Will a “no” vote extend the taxes?
Governor Brown and Speaker Perez are floating the notion of legislative
approval of tax extensions, to be "ratified" by the people at a later election.
This raises an interesting question – how would you present the question?
Remember, this is not a plebiscite, it’s a proposed
constitutional amendment.
The most straightforward approach would be to propose
to continue the extension of the taxes for however many years is agreed upon.
In that case, a "yes" vote continues the taxes while a "no" vote brings them to
an end. As a bonus, any related constitutional changes, such as a spending cap,
could be included in the measure. The disadvantage, as any political consultant
would attest, is that it is more difficult to obtain a "yes" vote from voters
than a "no" vote.
More fun with Prop 25 loopholes
Last week I recounted how legislators could still get paid
even if there is no budget in place by the beginning of the fiscal year in
July, in apparent contravention of the spirit of Proposition 25.
Today comes the story of how the Legislature has
passed with a majority vote and the Governor has signed substantive laws that
take effect immediately to implement the budget – but without a budget having
been presented to the Governor for his signature. This is probably legal, but
in this case again violates the spirit of Proposition 25.
All of this is permitted by a loophole in the "On-Time
Budget Act." The measure lowered the legislative vote requirement to pass a
budget from a two-thirds to simple majority. It also reduced the vote threshold
for "other bills providing for appropriations related to the budget bill."
These are commonly understood to mean substantive changes in the law necessary
to implement the state budget, but are not by its terms legally limited to
that. The only limitation in Prop 25 is that these bills must be "identified as
related to the budget in the budget bill passed by the Legislature."
Pressure is off to solve state budget deficit
That didn’t take long. The bayonet in last November’s
Proposition 25 to cut Legislators’ pay in the
event of a late budget has been quietly re-sheathed. While proponents had insisted the measure "holds legislators
accountable for late budgets (and) ends budget gridlock," it is conceivable
that the budget standoff could continue well into the summer without any
consequence to lawmakers.
How could this be? Well, as proponents said at the
time, just read the initiative.
"…in
any year in which the budget bill is not passed by the Legislature by midnight
on June 15, there shall be no appropriation from the current budget or future
budget to pay any salary or reimbursement for travel or living expenses for
Members of the Legislature…"
The key phrase is, "not passed by the Legislature."
Note that the Constitution does not require that the bill be enacted, or be
signed by the Governor, or even presented to the Governor for his
consideration.
It’s April and the pork is on the grill
Recession? Check. Record state budget deficit? Check. More spending on favored special interests? Unchecked!
Like water rising to its own level, legislative Democrats find a way to spend money on new programs. Even as the budget deficit tops $15 billion, the Legislature passed SB 1 in the first special session, which appropriates $8 million a year in utility ratepayer charges to provide career education subsidies for “clean technology and renewable energy job training” programs. The money would be used by schools to set up Partnership Academies to train prospective workers in, among other occupations, energy audits, retrofitting and weatherization activities, and installing energy-efficient household appliances, windows, doors, insulation, lighting and water and energy conservation technologies.
What’s Plan B for the budget?
With a June election to extend the 2009 tax increases
now officially kaput, and legislative leaders and the Governor
committing to not place the measure on a June ballot by a majority vote, state leaders are entering
uncharted territory in their quest to resolve California’s fiscal crisis.
What are the fallback options to address another $15
billion or more in budget solutions by the new Prop 25 deadline, which is June
15 or legislative pay is cut off?
Here are my thoughts on a Plan B, and for good
measure Plans C and D:
Plan B: A gimmicky or worse budget approved by the
Legislature by June 15. Legislative Democrats have created the specter of an "all cuts"
budget, even prevailing on the Legislative Analyst to prepare a list of cuts to illustrate the shape
and extent of another $13.5 billion in spending cuts. But an all-cuts budget is
either a myth or a euphemism. More likely will be a revised plan that avoids
most of the worst cuts, whacks some earlier untouched areas, like K-14
education and corrections, but that papers over the gap using tried and true
methods of the past decade.
