On the Road Again: Braving rental cars and bad coffee on the Summer of Small Business Tour

Rosario Marin
Former Secretary of California State and Consumer Services and 41st Treasurer of the United States

Last month, I attended the Orange County Small Business Council for a roundtable discussion on how small businesses are faring with state contracts. The Council is comprised of four prominent chambers of commerce in the region. After I opened the meeting, detailing the progress that the state has made in contracting with small businesses and existing incentives, the room was eerily silent. Slowly, board members began acknowledging that they had no idea that the state was so eager to do business with small businesses. Few were familiar with the Executive Order Governor Schwarzenegger had put out calling for the state to use at least 25 percent of it’s massive purchasing power with small businesses and disabled veterans business enterprises (DVBEs).

I couldn’t believe it; I knew it was time for my agency to take its show on the road.

We all know about the doom and gloom that is being reported on the nation’s current economic state, so it is especially important in these tough times that California’s businesses know the state is focusing on increasing its small business and DVBE contracts. After leaving the roundtable discussion, it became clear that bad hotel coffee and rental cars awaited me. Our state’s small businesses need to hear it from the real McCoy: California is open for business.

Each day 6.8 million Californians – half our state’s workforce – go to work at small businesses across the state. Their work in construction, manufacturing and service industries allow the small business sector to grow and drive our economy.

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New Majority calls for Real Budget Reform at Media Roundtable

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

Individuals from the New Majority, the powerful and well-heeled business executives’ organization dedicated to electing mainstream Republicans, could support revenue increases but only if accompanied by real budget reform.

While not an official position of the organization, some of the Orange County chapter’s leaders said at a media roundtable in Costa Mesa yesterday that if a revenue increase were the price for true reform to solve the continuing budget crisis, then the organization would consider such a package.

Membership Chairman Paul Folino compared fixing the state budget mess with turning around a floundering company. He said one has to be mindful of both the short-term fixes as well as making things work in the long term and getting away from the circumstances that plagued the company.

While the organization doesn’t take positions on legislation, Orange County New Majority Chairman Tom McKernan said his sense from talking to other New Majority members is that many could agree to new revenues for the state if they were tied to long-term budget reforms, such as a spending cap.

But, in considering any revenue package, McKernan said, the group would not accept any proposal that would harm business or cause more middle class Californians to move out of the state.

McKernan emphasized that the group would have to be certain that the reform was real. He said the group had no intention of being double-crossed by the Legislature again.

He was referring to New Majority’s effort to help fashion and then support a package of redistricting and term limit reform to be placed on last February’s presidential primary ballot.

In the end, Legislative leaders only put a term limit initiative forward, Proposition 93. The New Majority refused to back a stand-alone term limit measure and the group and its members ended up donating about $500,000 to help defeat it.

The New Majority members are now backing the redistricting initiative that just qualified for November’s ballot. The group helped to jump-start the signature drive on the initiative petitions with a hefty donation.

Indicating frustration with dealing with the Legislature, Political Affairs Chairman Dwight Decker said while not giving up its efforts with the Legislature, the group planned to increase its focus on policy changes to be made through the initiative process.

The New Majority now has four chapters in Los Angeles County, San Diego County and the Inland Empire as well as Orange County. The group hopes to expand in the San Francisco Bay Area and the Silicon Valley soon.

The New Majority PAC is focusing on a handful of California general election races with the goal of making sure that the Democrats do not achieve a two-thirds majority in either house.

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California Voters FIRST Act will get California on the Right Track

Former California State Controller and Businessman

Among the many measures that will appear on this November’s ballot, one of the most important is the California Voters FIRST Act. On Election Day, Californians will have the opportunity to send a message to their elected officials and to make sure their votes count in passing this important redistricting reform measure.

Year after year, partisan gridlock prevents our state lawmakers from effectively addressing the issues Californian’s care about most, including the state budget, health care, education, the economy, the impending water crisis, and the environment. Contributing to this ongoing problem is the fact that Legislators are allowed to draw their own district lines to guarantee their reelection. As a result, our lawmakers are simply not accountable to voters. In fact, even as legislative approval ratings are at historic lows, nearly 99% of incumbent legislators are reelected every year.

The California Voters FIRST Act will end the conflict of interest that exists in our current redistricting system and help put voters back in control and make lawmakers accountable to their constituents. The initiative will change the way legislative districts are drawn by creating a 14-member independent redistricting commission, including five Republicans, five Democrats and four members not affiliated with either major party. And, unlike the current process, the California Voters FIRST Act will ensure that the redistricting process is open, transparent, and protects the Voting Rights Act.

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A Split Property Tax Roll is a Bad Idea

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

Not surprisingly, considering the size of the projected state budget deficit, some are calling for tax increases that are unique or rarely heard: A tax on beer, on iTunes and movie downloads, even on strip clubs. Then there is the old standby—raise business property taxes; Peter Schrag called for an increase of business property taxes in his column yesterday in the Sacramento Bee.

This effort is commonly called the “split roll” because the idea is to split the property tax roll placing residential properties in one category and business properties in another while increasing the tax rate or assessment requirements that will tax business properties more heavily.

Even when Proposition 13 was on the ballot in 1978 an alternative was offered to the voters to treat business property differently from residential property. That measure went down to defeat. Since then a number of efforts to create a split roll have gathered signatures. The one to reach the ballot was defeated.

A split roll has not been passed for very good reasons. Those reasons have not changed even with the shadow of a large budget deficit hanging over the state. In fact, considering that the budget deficit is the result of a sour California economy there are even more sound reasons to reject the idea of a split roll.

