Author: Loren Kaye

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.

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.

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.

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.

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.

State Senate Democrats have introduced legislation ordering every state agency to:

(a) Review all regulations adopted by or applying to
the agency,

(b) Identify any regulations that are duplicative,
overlapping, inconsistent, or out of date, and

(c) Amend or repeal regulations to eliminate
duplication or inconsistencies.

About time, right?

Given the depth of California’s economic slump and
urgency to improve our competitiveness, we can hope that this effort might lead
to a serious overhaul of existing regulations. But based on past experience, it
will take much more than passing a bill to accomplish this objective.

On several occasions I’ve made the case that the Legislature
might propose a ballot measure to increase taxes without needing a two-thirds
vote to place the matter on the ballot. The tool is a little-known and rarely-used constitutional provision
allowing the Legislature to amend an existing initiative statute by a
subsequent statute placed on the ballot for voter approval. These statutes can
reach the ballot after approval by a simple majority vote of the Legislature
and the Governor’s signature.

While some experts have dismissed this notion, it is
apparently gaining some initial credibility where it counts, in the
Legislature. A freshman Democrat from Alameda County, Assemblyman Bob
Wieckowski, has introduced legislation to resurrect the California
inheritance or estate tax, which was abolished by voter initiative in 1982. His proposal would use
the majority vote maneuver to place the new estate tax on the next statewide
ballot for voter approval. Legislative Counsel has validated this approach.

Nine-tenths of the way through his eighth state-of-the-state address, Gov. Brown lightly touched on two issues that may have as much to do with settling this year’s budget debate as the election he dwelled on for the first 1,600 words. In what seemed to be a grudgingly obligatory nod to structural government reform, Brown said,

We must also face the long term challenge of ensuring that our public pensions are fair to both taxpayers and workers alike. Finally, at a time when more than two million Californians are out of work, we must search out and strip away any accumulated burdens or unreasonable regulations that stand in the way of investment and job creation.

Media reports and commentary have appropriately focused on Brown’s insistence on a statewide special election on his tax proposals and the generally negative Republican response. But was this deeply-buried shout-out to issues that embody government failure and inefficiency the start of a productive message to Republicans, and ultimately to voters?

President Obama and Senate leader Darryl Steinberg have each floated reform of
the government regulatory process as key elements of economic recovery. They’re
right. But for California now comes the hard part: putting meat on the bones of
an important but flexible political talking point.

The good news for policy makers is that the state’s
Little Hoover Commission, a bipartisan citizen panel appointed by the Governor
and legislative leaders (and to which I was recently given the honor of a
reappointment), is in the midst of a comprehensive study on how the
state can improve its regulation approval process. Spurred by a bipartisan
request from Assemblyman Felipe Fuentes and Senator Bob Dutton, the Commission
is examining, in its words, an: