Shift in Thinking Needed to Deal with Financial Crisis
Joel Kotkin, Presidential Fellow in Urban Futures at Chapman University in Orange, California and a recognized authority on global, economic and political trends, has written an interesting assessment on the financial crisis.
He argues that what is needed now is not a revolution against capitalism but a shift in emphasis back to the basics such as manufacturing, basic infrastructure and training critical skilled workers that a ‘real’ economy needs to encourage entrepreneurism and long term growth.
About California, Kotkin writes:
“California’s once envied water-delivery systems, roadways, airports, and education facilities are in serious disrepair. In the 1960s, infrastructure spending accounted for 20 percent of all state outlays, but as the technocratic perspective took hold in Sacramento, infrastructure spending fell to just three percent of all expenditures, despite the rapid growth of the state’s population.”
Read Kotkin’s piece on how America can grapple with the financial thicket here.
PPIC Poll Previews Coming Heavyweight Policy Fight
How will the next state budget crisis be avoided? Manypolicy experts, political pundits, and special interests have their own ideas.But odds are the solutions that will grab public attention will not contain anysubtleties or nuances. Opposing factions will likely support measures mosteasily understood by the voters.
Retire Proposition 13.
Retire Proposition 13. No, not the ballot measure, which has saved California taxpayers countless billions over the past 30 years, retire the number 13 applied to any new ballot proposition.
There are 12 ballot propositions on the November ballot. That means the first proposition at the next election, probably the special election the governor plans to call in 2009, will be labeled Proposition 13.
A decade ago, Senate Minority Leader Ross Johnson (R-Irvine) and state Sen. Steve Peace (D-El Cajon) offered a bill to prohibit any future ballot measure from carrying the number 13.
Those guys didn’t have triskaidekaphobia. That’s the fear of the number 13. There are a number of explanations of why the number 13 is considered unlucky. One of the most enduring explanations is that there were 13 people present at the Last Supper.
Johnson and Peace thought that voters seeing a Proposition 13 on the ballot would attach some meaning to the measure that may not be there.
Initiatives on the Special Election Ballot? Let’s Read the Constitution
Is there time to qualify initiatives for the special election the governor plans to call? The special election in 2009 will deal with the rainy-day budget plan and the lottery lease that were part of the budget deal. But, what else might be on the special election ballot?
The governor indicated a special election in March may be too early. So attention is focused on June 2.
The constitution says that initiatives must be qualified 131 days before an election. If the election were called for June 2, that would make the qualification date about January 23.
But there is a legitimate question if that 131 day requirement applies to a special election. Here’s Article 2, Section 8, Paragraph C of the state constitution dealing with initiatives:
The Secretary of State shall then submit the measure at the
next general election held at least 131 days after it qualifies or at
any special statewide election held prior to that general election.
The Governor may call a special statewide election for the measure.
Bail Out California And a Couple of Other Ideas
If the Federal Government is going to kick in $700-billion to bail out the nation’s financial industry, do you think it could come up with another measly $15 billion to bail out the state of California and balance our books? That’s only an additional 2% on the latest bailout bill.
And, like the Fed takeover of AIG, the Feds can simply take a share of the business…er….state. Fifteen billion is a little less than 15% of the general fund. Under the deal, the feds will own 15% of the state’s assets and add that to their portfolio along with the 80% they own of AIG. Let’s give them the freeways…during rush hour…and see what they can do with them.
The Budget is Done, The Budget Problem is Not
The budget deal agreed to by Governor Arnold Schwarzenegger and legislative leaders is better than the budget the legislature sent to the governor earlier in the week, but it does not come close to fixing California’s dysfunctional fiscal system.
The idea of borrowing from the taxpayers with a no-interest loan by increasing withholding was eliminated. That’s a good thing. And, the rainy day fund provision was strengthened while the size of that fund was reduced. That works, too.
But, whether other aspects of the deal—collecting larger penalties from corporations that underpay their taxes, and voters approving a plan on loans from an expanded lottery – will secure the needed revenue to balance the budget are iffy at best.
On top of that, the main budget problem remains: once again the state is projected to spend more in the next budget year than it brings in. While some think they can take a breather from state budget thoughts now that this budget is put to bed, others are plotting otherwise.
The Recall and Paycheck Protection
Governor Arnold Schwarzenegger formally answered the recall petition put forward by CCPOA yesterday calling it an intimidation tactic by the prison guards union. He added, “It’s offensive that one special interest is using a recall to get more money.”
In the end, will there be just one public employee union that sees this as an opportunity to set their agenda in Sacramento or will others join in? If a number of public unions sign up, then Schwarzenegger might have a different response: bring back a paycheck protection initiative.
Schwarzenegger supported Proposition 75 on the 2005 special election ballot which, if passed, would have required public employee union members to approve in advance taking dues from their paychecks for union political activity. The measure lost 46.5% to 53.5%, but it came the closest to passing of any other Schwarzenegger backed initiative on the ballot that day.
Blowing Up the Budget
It may not be quite “blowing up the boxes,” but "blowing up the budget” will send a similar message. Governor Arnold Schwarzenegger was elected to corral the budget beast. His announcement yesterday that he plans to veto the Rube Goldberg-style budget plan sent to him by the legislature is a righteous stand against California’s out-of-control budget process.
In December 2003, buoyed by the power of the recall election, the newly minted governor had the power to fix the problem he was elected to address—California’s unbalanced and spending-addicted budget. However, as a new governor, he chose not to use his mandate to force the necessary budget changes upon the legislature.
Wait Til’ Next Year — Again
When word of a budget deal first came out, we were told the budget would be balanced with no borrowing. What we were not told was that meant no borrowing from the usual sources–transportation funds or local governments. But I guess borrowing from the taxpayers is different.
By increasing withholding by 10% and requiring quarterly filers to increase payments and paying back any overage later, the state is essentially borrowing from taxpayers. And, it’s an interest free loan at that. When provisions were put in to protect local government from the state vultures, laws required that borrowed money would have to be returned with interest.
Then there are the items in the budget deal which stipulate that millionaires who see an income windfall will be required to make more of their tax payments sooner and businesses will be restricted from writing off losses for two years while recouping those revenue losses in future years.
All this on a day the stock market fell 500 points and Wall Street is in turmoil. I don’t think there will be too many windfall profits to hit up very soon. And, businesses probably will be suffering big losses and still have to come up with the money for taxes.
The Coming Initiative Wars Over Budget Reform
Legislature leaders came together on a budget deal over the weekend, but reportedly few major reforms in the budget process will be part of the deal.
Get ready for the coming initiative wars over budget reform. I believe frustrated political interests as well as members of the legislature will ask the people to reform the way the system works on the 2010 ballot.
Even if a 2009 special election is called to put forth some constitutional changes created by the legislature and included in the budget deal, big changes on the budget front will probably find their way onto the 2010 ballot by initiative.
Senate President Pro Tem to be Darrell Steinberg has already said he will not go through this type of stalled budget mess again, indicating an initiative is on the horizon to lower the two-thirds vote to pass the budget. Whether there will be included in a budget reform measure, or in a separate measure, a proposal to lower the two-thirds vote requirement to raise taxes is also a possibility.