Author: Joel Fox

Governor Arnold Schwarzenegger’s announcement that the current fiscal year budget is already $5 to $7 billion dollars in the red may have repercussions beyond the expected legislative budget battle.

With the budget heading toward another large deficit (including the projected structural deficit of an additional $7 billion-plus), the governor is suggesting across the board spending cuts again.

That will not sit well with the spending lobby, which has been mulling over tax raising initiatives in light of the polling numbers that indicate little interest in more taxes from the voting public. The cost of a full on initiative drive has made a number of the big money players have second thoughts about launching campaigns given the sour mood of the public and the down economy. Money is even in short supply for political wars.

However, the governor’s pronouncement will surely become part of the calculus when public employee unions and other pro-tax organizations decide whether to go ahead with tax increase measures. They’re thinking a roll of the expensive campaign dice might be worth the gamble when facing more deep cuts.

The movie The Fourth Kind, now in theaters, refers to the fourth level of interaction with extraterrestrials. We are told by the movie promotions the first kind is sightings, the second kind is evidence, and the third kind is contact. The fourth kind is abduction.

There appears to be a Fourth Kind of government entity that the people of California are dealing with themselves. The familiar first three kinds of government are federal, state and local. The fourth kind is the people through the initiative process.

A few might even say the initiative process is an abduction of government.

The people of California have not felt that way — at least not yet. Polls in the past have revealed that about 75% of those polled support the initiative process. Ironically, that number 75 is nearly the total of initiatives that have been filed with the Attorney General for title and summary during this election cycle.

The California Teachers Association has filed two split roll initiatives according to reliable sources. A split roll would change Proposition 13 to tax business property differently than residential property.

Moving ahead with either measure will trigger a costly battle — public employee unions versus the business community and taxpayer groups.

In response to the filings, oppnents of a split roll will take steps to set up an oppostion campaign.

More to come.

What do we make of many local tax measures passing in these tough economic times? According to the preliminary review by the League of Cities’ Local Government Finances Almanac, two-thirds of fifty-seven local taxes and bonds passed Tuesday.

Local voters said “yes” to a number of tax measures less than six months after statewide voters rejected continuing a number of temporary tax increases that were part of the February state budget deal. The “yes” on taxes also comes in the shadow of polls that indicate voters are not interested in raising taxes or making it easier to raise taxes.

It is telling that the “yes” votes occurred for local tax measures, while the “no” votes carried the day against continuing state taxes. With the legislature suffering a 13% approval rating, not too many people trust legislators with their tax money. On the local level, voters have a better sense of how their money is spent.

Our friends over at the lively website, Calbuzz, lamented the fact that with the exit of Gavin Newsom from the gubernatorial race there is no candidate that stands for authentic change. The particulars of the change they highlighted from the Newsom campaign were supporting a constitutional convention, changing the budget process, and taking a hammer and wrench to Proposition 13.

Perhaps the reason for Newsom’s early exit from the campaign is because those are not the kind of changes the voters want.

Citizens are angry and disgusted because government doesn’t work. However, voters are smart enough to know that not all medicine will revive the patient and some remedies could make the patient sicker. Taxing business property would not jumpstart the economy. It would cost jobs. Lowering the two-thirds vote to raise taxes leads to increased tax rates, but will it result in the expected revenue? The tax increase of February is already coming up short by billions of dollars. California’s economy doesn’t need another punch in the gut.

Gavin Newsom pulled out of the governor’s race and set the punditry world abuzz about the possibilities of another Democrat jumping into the June primary. While some Democrats like the idea of a clear field for Attorney General Jerry Brown, still nominally exploring a run, others asked, as expressed by former Assembly Speaker Willie Brown in his S.F. Chronicle column in reference to the 71 year old Brown with 40 years in the political world, “Can’t we find someone with a newer paint job?”

Names flying off the page include Treasurer Bill Lockyer, former Controller Steve Westly, L.A. Mayor Antonio Villaraigosa, Congress members Loretta Sanchez and Jane Harman, and, of course, the old standby, U. S. Senator Dianne Feinstein.

Old not being an indication of age here, even though she is Brown’s senior by five years. Old in the sense her name has been linked to the governor’s chair for twenty years.

For the first time since the field of potential gubernatorial candidates narrowed to five, consultants for all the candidates appeared on the same stage at the California Chamber of Commerce’s Fall Public Affairs retreat in Napa yesterday.

Steve Glazer, advisor to Jerry Brown’s exploratory committee, joined Garry South chief advisor to the Gavin Newsom campaign, Jim Bognet, Steve Poizner’s campaign manager, Jamie Fisfis with Tom Campbell and Rob Stutzman, consultant to Meg Whitman.

The spin masters dodged and weaved and spun their way through a lively hour-plus presentation.

South said his candidate, Gavin Newsom, did not have to worry about his standing in the polls well behind Jerry Brown, pointing to a number of gubernatorial races over the past two decades in which the leading candidate for governor in early polls did not win.

The game is on in quest of a new constitution for California. In filing the initiative to call a state constitutional convention, Jim Wunderman of the Bay Area Council said this is an “historic day” for the state.

Perhaps. Getting the call for a constitutional convention approved by the voters and successfully creating a new constitution faces many hurdles. Elsewhere on this site, Joe Mathews gives a run down on the details involved with establishing the convention, including the complicated delegate selection process. Loren Kaye contributes his view on the powerful Clerk position created for the convention as proposed by the initiative.

My purpose is to give some thought to whether this constitutional convention measure might pass if it qualifies for the ballot.

The complication of the delegate selection process will work against it. Just reading the paragraph dealing with delegate selection in the million-plus population cities repeated word for word in the Mathews piece would move voters to grab bottles of aspirin. Not knowing where a convention could lead will make for an unsteady hand as voters reach to mark a ballot.

Once again there is a call for a tax on oil to help solve California’s budget problems. Assemblyman Pedro Nava called for a 10 percent oil severance tax piling on Assemblyman Alberto Torrico’s bill that would establish a 9.9 percent oil tax dedicated to higher education.

Both plans are a backward way to look at taxing oil extraction.

Adding another tax on oil companies for taking crude out of the ground will discourage production. Since practically all oil taken from the ground in California stays in the state, lower production will mean more reliance on foreign oil.

The cost of the product will undoubtedly increase, although Nava intends to prevent that with government price controls. He wants the Board of Equalization to monitor price increases to make sure that price increases at the pump are not a backfill for the tax. If prices do increase to make up for the tax, the bill would allow the attorney general to take action against the oil company. Did we mention Nava wants to be the next attorney general?