Recently in The Budget Category

A recent large headline in the San Jose Mercury News got me thinking.  The headline was, "A dire warning from the Governor". (Online headline is different from the morning's print headline.)   From the story, "Schwarzenegger said ... his threat ... is necessary to prod lawmakers into swift action."

I have to admit that even I rolled my eyes when I saw that -- even though I understand how serious the problem is. And this led me to think that maybe there is a "crying wolf" factor at work here.  This has been going on now or a long time. 

A few months ago the crisis was reaching a breaking point, dire warnings were issued, and most importantly the public was starting to pay attention.  This triggered the leadership in Sacramento to do what I think was the worst possible thing: they came up with the fluffy budget compromise that "solved" the crisis and resulted in the failed May 19 Special Election.  I believe the compromise was a mistake that broke the tension and led people to believe that the "crisis" was over, so they tuned back out. 

I think the "chicken little" aspect of the whole affair kept people away from the polls in droves.

I am not faulting the Governor and other state leaders for headlines like thos and other warnings because the crisis is real.  Our leaders all need to do whatever it takes to get people to pay attention, to realize this budget crisis is real and that everything that can be cut has been cut, that they really are going to have to let people out of prisons and close parks and still will run out of money anyway.  Bankruptcy and all of its consequences looms.  For real.  The public has to get involved and do their job in this democracy.

But I can understand why most Californians have tuned out.  I think part of this budget problem is that it has become the norm to use drama and fear to prod others into action.  And not just with the budget.  There are so many terrible problems hitting us from so many directions.  The economy really did collapse, and we may be on the edge of another Great Depression.  For real.  This has been a headline swarm for months.  Swine flu is real, but is not as lethal as it first appeared it could be.  This was the headline swarm a few weeks ago.  And of course Global Warming is real, and serious.  It has been a headline swarm for years.  

Those are real and serious problems.  But at the same time there are so many manipulative, well-funded and sophisticated PR campaigns, usually from corporate interests, that use fear and/or other manipulation.  Remember the headlines warning aobut possible terrorist smallpox attacks?  Remember being told that Iraq was on the verge of hitting us with nuclear weapons?   Remember duct tape? 

So people just do not know who to trust and necessarily are becoming immune to drama.

California's big media outlets could do a better job of explaining the real problems facing the state, beginning by dispelling the idea that the state is just wasting taxpayer money and everything can be solved with a few painless budget cuts.  They need to do this in a serious, respectful way, with comprehensive investigative reporting.  If print media won't do that, they should close their doors -- they aren't doing their jobs and aren't helping anyone anymore so they should let their advertisers support a medium that helps democracy rather than hinders it.  If broadcast media can't do that, they should relinquish their broadcast licenses to others who will.

The poor, elderly and disabled have already suffered the cuts.  They understand that this is for real.  So maybe we need the crisis to hit home so (middle class) people can also understand that it is for real - this time.  

I came across two letters-to-the-editor in today's San Jose Mercury news, asking California's leaders to be responsible and include revenues instead of just cutting services to the people of the state.  Here is what they wrote:

State leaders must find more money

Our California Legislature really needs some budget advice from California's moms and dads. If my family was in a deep financial crisis that meant I couldn't provide my kids with the essentials they need, I would turn over every cushion looking for spare change, get a weekend job, or sell things in a yard sale. I would try almost anything to bring in more money.

While our state leaders have said these budget cuts are agonizing for them, they haven't yet considered every option to avoid or lessen them. Cuts to programs serving children, families, and the elderly could be avoided if legislators closed corporate tax loopholes, and raised taxes on items like tobacco and alcohol in order to raise revenue. According to recent public opinion polls, these revenue options are overwhelmingly popular while drastic cuts to social programs are not.

I urge our leadership to step up and do right by California's kids and families.

-----

To be responsible, state must raise cash

Our California legislative leaders keep repeating that "all options are being considered" in an effort to balance our state's budget. Yet Sacramento has said very little about options to increase revenue. California families need our lawmakers to do better than just slash essential programs that we all need. To be responsible, we also need to raise revenue.

Truthfully: An 83 cent increase on tobacco taxes is far more responsible than cutting up to a million kids off health care coverage. And raising revenue on items such as tobacco and alcohol is popular, while making drastic cuts to social programs is not.

Before we start slashing billions of dollars from health care and education, let us truly examine all the options.

People want their government to serve them, not just the big corporations.  Cutting services to people in order to keep taxes low on big tobacco and oil companies is a terrible way to run a state.

Most Californians don't know that there was a huge corporate tax CUT in the recent budget deal.  With this huge budget problem requiring tax increases and service cuts for the people of California, they passed a huge tax cut for large corporations.