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Back to the future? Not so fast..

Fred Silva
Director of Public Policy, California Forward

Joel Fox wrote an interesting piece yesterday about returning to the budget approval process that was in place from 1933-1962. Oh, if life and budget making were so simple…

The so called current services budget format simply tells us what the Governor thinks it will cost Californians to pay for our collective statutory and constitutional spending requirements. In the post-WWII period, life was neat and simple and so was the current services format. The state’s obligations were small with a significant portion of the general fund expenditures going to infrastructure.

Today, current services budgeting has a whole new meaning. It is filled with entitlements, caseloads, judicial requirements and pesty lobbyists. If we could find a way to measure the value of a dollar spent rather than the simple measurement of the growth in spending, some progress toward budget reform could be made.

If the Legislature and the Governor could find the magic number that would fund contemporary current services and produce value for the dollar spent, the idea of a vote requirement that is linked to state spending might be worth the time required to make it work.

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Same Sex Marriage – An Economic Windfall for California

Matt Klink
President, Klink Campaigns

Much hoopla or protestation, depending upon your political persuasion, surrounded Monday’s 5:01 p.m. marriage ceremonies in Beverly Hills and San Francisco. Tuesday, papers nationwide covered the ceremonies and foretold the flood of same-sex couples flocking to county registrar offices throughout California to obtain marriage licenses.

While these daily newspapers focused on the strife between proponents and opponents of gay marriage, more attention should be paid to the economic benefit that gay marriage will bring to a deeply indebted California – and what this means for our state’s future.

A June 11, 2008, US News & World Report article on the subject offered a brief analysis of the situation when its author wrote, “Almost as soon as the state Supreme Court declared a state law banning same-sex marriage unconstitutional last month, analysts saw the potential for an economic boomlet.”

Thankfully, someone had the foresight to study this situation and offer an economic analysis. According to a report co-authored by Brad Spears, J.D., and M.V. Lee Badgett, Ph.D., “allowing same-sex couples to marry will result in approximately $63.8 million in revenue over the next three years.” This figure is staggering given that California faces a $15 to $17 billion budget deficit this year alone.

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Back to the Future to Solve Budget Delays?

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

Perhaps, the way to fix future budget delays is to go Back to the Future. The character Marty McFly in the movie by that same name went back in time to re-adjust happenings in the past that would make life better in the future.

Since no time machine has been invented yet to change the past, maybe we should simply borrow an idea from years ago that could help with passing budgets in the future.

From 1933 to 1962, a simple majority vote to approve the state budget was required if the yearly budget increase were 5% or less. If the yearly increase was more than 5%, a two-thirds vote was required. Bringing that provision back may solve many a budget impasse and at the same time provide a reasonable spending cap.

Many complain that the requirement for a two-thirds vote to pass the budget is the cause of delayed budgets in California. Only four times in the last 30 years has the Legislature passed a budget by the June 15 deadline. Once again, they missed the deadline this year—that’s 21 years in a row.

The two-thirds vote requirement to pass a budget was not a requirement of Proposition 13. How many times I have heard that incorrect “fact” charged in a debate. The two-thirds vote to pass the state budget became law in 1962.

When a two-thirds vote was required between 1933 and 1962 when the budget increase exceeded 5%, it was often easily attained so the two-thirds provision was made permanent when the constitution was “cleaned-up” of excess language in ’62.

Whether the two-thirds vote to pass the budget has worked to the citizens’ advantage is an interesting debate. By requiring a two-thirds vote, the minority party has been involved in budget discussions and minority party members’ ideas are considered.

On the other hand, as budget hawk Senator Tom McClintock has pointed out, the two-thirds vote to pass the budget has too often led to more state spending. McClintock said, “What it does is bid up the cost of the budget with each additional vote.” In other words, a legislator may bargain his or her budget vote for a new program or park in the home district.

If the two-thirds vote doesn’t restrain spending, maybe using the old model to pass the budget will. If a majority vote were required to pass a budget increase of no more than 5%, that cap would serve as a spending limit. If the legislators want to go above 5% they can do so with a two-thirds vote.

California operates on a current services budget. If current services are continued in most cases the increase would come under the 5% cap and could be achieved by a majority vote. However, if a new spending commitment were made by the Legislature — and that increased spending exceeds the 5% limit, — then a two-thirds vote would be justified.

Setting up a two-tiered system would force legislators to think about new spending programs. And, the plan would act as a de facto spending limit. However, it would also allow for a majority vote to pass the budget if spending increases were reasonable. Could this model from the past lead to a new way of doing things in the future?

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Semantics may factor into proposed tax increase

Michele Steel
Orange County Supervisor (2nd District) and Former California State Board of Equalization Member

This past week, Senate Democrats called for a $11.5 billion dollar tax increase to help balance the budget. The Republican legislative delegation will hold strong against any new taxes or tax increases. Every Republican member, save one, has publicly taken the "No New Taxes Pledge;" it would be political suicide for a Republican member to break their promise on taxes.

However, taxpayers should be very afraid of the inevitable game of tax semantics, especially over a sales tax on services. The pro-tax lobby is already trying to frame the issue as "tax fairness" and "modernizing the tax code." A wide application of the sales tax to services could mean up to $45 billion in new taxes! That huge number gives the pro-tax lobby a wide variety of services to tax. 

Make no mistake about it; applying the sales tax to services is a tax increase. Moreover, it means a double tax for businesses that already pay one of the nation’s highest income tax rates. Small businesses need to make it clear to Republican members that any expansion of the sales tax is a tax increase. 

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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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