The Improbable Marijuana Budget Solution?
Would anybody be surprised to see a state budget deal fashioned on an unlikely possibility?
Let me explain. The budget is a couple of weeks late with no outward sign of completion. The governor and Republicans have insisted on a cuts only budget. The Democrats insist on tax increases along with some borrowing and moving around funds.
Both the Assembly and Senate Democrats have supported an oil severance tax that is estimated to bring in $1-billion. However, this tax plan has no support from the Republicans and probably little from the voters since they defeated a similar proposal at the polls a few years ago.
No Deal on Prop 25
In his column this morning, Los Angeles Times columnist George Skelton offers up a deal to resolve the budget crisis. Skelton says the legislature should give Governor Arnold Schwarzenegger the reforms he demands for public pensions and budget in exchange for the governor’s support for Proposition 25, which would lower the two-thirds vote to majority to pass a budget.
Don’t take the bait, Governor.
I say this as someone who has been quoted by Skelton in the past as seeing a way to a majority vote for the budget. However, Proposition 25 is not it.
I have argued for what I called a “Back to the Future” budget vote compromise. Between 1933 and 1962, California allowed for a majority vote budget if the yearly budget increase did not exceed five percent. A budget that leaped up over five percent required a two-thirds vote.
Coming Soon: A $1-Million A Year Public Employee
So much for that old saw that government employees are being paid less than the rest of us so they deserve better benefits.
The Los Angeles Times revealed in a front-page story that Bell City Manager Robert Rizzo is paid a salary of nearly $800,000 a year. His contract calls for annual increases of 12%. That means his one-year increase in salary next year will be over $94,000.
If he stays with the job – and why wouldn’t he – and the contract doesn’t change, the city manager of a city with a 37,000 population will be making more than a million dollars a year in a couple of years.
Ronald George’s Retirement and Arnold’s Opportunity
No real surprise at this site that California Supreme Court Chief Justice Ronald George decided to hang up his robe. A number of columns here have hinted at the possibility.
In December, Joe Mathews conjectured in his end of the year "office pool predictions" that a number of things might happen this year but listed first was "when Chief Justice Ronald M. George unexpectedly retires, sparking a fight over his successor."
In 2008, I wrote the Chief Justice would be in the spotlight for his vote in favor of gay marriage and that at 70 years old in 2010, he might not want to go through the stress of an emotional retention election.
Lights, Camera, Investments All Around
Mike Murphy’s film development company picked up a cool million from Meg Whitman before he signed on to advise her political campaign. Talk about stopping run-away production. News articles suggest that the investment stopped Murphy from running away to Whitman’s opponent in the primary.
I happen to know Murphy is serious about making a go in the movie business. He talked about it with Arnold-the-actor right before he was sworn in as Arnold-the- governor back in 2003 and soon after Murphy declared he was staying in California, taking a break from politics and setting up shop in Hollywood. Murphy is not the first person to come back to his roots while trying a new venture.
Speaking of investments, I see Roger Salazar, spokesman for the union sponsored independent expenditure in support of Jerry Brown, responded to the new Whitman ad, which pointed out Jerry Brown is the public employee unions’ candidate by saying that the IE’s messages must be resonating with voters.
Poll Indicates No Ideal Candidate for Voters in Governor’s Race
The Field Poll released yesterday showed weaknesses for both major candidates for governor. Voters are not pleased with Meg Whitman’s voting record and Jerry Brown’s age. Being a wealthy candidate is a negative (Whitman), as is being a candidate backed by labor unions (Brown).
Mixed messages from the voters to the candidates appeared in the poll. The voters seemed to like someone who has experience dealing with the legislature (Brown), on the other hand business experience is good, too (Whitman.)
Californians also said they back the new national health care law and the Arizona immigration law … two issues that may work together for the voters but don’t line up with either major political party.
LeBron to the Income Tax Free State of Florida and Other Friday Thoughts
LeBron James turned down the Los Angeles Clippers and a few other teams and joined high priced free agents Dwayne Wade and Chris Bosh to play basketball in Miami. It’s reported all may have to cut back their salaries a bit so all three players can join up with the Miami Heat under the salary cap.
But they will probably make it up by not paying income taxes. LeBron could save perhaps $10-11 million by practicing his basketball skills in Miami instead of Los Angeles.
I don’t have the exact figures but check out this article, which suggests that James would keep over $12 million in his pocket under a $96 million deal by playing for Miami instead of the New York Knicks, where the state and city income tax is soon to hit 12.85%.
John Laird’s Spin Cycle
Former Assemblyman John Laird has been spinning away from his track record on taxes and spending just as he tried to spin his second place finish to Assemblyman Sam Blakeslee in the 15th Senate District primary as a win.
You’ll recall that Blakeslee just missed avoiding a run-off on June 22nd by a half-percentage point. But, Laird wrote that Blakeslee’s near miss was actually a big boost for the Laird campaign when you considered all kinds of factors and assumptions. In a word — spin.
Laird is at it again when reviewing his tax and spend record.
Pension Reform Focus is on Cities
Despite Governor Arnold Schwarzenegger’s success in negotiating some concessions from state unions on the pension front, heated action in the battle for pension reform is happening in California’s cities.
Yesterday, initiative petition signatures were filed in San Francisco to require thousands of city employees to contribute 9% of their salaries towards their pensions and health care plans. Currently, many (but not all) contribute nothing. The initiative would also boost public safety workers contributions to 10% of salaries. Police and firefighters just saw their contributions increased to 9% by voters in the June election.
Interestingly, the initiative’s proponent is an outspoken liberal public defender. Jeff Adachi is leading the petition drive because his office has been cut 40% in recent years.
Business Uncertainty Over Government Action Undercuts a California Recovery
Carnegie Mellon University economist Allan H. Meltzer’s Wall Street Journal article Wednesday contains some thoughts that can be applied to California’s upside down fiscal situation.
One point Meltzer makes is that, "High uncertainty is the enemy of investment and growth." Businesses uncertain if tax laws will change pull away from hiring more employees or building more facilities until they know what to expect.
Corporations in this state face uncertainties on the tax front that will cause them to hesitate investing in their California operations. That in turn will keep the Golden State unemployment rate high and economic growth subdued, which only extends, if not deepens, the state’s economic chaos.