The Working Families e-activist network sent out an email that included the following:

While Governor Schwarzenegger claims the only way to balance the budget is by slashing funding for education, health care, public safety and other vital services, a handful of large corporations are poised to receive significant tax giveaways which will wind up costing the state nearly $10 billion over the next five years.

. . . Fairness dictates that everyone shares in the pain, and that should include some of the world's wealthiest corporations. The decision to keep tax loopholes open and make cuts instead is a conscious choice, and it's one that legislators should be held accountable for making. Before considering additional cuts to programs Californians care so deeply about, the California Legislature needs to act now to shut down these unfair, unnecessary corporate tax giveaways. 

Send a Letter to Your Legislators to Shut Down Unfair Corporate Tax Giveaways!

Click the link and add your voice to this effort.

Governor Schwarzenegger has talked about the need to act responsibly and pass a budget. 

So the legislature is trying to do just that.  According to the Sacramento Bee, "... the Legislature's joint budget conference committee, on a party-line vote, adopted a plan that included about $2 billion in new oil production and cigarette taxes to help bridge a $24 billion budget gap."

So what is the Governor's response to a balanced approach to fixing the budget?

"Gov. Arnold Schwarzenegger said he wouldn't sign a plan that was balanced with tax increases."

He will shut down the state, close the schools, lay off thousands of workers, because the legislature balances the cuts with small tax increases on tobacco and oil companies.

This is known as "dancing with the ones who brung ya."  The Republicans get elected with millions of dollars from big corporations, and that is who they answer to.  They will close schools, lay off police and firefighters, and keep elderly people from getting needed medical care or oxygen tanks delivered, just to protect the cash that is flowing to a few very large corporations.  From the referenced post,

If you look at the independent expenditure reports for the 2008 California election you'll see a massive amount of last-minute money. ... you learn that this money came from corporations like Arkansas' Wal-Mart, Blue Cross of Ohio (Ohio?), Reliant Energy, major real estate companies, and from other PACs.

... huge amounts of money coming from large corporations like Philip Morris, ATT, Chevron, Safeway, Sempra Energy, Verizon, big insurance companies, big pharmaceutical companies, big real estate companies ... and other conduits like the Chamber of Commerce.

But think about this: it isn't "corporations" who are doing this.  Corporations are just abstract concepts, really nothing more than a bundle of legal contracts and enabling laws. It is people -- a few specific people.  When you hear that a corporations did something, it wasn't Bob in Sales or Alice in Accounts Receivable who made decisions that affect your life like this, it was really a few people at the top who have control of the resources of that corporation.  The things they do are intended to benefit them personally, not to benefit the company.  This is why so many companies are destroyed while the executives get rich and then leave a mess behind.  Corporations are not the problem, it is the use of corporate resources to influence government that is the problem.

And this time, while we try to solve a budget problem that looks like it could shut down the state, it is a really big problem. 

As the state's budget woes grow it is increasingly difficult to gauge what the public wants (or even understands.)  The information channels are stuffed with corporate/conservative propaganda and astroturf like the "tea parties" but there is little comprehensive, accurate and truly objective information available to help the public understand what is happening.  For example, few stories about the budget explain that a minority of only 1/3 of the legislature is blocking the passage of a budget, or that a budget was passed by the legislature in January and was vetoed by the Governor.  Few stories explain the extent of budget cuts the state has already made.

The uninformed public isn't helping solve this.  Turnout for the special election was only about 28 percent of our 17.1 million registered voters, which is about 20% of the 23,385,819 eligible voters.  So the election didn't tell us what about 80% of our citizens want to do.  It did show that a solid majority of 20% of us didn't want those particular ballot initiatives. But what does this mean?  While 31% of Los Angeles County voters were for proposition 1a, just this last November 68% voted for the Measure R sales tax increase. This corresponds with other gauges of the meaning of the special election.  So the special election provides little guidance for policymakers.

An April Field Poll of Californians showed that Californians are against raising taxes and against cutting school budgets, health care and higher education.  Should we conclude from this that they are just in favor of bankruptcy?  Before we conclude bankruptcy is what people really want, we need some polling to see if people understand what it would mean to their own lives.  For example, do pepole understand the economic effect from laying off all of the state employees, teachers, etc., closing down the schools, colleges and universities, hospitals, prisons, and stopping all the firefighting and police services that people expect.  Are they really in favor of this, or do they just not understand what they are asking for?

Meanwhile, the poll found that 74% approve of increasing taxes on millionaires, and 56% favor legalizing and taxing millionaires marijuana.  So maybe there is some guidance from that.

