Author: Joel Fox

California Republicans announced a road trip yesterday. They plan to head to Reno, Nevada to hold a hearing about why businesses choose to leave California. Nevada is a good place to look for such businesses in exile.

The Republicans will not only have former California business people testifying at their hearing; Nevada’s governor and some of its legislators will also be in attendance. I imagine there will be a few zingers fired California’s way from that crowd. But, they have a right to crow – California businesses move out of state because of poor policy choices by our state’s lawmakers.

Not only can the condition of chasing businesses from the state be turned around, it must be turned around. The answer to solving California’s budget problems is to free up the job creating power of business. And the best way to do that is to encourage ENTREPRENEUR CALIFORNIA, a place where the entrepreneur can thrive without the burden of difficult regulation and high taxes.

The news conference supporting Propositions 1A to 1F at the Los Angeles Area Chamber of Commerce featuring Governor Arnold Schwarzenegger, L.A. Mayor Antonio Villaraigosa, L.A. County Sheriff Lee Baca, Chamber president Gary Toebben and other business and public sector leaders didn’t promise much drama. But, I attended the proceedings in hopes that some local color or unusual event would set this conference apart.

About forty teachers, business executives and carpenters stood behind the speakers, the carpenters in their hard hats and orange vests adding some color and visual impact for the cameras.

Mayor Villarigosa “humanized” the proceedings by revealing he was lobbied for support by the governor at Washington’s Gridiron Club over two beers and a stogie.
Villaraigosa declared that the propositions were the “only way out of the morass” in Sacramento, criticizing both the left and the right for trying to oppose the package.

Taxing commercial property was the focus of the Commission on the 21st Century Economy in its fourth meeting, this one held at UC Davis yesterday. Commercial property and residential property are taxed the same under the provisions of Proposition 13. However, some advocates want to see the property tax roll “split” into at least two categories with residential and commercial property treated differently.

What a split roll would mean to the California economy and how business and commercial property have faired since the passage of Proposition 13 in 1978 depended how one reads the economic landscape. CSU Professor Terri Sexton said that residential property has taken on a greater share of the property tax burden in the last thirty years, although she admitted that could simply be the product of more residential home building or homes turning over during that time.

On the other hand, former Legislative Analyst William Hamm said there was no evidence of a property tax shift to homeowners. He argued that the ratio of assessed value to market value was higher for business property meaning that business properties are assessed closer to the full market value than residential properties.

The commission studying California’s tax system decided to pass on a suggestion to endorse Proposition 1A, which will establish a spending cap and at the same time extend temporary taxes. At the tax commission meeting held at UC Davis today, Commissioner Bill Hauck asked the Commission on the 21st Century Economy to support Proposition 1A, arguing that it addressed one of the main concerns the commission is attempting to resolve—the volatility of state tax revenue.

However, Committee Chairman Gerald Parsky suggested that the commission as the whole should not go on record either for or against the measure. Parsky pointed out that the commission’s original deadline of April 15 was pushed back to July 31 to see how voters would decide on the ballot measures. Parsky also argued that the proposal to offer an endorsement would go beyond the charge of the commission.

Commissioners agreed with this position and did not take up the endorsement.

Hard times are forcing former public employee union organizer Antonio Villaraigosa to play hardball with Los Angeles’ public employee unions. How Mayor Villaraigosa’s demands on the city’s unions play out could be a precursor to a coming give-and-take between the state and its unions.

In attempting to reduce a projected $530 million budget shortfall, Villaraigosa has told city workers that they have to share sacrifices to help balance the budget. The mayor is looking for major concessions, which could include foregoing cost of living increases or reducing the workweek for every employee. Villaraigosa plans to include public safety positions when requesting employee concessions.

Villaraigosa argued that the city workers sacrifice is the only way to avoid widespread layoffs although those layoffs could come if the city unions refuse to negotiate with the mayor. The unions can reject pay cuts that are controlled by contract. But, the contracts do not prohibit the mayor from firing workers.

Legislators are on the look out for ways to reform the initiative process, either for the high-minded purpose of improving the process, or with a goal to limit direct democracy and re-claim the lawmaking function for themselves.

California is not the only state initiatives play a major role in policy making. Oregon often has more initiatives on the ballot than the Golden State so it was no surprise last week when a Senate Committee in Oregon held a hearing on a bill that would give power to the legislature to place a measure on the ballot to counter any initiative that was qualified by voter signatures. Supporters of this maneuver claim that voters would be given a choice on different approaches to the problem the initiative is designed to fix. They also argued that initiatives are often poorly drafted and the legislature and its staff, with experience in drawing up laws, would be able to present a better-constructed law to voters.

The intriguing question about the May special election is whether either of the billionaire Republican gubernatorial candidates will spend money to defeat the measures they both publically opposed. Steve Poizner and Meg Whitman are weighing the politics of such a move, and looking ahead to January 2011 to determine whether they would be better off starting out their gubernatorial term with the current budget fix in place or to deal with the consequences of the measures defeat, whatever they may be.

The focus is mostly on Poizner because he has a history of spending heavily in initiative campaigns. He helped fund the unsuccessful redistricting campaign during the 2005 special election and, most notably, stepped up with big dollars to knock out the term limit change measure promoted by then Speaker Fabian Nunez and Senate President Pro Tem Don Perata that would have allowed them to remain in their leadership positions beyond the scheduled end of their terms.

This was originally published in Stephen Frank’s California Political News and Views

Many opponents of Proposition 1A believe that if the measure fails state government will melt down and arise like a phoenix from the ashes, reborn and remodeled in a positive way.

There is a lot that state government must do to change away from its 19th century model, including restructuring the tax code to promote growth, reconsidering regulations to offer a more business friendly environment, and introducing technology to create a more efficient government. However, changes will not come overnight.

One important consideration voters will have to make in deciding on Proposition 1A is to conclude if the cost of the measure is worth the price. The cost does not only include extending taxes for up to two years. The cost also includes what happens if Prop 1A and its accompanying measures fail.

To say that Proposition1F on the May 19 Special Election ballot is popular with the voters is an understatement of Tyrannosaurus Rex proportions. The only measure on the ballot to secure over fifty percent in the recent Public Policy Institute of California poll, it rang the bell at 81% approval. But, then the measure has a punitive effect on legislators, so there’s little surprise here.

The measure would prohibit the state commission assigned to setting legislators’ salaries from authorizing a pay raise any year the state budget is in deficit. Given that the legislative approval rating in that same PPIC poll hovered a little above the floor at 11%, the voters’ affection with the measure cannot be a surprise.

But, this sure thing proposition should not even be on the ballot.

This has nothing to do with Senator Abel Maldanado, who required this law change as part of a package of measures he wanted enacted before voting for the budget bill. My problem is with the commission setting the legislative salaries in the first place.