Author: Loren Kaye

The California jobs picture remains discouraging. Data released on Friday showed that the unemployment rate for December remained at 12.4%, hovering around this same level for about five months. But nearly 40,000 jobs were lost last month, bringing California’s overall employment to a level not seen in more than a decade. California has shed more than a million jobs since the beginning of the recession, losing nearly seven percent of its employment base.

Job losses for this recession are still outpacing the last two California downturns, and we probably have not yet hit bottom. We’re two years into this recession: recovery from the 1991 defense realignment recession didn’t begin until the 34th month; job losses from the 1990 recession after the tech bubble didn’t bottom out until 28 months into the downturn.

A state Assembly committee on Tuesday approved legislation to legalize the possession, sale or cultivation of marijuana by adults. (The bill later died when a separate committee refused to hear the bill.) A ballot measure is circulating to accomplish the same goal.

But just last June, the state’s official risk assessment agency, the Office of Environmental Health Hazard Assessment, officially added marijuana smoke to the “Proposition 65 list,” determining that “marijuana smoke was clearly shown, through scientifically valid testing according to generally accepted principles, to cause cancer.”

Therefore, marijuana smoke has been placed in the same category as second-hand tobacco smoke.

So which is it, people? Legalize and tax it? Or label it and banish the stuff from polite society?

The White House reports that federal stimulus funds have saved or created 110,219 jobs in California. This figure is as reported by fund recipients, and has been the subject of some controversy about its accuracy and meaning. Put in context, California has lost more than a million jobs since the start of the recession here in the summer of 2007.

But no matter how the job accounting is resolved, it’s clear which sector is being stimulated:

Much of the controversy over the movement to create a constitutional convention for California surrounded the make-up of the convention: who would comprise the convention delegates and how they would be selected. The Constitution today provides that “Delegates to a constitutional convention shall be voters elected from districts as nearly equal in population as may be practicable.”

Seeking to avoid a panic over direct elections for delegates, proponents announced an excruciatingly detailed process for selecting 465 delegates, involving a random jury-pool selection for about half the members and a highly-constrained selection by local elected officials for the other half. In all, about 3,300 words are consumed detailing delegate qualifications and the selection process. Take that, special interests!

But if you’re looking for a power center in this meta-process, skip all the delegate selection arcana, and focus on the powers, duties and responsibilities of the quaintly-named “Clerk.”

“Reform” is the byword in Sacramento and the meme on the blogs. Constitutional Convention. California Forward. And we’re about to be awash in proposed ballot initiatives for November 2010. Perhaps in response to the former, or in anticipation of the latter, the California Legislature is getting into the act.

Speaker Karen Bass and Senate President Pro Tem Darrell Steinberg announced the creation of a special Legislative Committee on Reform to “look at ways to make the Legislature more transparent and effective and make state government more efficient and customer friendly.” The committees, chaired by Assemblyman Mike Feuer and Senator Mark DeSaulnier, are having their inaugural meeting today.

Bravo. If the Legislature can take a deep breath, reach across the aisle, and adopt substantive reforms, then maybe they can begin to climb out of the hole, instead of continuing to dig. In that spirit, here is my prescription for some easy, short-term successes – two principles, and three substantive proposals.

Since the state’s employment peak in July, 2007, California has lost over a million jobs. Don’t lose sight of that grim statistic as we hear some qualified, “it’s-getting-worse-more-slowly-and-maybe-we’re-seeing-the-bottom-down-there-somewhere” news.

California’s latest unemployment rate, released last Friday, remained steady this month at 12.2%. Part of the reason is that the actual number of unemployed blipped down, and the labor force also shrank. Month-to-month changes should be viewed with caution: California’s unemployment rate is double what it was just 20 months ago, and is the fourth-highest in the country, behind Michigan, Nevada and Rhode Island. Inland rural California is suffering even worse; its 14.7% unemployment would be second-worst nationally.

Overall employment dropped again this month, but only by a hope-stirring 39,000 jobs. (This is about half the average monthly job loss from last November through June.) Major sectoral losses were in construction, information, manufacturing (durables), and private education. Job losses are also beginning to appear in the government sector. There may be some initial good news in some low wage industries, such as retail trade and tourism, but again, one-month changes should be viewed skeptically.

With little drama, but much fanfare, the 21st Century Tax Commission’s report was released yesterday. The panel’s recommendations will receive a pro forma hearing by the Legislature; and in the fullness of time, like many initially controversial ideas that challenge the status quo, they may have a salutary influence on California tax policy.

But the take-away from the Commission’s effort in the short term is less elevating, because it leaves Californians with the impression that the tax system is anachronistic, unfair and broken. That is simply not the case. The Commission purports to “update and improve California’s out-dated revenue system and make it more reflective of our state’s economy” and to “get the state back on track with a more modern, stable and fair tax system to better serve all Californians.” But the Commission failed to make its case that the 70-year-old California tax system is so broken as to justify upending it.

The Commission provides a useful synopsis of the growth and change of the California economy:

Gerald Parsky is about to engineer one of the great leaps of faith in modern California policy making. The chairman of the Commission on the 21st Century Economy is assembling bipartisan support for a proposal to radically reshape a state tax system that has been more or less in the same form for nearly 70 years.

This makeover is sailing on the wings of good intentions, on an imperative for action, and on compromise – but most assuredly not on data or analysis. Mr. Parsky knows this, which is why the recommendations to the Legislature and Governor are for "consideration" and for further study, as opposed to outright implementation. This serious panel has brought forth the next Big Thing, but is gingerly – almost sheepishly – nudging it to the world of practical politics.

If, as expected, Mr. Parsky assembles a sufficient majority of Commissioners to support the plan, it will probably look like this:

·       Create a new Business Net Receipts Tax (BNRT). The tax base is a business’ gross receipts from all sources less purchases from all other businesses.

Despite the high expectations set for the Commission on the 21st Century Economy (a.k.a. the “Tax Commission”), it is more likely than not that their recommendations for tax changes will be relatively modest. The Commission meets this Thursday and possibly again the following Monday, September 14.

How can modesty prevail when the stakes are so high and the key proposals surfaced in the Commission are so far-reaching? For starters, the Commission comprises serious scholars, business leaders and policy experts whose reputations enhance the Commission – not the other way around. These Commissioners did not build their resumes by endorsing half-baked proposals and were not selected for their talents at horse trading.

But perhaps more revealing is the growing resistance by Commissioners to addressing the state’s budget volatility through the tax system. Remember: fixing volatility was the ostensible reason the Commission was created in the first place. For example, Legislative appointees have opined that: