Only One Way Out Of California’s Mess: The People

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

It has become obvious that Gov. Schwarzenegger and legislative leaders of both parties simply won’t be able to reach a compromise that comes anywhere close to closing California’s rapidly growing budget deficit, now estimated at some $40 billion over two years. The state government is running low on cash. Within weeks, it may have to start paying people in IOUs.

Democrats simply won’t agree to enough cuts. Republicans won’t agree to tax increases, and they can block that because of the state’s requirement for a two-thirds vote. The Democrats’ convoluted (if politically smart) attempt to do an end run around two thirds and raise taxes by majority vote isn’t going anywhere; even if it’s revived and signed into law, it’s all but certain to get struck down in the courts or overturned by referendum. The governor you ask? Schwarzenegger has little credibility with lawmakers of either party. When it comes to big deals, he simply can’t close.

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We can’t find anyone from California to fix computers? Seriously?

Chandra Sharma
Political Communications, Redistricting and New Media Strategist

The Bee reported yesterday that the state has terminated its 2006 contract, with a going rate of $69 million, for the modernization of the state’s payroll and personnel computers. $25 million of the contract was already fulfilled at the time of termination.

It’s clearly a good thing to see the state hold a vendor accountable for not doing their job properly. The part that gets me is the company in question, BearingPoint, is based in Virginia. Don’t get me wrong, I’m all for interstate commerce and saving money by going to a low bid, but could we seriously not find one company in California, the technology capitol of the world, to handle modernizing our state’s aging computer systems?

The performance of the Virginia firm was clearly deficient given the recent ‘computer troubles‘ we’ve seen from payroll and personnel, but performance aside, the state should not be sending $69 million out of the California economy when that same investment can be made within our own state, particularly within these troubling economic times.

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Expand Our Firefighting Options

Richard Rider
Chairman of the San Diego Tax Fighters

Higher taxes are not the answer to fight brush fires in San Diego County – we need to spend more of our existing funds protecting the public.

But just spending more money on public safety is not the only answer. Far from it.

Indeed, calls for spending hundreds of millions of dollars annually to expand the county professional firefighting forces to battle the next major wind-whipped brush fire – an event that happens once every 3 to 8 years – is madness. As it now stands, professional firefighters spend only 3-4% of their average shift actually fighting fires.

What will the hundreds of additional firefighters be doing 24/7, 365 days a year between those rare, huge brush fires? Besides getting paid, that is.

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The roadmap to compromise: Staying focused on long-term fiscal reform is the way to fix the state budget

Fred Silva
Director of Public Policy, California Forward

The failure of our lawmakers to reach a reasonable compromise on the state budget dangerously erodes the confidence Californians now have in their government.

That palpable public mistrust was an overarching concern when California Forward fashioned a five-part reform package for a new budget system that, if adopted, would result in smarter fiscal decisions at the state Capitol over the long-term.

The reform proposals – titled It’s about Trust: A State Budget Process that Restores Public Confidence and just released – is based on the best management practices from state and local governments around the nation and on conversations with thousands of Californians.

Budget reforms cannot fill the estimated two-year $42 billion budget gap — that requires the difficult arithmetic of cutting programs, raising taxes and borrowing money. But the reforms are a way for Democrats and Republicans to send a clear message to their constitutiencies: revise the budget-making process so that the next fiscal crisis is managable. Because right now, if we’ve learned anything, it’s that our current budget-making process is part of the problem.

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What California’s Impending Financial Bust Means for The Court System

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977;

I defer to the many writers on F&HD who know far more than I do about California politics and the impending financial crisis when this state shortly runs out of money. I make my living in the courts, mostly in the Los Angeles Superior Court (“LASC”) system, which once boasted that it had more sitting judges than in all of Great Britain, and I have done so through four down economies in my 32 years as a civil trial lawyer – this being the fifth, and by far, the worst I have ever seen or dared to imagine. My point here is to illustrate what will happen to our civil state court system when California shortly goes broke.

Criminal cases have absolute preference over any civil cases due to the Speedy Trial Act, by which a criminal defendant accused of a crime, if he or she wishes, can force the prosecution to go to trial in a matter of months, ready or not, or the case must be dismissed. For this reason, big city civil litigators often bemoan how hard it sometimes is to get a full civil jury panel when the criminal courts get first pick and may not leave enough left over for a full panel to do voir dire, the jury selection process to pick the 12 who will sit in the box. That is the situation in good times.

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Does Barbara Boxer possess compromising photographs of all of California’s most promising Republicans?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

I don’t know. But there must be some explanation for why Republicans seem to be doing so little to produce a strong candidate to challenge Boxer in 2010.

It’s particularly striking when you consider all the jockeying between potential Republican candidates in the 2010 race for governor. The California GOP is either dead or on life support, depending on whether you’re an optimist or a pessimist (and depending on what you think of Republicans). The party doesn’t have much money and has only a handful of potentially attractive statewide candidates.

In fact, the three strongest statewide candidates in the party might be Insurance Commissioner Steve Poizner, former Congressman Tom Campbell, and former eBay chief Meg Whitman, who made news this week by resigning corporate board seats to prepare for a career in politics. These three candidates, however, share a problem: they all want to be governor. And they’re going to run against each other.

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It’s Time to Draw a Line in the Sand…

John Kabateck
NFIB State Director in California

Yesterday, the National Federation of Independent Business/California, the state’s leading small business association, formally joined in legal efforts to prevent legislators from circumventing the state Constitution by cleverly replacing the word “tax” with “fee” in an effort to obtain a simple majority vote to raise taxes on hard-working Californians.

Why did our organization, and the 23,000 small businesses we represent, choose to engage in this lawsuit? Frankly, because California’s “mom and pop” business owners – indeed, our state’s number one job creators – are absolutely outraged. As well they, and millions of other voters throughout the Golden State, should be!

Last November, California voters sent a new crop of presumed “leaders” to Sacramento with the hopes that they would not only create the law, but that they would abide by it as well. Moreover, voters approved Proposition 11, the Voters First Act, to put redistricting into the hands of the people of California, not the elected leaders (foxes) who have for too long been guarding their precious and plum positions (henhouse).

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Governor is Right on Economic Stimulus

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

One of the main reasons Governor Arnold Schwarzenegger vetoed the Democratic budget bills yesterday was that the bills did not create the economic stimulus the governor was seeking. He is right in taking a hard line position on creating jobs and stimulating the economy. Economic history is clear that the greatest revenue boosts for the state government have come with economic growth not from tax increases.

One way to create jobs and get pubic infrastructure projects rolling is to expedite the environmental review process and the permitting process for projects already in the pipeline. The legislature balked at this request from the governor. But, if legislators are concerned about job creation, expediting the process is an important step to take. Not only will it get money flowing through the system, it will get important projects completed faster.

After the 1994 Northridge earthquake, Governor Pete Wilson led the effort to expedite the rebuilding of the freeways by waiving standard operating procedures. California got back to business in record time. That is a model that should be implemented to a degree now.

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Housing continues slide in California

Loren Kaye
President of the California Foundation for Commerce and Education

The bottom to the California home price free-fall is still not in sight. Last week Standard and Poor’s released its monthly index of metro home prices, and California still registers a growing year-over-year drop. The composite average for San Francisco, Los Angeles and San Diego prices dropped in October by 28 percent from the previous year, the largest year-over-year drop recorded by the state, and exceeded only by the Sunbelt cities of Phoenix, Las Vegas and Miami. As you can see from the chart below, the trend is accelerating.

According to this index, California’s composite home prices are equivalent to where they were about five years ago, in the summer of 2003.

?California Composite Home Price IndexCalifornia Composite Home Price Index

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2008: Thirty Trillion – Up in Smoke!

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977;

Of all the grim economic statistics produced in the debacle of 2008, one really nailed me as I reviewed the news of the first day of 2009: “The World Federation of Exchanges, which tracks stock markets in 53 developed and emerging economies, said that some $30 trillion in market value evaporated through the end of November.” ((Wednesday 31 December 2008, Kim Coghill and Claudia Parsons, Reuters). And that doesn’t even include December!

“Evaporated” is the key word here. It was not lost in the sense that somebody came and took it away or buried it in a box in the desert and forgot where – it evaporated from the world’s balance sheets via stock markets around the globe, like the morning dew on your front lawn when the sun first comes up. Up in smoke. If my math is correct, that means $44, plus a few dimes and pennies, each, theoretically evaporated from the pockets of every man, woman and child on earth – all 6 ¾ Billion on them – in 2008. To put this into some perspective, according to World Bank statistics from 2003, half the world’s population – some 2.8 billion people — live on less than $2 (U.S.) per day, with 1.7 billion of those getting by (somehow) on less than $1 per day.

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