamiliar with the current state of California’s trade economy, here are a few statistics that may help clarify the current challenges we face – and the "robbing Peter to pay Paul" raid on the General Fund that would have resulted to the current year budget if the latest container tax had been implemented.
Leno to Act as Prime Mover
Hey, did you hear the one about Jay Leno moving to prime time?
It’s probably a good move. That way, Leno’s audience can actually watch half the show before nodding off. Ba-dum-dum.
Of course, to make room, NBC will have to find someplace to put a lot of its prime time programs. Shouldn’t be a problem, though. Forest Lawn is nearby.
But seriously, folks … NBC’s announcement last week to move Leno to prime time does have implications for L.A.’s economy. That’s because the army of actors and wannabe actors who live in and around Los Angeles will have fewer opportunities for work.
He Made off with $50 Billion: How Did Madoff Do That?
He was once the President of NASDAQ. The list of his clients is an ultra-world class cross section of truly impressive charities, banks, entertainment and other celebrities, university endowments and more (See the NYT website). The SEC even examined his books not long ago and gave him a financial clean bill of health.
How then did 70-year old Bernard L. Madoff, Pillar of Wall Street respectability, make off with $50 Billion? What does this mean for the already pitifully low level of public confidence in our thoroughly beaten-up financial system? And, for God’s sake, why on earth did he do it?
Bernard L. Madoff Investment Securities slipped passed the event horizon and disappeared into a financial Black Hole last week when the FBI turned up to arrest Madoff and seize everything that wasn’t nailed down. Madoff apparently kept several sets of books and various phoney documents and had a long history of lying to regulators about what he was doing.