CA will benefit overall as Roski and NFL move toward LA Stadium deal

Chandra Sharma
Political Communications, Redistricting and New Media Strategist

As a 49ers fan, I had a good laugh in 1994 when the Los Angeles Rams and Los Angeles Raiders both fled their home city in the same season as the likelyhood of new or renovated stadiums for the two teams became increasingly unlikely, despite several promises to the contrary. Nearly 15 years later, it’s no longer a laughing matter.

Los Angeles, the country’s largest media market, has been without a professional football franchise since the 1994 season. The San Diego Chargers and Oakland Raiders both play in venues that are considered to be vastly outdated by modern standards, and the San Francisco 49ers still play at Candlestick Park, which has not undergone a major renovation since 1971 and is widely considered to be the most dilapidated in-use venue in American professional sports.

The news last week that the NFL is warming to developer Ed Roski’s recent LA stadium proposal could serve as the catalyst to turn this situation around.

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My Kingdom for a Legislature

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)

Whenever I think about California and its problems, my mind fills with questions, unanswered questions about the state’s various messes and how we got into them. The press is dying, but sometimes I think how nice it would be if the state had some entity … you know… a body… a group of folks… maybe elected by and accountable to voters… you know, with subpoena power… the ability to call hearings… ask all kinds of questions — investigate.

You know. If we had a legislature.

Oh, that’s right.

If we had a real legislature.

If we had a real legislature, we might get to the bottom of any number of campaign finance scandals.

If we had a real legislature , we might learn what’s really going behind the scenes at CalPERS and CalSTRS.

And if we had a real legislature, we might figure out what exactly the state did wrong — or didn’t do that it should have done — to prevent some of the worst problems in the mortgage business.

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Tim Russert: An Appreciation

Author and Public Relations Consultant

If ever there were any truth to the superstition that Friday the 13th brings
bad news, then Tim Russert¹s untimely death proves it. All of us who
work in media mourn the passing of this giant in broadcasting. Russert wore
many, many hats ­ professionally and personally. He was the Washington
bureau chief for NBC News, anchor of NBC’s "Meet the Press," and a regular
on various MSNBC news programs, to name but a few of his reporting duties.

Russert took over "Meet the Press" from Laurence Spivak in 1991 and has been
an agenda setter ever since. Spivak handed him a winning show and shared
his four-part "secret sauce" for making it great: learn everything about
your guests position; take the opposite position in your own questioning;
be persistent; and, always be civil.

With Russert at the helm, "Meet the Press" turned into a resounding
powerhouse hour for anyone interested in politics in America. For those who
live in Los Angeles, it airs at eight o¹clock on Sunday morning. What a
bracing way to wake up! No matter how late my Saturday night ended, I was
always glued to my TV the next morning because I craved my weekly fix. I
knew the guests would be excellent; the discussions, stimulating; Russert’s
research and background information would be impeccable and come from a
variety of sources; and he wouldn’t shy away from confronting anyone who
shirked his hard-hitting questions.

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The Sales Tax Base is Just Fine, Thanks

Loren Kaye
President of the California Foundation for Commerce and Education

Dan Walters’ recent column perpetuates a persistent myth about the sales tax. According to Walters, "(T)he 75-year-old sales tax’s stolid image, however, masks long-term erosion of its revenue-producing ability … " Other elected officials, such as BOE Chair Judy Chu, use this argument to support a broad proposal to apply the sales tax to numerous business and personal services.

There’s a small problem with this erosion myth … it’s not true!

Walters compares money raised from taxing retail sales unfavorably to taxing personal income, but personal income has always been a more dynamic revenue producer than retail sales. The more recent phenomenon is the greater volatility of personal income tax revenues, compared with the relative stability of sales taxes.

For the past 30 years, personal income has always grown faster than taxable sales. In fact, during the most recent decade, their growth rates have converged.

   Growth of Taxable Sales Growth of Personal Income
1996-2006  74%  77%
 1986-1996  48%  69%
1976-1986 159% 179%

In fact, since 1992 – the nadir of the aerospace recession – taxable sales and personal income have grown at almost exactly the same average rate, about 5.3 percent a year.

Also since the 1991 recession, taxable sales have contributed – year-in and year-out – to about a third of the California economy – apparently unaffected by the boom in internet sales, baby boomer retirements, or proliferation of services businesses. From 1970 through 1990, taxable sales represented on average about 40 percent of the economy. It is just as likely that the decline in the California manufacturing sector is responsible for this decline in taxable sales base as any change in consumer purchasing patterns.

The notion that the sales tax base must be “broadened to reflect commerce in the 21st Century,” in BOE Chair Chu’s words, is a nonsequiter. The sales tax base is insufficient only relative to how much in taxes should be raised to meet state obligations, not by an arbitrary measure of contribution to the economy. Indeed, if “contribution” was truly the measure of a tax base, then the personal income tax would be flat, rather than its present steeply progressive curve.

Jean Ross, executive director of the California Budget Project makes her case most forthrightly: “Simply put, our tax system doesn’t raise enough money to support the services Californians want and deserve.” The question honestly debated is how big should government and its tax burden be. Arguing over the relative ideal contributions of various economic activities is a smokescreen.

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We Get What We Pay For

Patrick Dorinson
Host of The Cowboy Libertarian Radio Talk Show in Sacramento

For those of us who believe that the Constitution of the State of California means what it says and is not just a set of suggestions, yesterday June 15th was the constitutionally mandated date that the state budget was due. As of this writing it remains overdue and according to Senate President Pro Tem Perata will not be done for quite awhile.

To quote a story from last week by veteran Capitol reporter Timm Herdt of the Ventura Star, “Senate President Pro Tem Don Perata, D-Oakland, said a long, hot summer lies ahead. He said there is no chance that the state will have a budget in place by the beginning of a new fiscal year July 1, but that negotiators will be focused on meeting a more meaningful deadline of Aug. 1.”

The thing that struck me the most was the cavalier way Senator Perata dismissed a constitutionally imposed deadline as if it means absolutely nothing to him or his caucus. They have known about this fiscal train wreck for months and are just now getting around to submitting their budget so they can reconcile the differences with the Assembly and then haggle with the Governor over the final price for funding California government for the next fiscal year which begins July 1st, another date that will be missed by the way.

But this post is not about the budget process.

In 1966 then Speaker of the Assembly Jesse Unruh, with the support of both candidates for Governor, Republican challenger Ronald Reagan and incumbent Democratic Governor Pat Brown, proposed and passed one of the most significant changes to the California Constitution. It took the State Legislature from a part-time status that met only 120 days a year and had small salaries and per diem and made it full time with large salaries, per diem and other benefits.

At the time Unruh said it was necessary because California was a large, growing state and we needed a “professional” Legislature. Old Reagan hand Ed Meese said a few years ago that Reagan told him later that supporting the measure was one of the worst decisions he ever made. No matter, the deed was done and we have been living with the consequences ever since.

I am not advocating that we return to a part-time Legislature, although given the current state of affairs it is mighty tempting. But I am a realist who knows that the powerful forces controlling the Capitol would never permit that to happen, would spend whatever it took to defeat such a proposal at the ballot box and bury the proponents in the political graveyard. You can almost hear them saying “try that and you’ll never work in this town again”.

But I am very concerned about the unintended consequences since California voters made that fateful decision in 1966. We have created in California a permanent “political class” who move from office to office, from being a staffer to running for the Legislature or other office without ever having set foot in the real world that the rest of us live in. They rarely bring the kind of real world experience that is necessary to make complex fiscal decisions. Some like fellow blogger Dr. Keith Richman had successful careers before they ran for office, but they are the exception and not the rule.

As I see it the main problem is that the Legislature has become a career and not a civic duty. It is complete with a career path, six figure salaries, car allowances, healthcare and fancy titles. With this career however, you rarely get fired for poor performance because through gerrymandered districts you get to choose your own bosses. And your main goal is getting re-elected so you can keep that six figure job and all it brings.