New majority vote tax threat
How frantic are
Democrats in the Legislature to place a tax measure on a special election
ballot? If negotiations with legislative Republicans break down for good,
Democrats might just be desperate enough to assert new legal authority that
would bypass existing constitutional protections.
As I’ve noted earlier, the Constitution grants the
Legislature three mechanisms by which they can place a question before the
voters: proposing a general obligation bond or constitutional amendment,
each of which requires a two-thirds vote of the Legislature, or proposing an
amendment to a statute that was approved by voter initiative, which requires a
simple majority vote of the Legislature. The latter two mechanisms could be
used to present to the voters the tax extension question. The Governor has
proposed and is still supporting a constitutional amendment, ACA 2 in the first extraordinary session.
However, legal scholars have construed the initiative amendment authority to be
quite narrow, and Democrats in the Legislature seem to be backing away from
that route to the ballot.
Strong but uneven job growth in California last month
Nearly 100,000 private sector jobs were created in California last month, the best month-over-month jobs performance of the California economy in years. Most sectors showed strength, especially construction, information, business services and tourism. Only two sectors showed minor declines – state government and retail trade.
California’s unemployment rate, from a different survey and seasonally adjusted, fell from 12.4% to 12.2% in February. But this change should be viewed cautiously. Most of the drop in the unemployment rate was attributable to a drop in the labor force, and only to a lesser extent to an increase in employment. Growth in the labor force over the next several years, both from natural increase and from discouraged workers returning, will further dampen the decrease in overall unemployment rates.
However, regional differences still strongly characterize California. On a seasonally unadjusted basis coastal counties’ aggregate unemployment rate was 11.5% while inland counties’ rate was 15.7%. Coastal counties saw their aggregate rate drop by nearly a half percentage point last month, while inland counties’ aggregate unemployment rate fell by only two-tenths of a percentage point.
Pension reform begins with the current workforce
While Governor Brown
was acknowledging yesterday that pension reform is a
possible element of a budget solution, a bipartisan, independent state
commission released a report charting a bold path for
pension reforms that would create both short- and long-term budget savings.
The Little Hoover
Commission, of which I’m a member, unanimously adopted Public Pensions for
Retirement Security, calling for Legislative action to establish the legal
authority to allow state and local governments to freeze pension benefits for
current workers, and allowing those workers to accrue future benefits under
more sustainable pension plans.
After ten months of
public hearings and background research, Commissioners concluded that
California’s pension crisis cannot be solved without addressing the obligations
of current employees, many of whom have accrued generous benefits augmented
during the go-go years of the dot.com and real estate bubbles.
Pension reform begins with the current workforce
While Governor Brown
was acknowledging yesterday that pension reform is a
possible element of a budget solution, a bipartisan, independent state
commission released a report charting a bold path for
pension reforms that would create both short- and long-term budget savings.
The Little Hoover
Commission, of which I’m a member, unanimously adopted Public Pensions for
Retirement Security, calling for Legislative action to establish the legal
authority to allow state and local governments to freeze pension benefits for
current workers, and allowing those workers to accrue future benefits under
more sustainable pension plans.
After ten months of
public hearings and background research, Commissioners concluded that
California’s pension crisis cannot be solved without addressing the obligations
of current employees, many of whom have accrued generous benefits augmented
during the go-go years of the dot.com and real estate bubbles.
On Wisconsin
What are they fighting about in
Wisconsin, and what might this mean for California?
The battle in Badger State is on
many levels, but the closer you look, the less it seems to be about union
members’ benefits and the more it seems to be about union leaders’ ability to
mobilize organizational and political power.
Wisconsin public employees
traditionally have had generous benefits. Their health care contributions have
been about 5.6 percent of total premiums and they contribute only 0.2 percent
of their monthly pay to their pension plans.
Governor Scott Walker is proposing
to more than double state and school employee health care contributions to
about 12.6 percent of premiums, but that still compares favorably to, say,
California. According to the California Health Care Foundation, Californians
paid 27 percent of the cost of premiums in 2010 for family coverage. California state employees pay about 20 percent
of their health care premiums.