We have also compounded the problem with term limits. This created another unintended consequence. We now have politicians who are always looking for the next office and they create Legislation meant to please interest groups that can be helpful in future elections. This is one of the few bipartisan things that happens in the Capitol. I would gladly trade term limits for fair and honest redistricting that can create competition and require both parties to speak to the broader electorate and not just the far right or the far left. And while we’re at it, that includes Congress.

Another problem is the volume of Legislation that is passed every year and sent to the Governor. In the four years Arnold Schwarzenegger has been governor 4,362 pieces of legislation have been sent to his desk. (Just for comparison, Governor Wilson in his eight years had 11,284 bills sent to him). On average he has vetoed about 25% of them. Out of the 4,362, 3,788 eventually became law. Does anyone in their right mind think we need almost 1,000 new laws every year? While some may have merit, many of them create new things we have to fund or are solutions in search of a problem. And many are nanny state legislation that erodes the freedom of the individual or opens new business lines for the trial lawyers.
Finally there is the initiative process. More and more the voters are being asked to make the decisions that the Legislature should be making. The ballot box is a terrible place to settle critical issues because political campaigns reduce the issue to sound bites and TV commercials and ask the voters to pick.

We hired the Legislature to tackle the tough issues, but if the voters are the ones who constantly must be called upon to do so, it begs the question, what are they doing?
There is also the role of the voters. In 2005 I wrote the following in the Capitol Weekly. Unfortunately it is still true today.

“At some point the voters must shoulder their share of responsibility. If
nagging problems like the cost of public employees pensions are not
addressed soon, there won’t be any money to fix the other problems facing
California. But I guess the self-absorbed, ipod-listening, text-messaging,
reality show-watching public can’t be bothered with the serious business of
citizenship. But citizenship is not and should not be a passive activity
like watching television.

Almost 2500 years ago, the Greek statesman Pericles said, "Just because you
do not take an interest in politics doesn’t mean politics won’t take an
interest in you".

We are all collectively responsible for California’s welfare. The more we
allow ourselves to be swayed by 30-second ads and slash and burn political
tactics, the more we abdicate our role of holding politicians accountable
for their actions.

An electorate that is increasingly disconnected from those who govern is a
recipe for disaster. Open political discourse is the lifeblood of a healthy
democracy. But if the citizens are not vigilant because they are "turned
off" by politics or think that because a law or initiative was passed that a
problem is purportedly solved, then the voters will deserve what they get.”

I don’t have all the answers and don’t know how we change the political culture in the Capitol to get better results. I do know this. That if the Legislature does not take up the cause of reform and change the way they do the people’s business, the people will one day rise up and do it for them. The Recall of 2003 proved they not only can but will if pushed too far.

And I guarantee you that any change at the ballot box will be much more draconian than anything the Legislature wants.

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2008 National Small Business Summit Highlights Contributions of Small Business Entrepreneurs

John Kabateck
NFIB State Director in California

This past week, the national spotlight was on the impact small businesses have on America. Small business entrepreneurs are the backbone of the American economy and create tens of thousands of jobs every year in America.

I had the opportunity to attend the 2008 National Small Business Summit in Washington D.C. this week and saw, first–hand, the dedication and commitment of small business owners to having their voice heard by policymakers. The organizers brought together a wide range of speakers to give our members an opportunity to hear about economics, politics and other issues that small business owners care about.

Meg Whitman, the outgoing President and CEO of eBay, gave a keynote speech on Monday that demonstrated her keen understanding of the importance of small business. Her speech drove the message that government leaders need to make sure government is not getting in the way of small business and innovation: "We live in a hyperfast and hypercompetitive global business environment. Our government leaders must be prepared to take those challenges head-on and do what is needed to keep the United States as the best place in the world to innovate and create jobs.” She hit on key issues for small business like keeping taxes low, eliminating regulations that discourage innovation and growth, and the need to invest in education. She succinctly explained the challenges that business owners face with the continuous rise of healthcare costs: “Healthcare expenses are killing employers… Too often, when companies are successful, workers see their share of that success swallowed up by higher healthcare premiums rather than more take-home pay."

Senator John McCain was the keynote speaker the following morning and made it clear he understands that small business is critical for jobs and our economy. McCain gave a compelling and detailed speech that articulated his plan for lower taxes, less regulation, and free trade. He argued that we need to invest in retraining displaced workers to get them back to work with new skills, and he highlighted his key reforms to fix the rising costs of health care. I was particularly impressed by one comment: “Government should be on your side, not in your way.” This is exactly what NFIB fights for every day. He also said, “For too long government has been more interested in protecting its budget and its interests rather than the interests of small businesses and the family budgets that depend on your growth.”

The Small Business Summit provided an opportunity for a national focus on the challenges and needs of small business entrepreneurs and the contributions they make each day to the communities in which we live. During this important legislative session and political year, we hope that our elected leaders won’t dismiss and instead will make a top priority the vital role small businesses play in creating scores of jobs and a thriving economy for California and the nation.

I have attached links to the NFIB Web site that reported on the highlights of the conference.

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Controller’s Report Shows Business Taking a Hit

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

Some interesting information appears in the Controller’s Report on revenue issued this week. Those who think taxing business is the way to solve California’s budget problem should especially take notice.

The Controller reported that while income tax came in a surprising 12.1% above May Revise projections (a plus $283 million), the increase in dollars was greatly offset by a 3.5% drop off in projections in sales tax ($124 million off)and a whopping 36.1% below projections for the corporate tax ($90 million lower than expected).

Compared to May a year ago, corporate taxes are down 49%.

Yet, with business clearly suffering some think the answer for California’s budget woes is to tax business more. Adding a tax on business will just slow business even more, which means revenue for government will likely decrease not increase.

If you don’t believe me, consider what John Maynard Keynes wrote in the Times (of London) in 1933 about the futility of trying to alleviate deficits by increasing already high tax rates:

“Nor should the argument seem strange that taxation may be as so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more — and who, when at last his account is balanced with naught on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss."

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A Dangerous and Precedent-Setting Intrusion

Guest Author and Vice President of Community Advocates Inc.

An Assembly bill claiming to bring diversity and transparency into charitable giving in California is actually an unprecedented intrusion by government to muscle its way into charitable organizations.  Here’s a fuller perspective on the bill which David Lehrer and I wrote for the Jewish Journal:

The next few weeks will be the moment of truth for Assembly Bill 624, the so-called, “Foundation Diversity and Transparency Act” as it comes before the State Senate Business, Professions & Economic Development Committee.

The bill is a nearly unprecedented intrusion by government into the world of charitable giving. While purporting to promote “transparency”, in fact it is the first step in setting government mandated priorities for where charitable dollars should go.

Through the not very subtle means of mandating the publication of the race, ethnicity, and gender of large foundations’ staff and board members, AB 624 requires that they inquire about and report on the race, ethnicity and sexual orientation of the board and staff of the organizations to which they make grants and of every business contact they have. The bill also mandates that foundations report the percentage of their grants that go to organizations that “specifically serve” designated minorities.

This intrusive legislation (which in the version that passed the Assembly, additionally required that the foundations survey their boards and staffs to determine everyone’s sexual orientation) is bad policy and will ultimately drive our largest foundations to set up shop outside of California.

The bill claims to simply be “sunshine” legislation—aimed at letting the public know more about large, tax-exempt foundations and their beneficiaries. In truth, sunlight is not what animates the authors of this bill; they have tried to hide in the shadows the true intent of the legislation.

The Greenlining Institute, the bill’s drafters, has rarely betrayed what the motivation behind AB 624 is. In a televised discussion of the bill last year, Greenlining Institute’s Associate Director, Orson Aguilar, made an admission that Greenlining has been loath to own up to since,
We think that foundations have a lot of power in society today. So what we want is to make sure that foundation dollars are reaching our communities so that we can be active decision-makers, discussion-makers, that we can be voters, that we can influence the democracy that we live in. So that’s basically what we’re asking for…. equal dollar amounts (emphasis added).

It was a rare moment of honesty in the debate over AB 624— a moment when the real purpose was revealed— to ultimately direct where the charitable dollars of private foundations are given.
That unprecedented over-reaching is compounded by other serious deficiencies in the legislation that are dangerous in their implications.

For example, the universe of the underserved is not defined by race, ethnicity, disability or sexual orientation. The poor and disadvantaged come in all sizes, shapes, colors and sexual orientation. Focusing on selected groups (as the bill does) is, in fact, special pleading and identity politics.

The Institute’s contempt for those causes they don’t favor has also been a hidden reality. Its executive director, John Gamboa, has derisively dismissed as “pet causes” foundation gifts to “elite universities and the opera.” If it’s not on Greenlining’s agenda, it’s not very important.

The Nonprofit & Unincorporated Organizations Committee of the State Bar of California has weighed in twice on this legislation. In its most recent opinion it concluded that it is unconstitutional, burdensome on foundations, poorly drafted, and invasive of privacy. There is no equivocation in its analysis; the bill has “fatal flaws.”

Equally troubling is the statistical “data” proffered by the Greenlining Institute to justify the need for their bill, information they testified to before the state legislature as if it were gospel. The most damning of their assertions is their claim that just three percent (or more recently the claim is 3.6%) of foundation giving went to minority-led organizations in California and only 10% went to benefit low income communities. An amazing assertion if one is at all familiar with large foundations in California and their patterns of giving.

Although few eyebrows were raised as they repeated their claims over the past year of lobbying, Greenlining’s data—the rationale on which their legislation is predicated—is as “fatally flawed” as the bill. An independent study of their research by George Mason University’s Statistical Assessment Service concluded that the Greenlining’s research “contains several analytical problems, involving sampling strategies, data collection, operational definitions, and data analysis…As it is, the foundation community seem ‘set up to fail’ by the comparisons used in the report.” After that critique, there isn’t much left for Greenlining, or its supporters, to hang their hat on.

AB 624, despite its manifest flaws and its being based on erroneous and skewed research, sailed through the State Assembly in a virtual party line vote earlier this year—every Democrat voted for it, every Republican, save one, opposed it. With the attention the bill has received in recent months, the result in the next few weeks might be different.

Students at UC Berkeley, hardly a bastion of conservative or libertarian thought, editorialized on AB 624 in the campus newspaper, The Daily Californian, and got it right, “AB 624, however, is less an effective treatment for pervasive inequality than a horrendous intrusion by the state into the affairs of private institutions. “

Hopefully, our legislators will think twice before reflexively voting for a measure that will do far more harm than good.

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19th Amendment still on the books

Public Affairs Consultant specializing in Issue Advocacy and Strategic Communications

Like a college freshman needing to learn some smooth lines to connect with co-eds, the GOP needs to better learn how to connect with women voters.

The latest example of the GOP missing the boat on attracting women voters is from a Santa Ana city councilman’s comment after the Orange County Board of Supervisors yesterday selected Sandra Hutchens as the new sheriff:

As reported in the Los Angeles Times’ lead paragraph on the story, "I kept telling the chief," he said, referring to Santa Ana Police Chief Paul Walters, who narrowly lost the sheriff’s job, " ‘Maybe we should get you some implants. Or a water bra.’ "

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Timing Couldn’t Be Worse to Float Tax Increase

Jon Coupal
President of the Howard Jarvis Taxpayers Association

Yesterday was a day of contrasts at the Capitol with a vocal rally of taxpayers chanting "No New Taxes" while democratic leadership called for $11.5 billion in new taxes. Perata’s call for massive tax hikes is nothing more than brazen. But in one respect, the establishment of clear lines of demarcation benefits the Republicans. Had the democrats actually proposed something reasonable, the Republicans might find themselves in the familiar territory of being on the defensive. But 11 billion plus in new taxes has even resulted in snickers from the Capitol press corps.

The timing couldn’t be worse to float such a silly idea – didn’t the democrats just see the polling where most Californians thought that the lion’s share of the action should be in cuts, not revenue increases?

One more observation: Kudos to Republican leadership for being proactive by advancing a series of alternative proposals. Come August, there is a good chance the dems will be viewed as the obstructionists. It’s about time.

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