These figures on taxes are supported by an April 15 Gallup poll finding that 48% of Americans think they are paying the proper amount of taxes, but 60% believe the wealthy are under-taxed (and "23 percent think they pay their fair share, and 13 percent feel that they are overburdened").

The SEIU has just released a TV ad which they will be spending $1 million to run, along with a new website, CommonSenseForCA.org. They are asking for a balanced approach to fixing the budget, not just through cuts but also with new revenue.  Here is the ad, and please visit the website. 



Let us know what you think.

This is a guest post from former State Senator Sheila Kuehl.  This is a more accurate analysis of the real reasons the initiatives failed than the spin you are probably hearing on the radio or word-of-mouth.  As we discussed the other day, polls show a number fo reasons the voters rejected the proposals, few of them related to taxes.

The Problem With the Rhetoric

Immediately after the election, the Governor announced that the "voters had spoken" and that the defeat of Prop 1A "clearly" meant that Californians stood adamantly against any new taxes or fees.  He must have been reading the leaves in the bottom of his tea cup in order to come to a favored conclusion, however, because there was no evidence to support his assertion.  Quite the opposite, as a poll taken between May 16 and May 20 showed.  (see below)

The Governor didn't stop there.  Building on his unsubstantiated assertion, he went on to maintain, that he, therefore, had no choice but to propose a budget that would put the wrecking ball to California's safety net for healthcare, children, the elderly and schools.  As shown below, his conclusion as to the meaning of the "No" vote on Prop 1A is not true, and, therefore, these proposed cuts, and a budget with no new revenues, is not the most acceptable answer for California's voters.

What Would Prop 1A Have Done Again?

Many voters indicated they were confused by Prop 1A and with some good reason.  Like every one of the Propositions on the May 19th ballot, Prop 1A was originally constructed to satisfy Republican demands in exchange for a minimal number of "aye" votes on the February budget.  As such, Prop 1A would have placed a spending cap on future budget expenditures.  Then, in order to placate Democrats who did not agree with the spending cap as drafted, an extension to the new sales tax was added to the Proposition, giving virtually everyone something to hate.
 
An Interesting Irony

It seems sadly ironic that, just as the rest of the United States is rejecting the right wing's long stranglehold on our rhetoric, California, the long hold-out, is embracing it.  Years ago, Grover Nordquist, one of the right's mouthpieces, said that his goal was to shrink government down to where it could be drowned in a bathtub.  By patiently denigrating government, valorizing private enterprise, establishing inflexible term limits to guarantee an inexperienced legislature, setting up a 2/3 vote requirement to raise a tax, but only a majority to lower one, government in California was set up for the shrinkage.  

But California proved stubborn.  Support of schools and the safety net continued.  Since, by definition, these are jobs only the government can perform, government continued to be an important part of all solutions to poverty, education and healthcare. 

Until now.  This month, even our moderate Republican Governor, along with a seemingly cowed Democratic majority in both houses, contemplates throwing in the towel and balancing the budget with nothing but cuts, cuts, cuts, thus fulfilling Grover Nordquist's desire. 

But the call for these cuts is predicated on misreading the tea leaves of the defeat of Prop 1A, in an election in which only 23% of registered voters voted (4 million out of 17.1 million, or about 10.5% of Californians).

What Did The Voters (and the Non-Voters) "mean" by the Defeat of Prop 1A

The only real information we have about voters' intentions is a poll conducted between May 16th and May 20th of 603 people who voted in the election and 405 who did not.  According to several sections of the poll:

1) 3 out of 4 voters and non-voters simply thought these propositions should never have been put to them for a vote.
2) 7 out of 10 did not like that the Governor and the Legislature keep balancing the budget "on the backs of average Californians" instead of requiring special interests to pay their fair share.  Only 20% thought all Californians were being asked to share the pain equally.

How About the "No on 1A" voters specifically?

This is the result that puts the lie to the Governor's interpretation.  Of voters who voted "no" on Prop 1A, less than half said the government should rely entirely on spending cuts and not increase taxes.

65% of all voters agreed that shared responsibility should be part of the solution and not simply reliance on spending cuts to balance the budget.

Do "No" Voters on Prop 1A Support Any Taxes?

According to the poll, 62% of "no" voters supported increased taxes on alcohol (75% of "yes" and "no" combined supported this tax), 62% supported increased taxes on tobacco (74% of all voters), 60% supported an oil extraction tax on oil companies drawing oil and gas in California (73% of all voters), 58% supported not allowing corporations buying property to be protected by Prop 13 (63% of all voters), 55% supported not allowing tax credits for companies to go over 50% of what they owe in taxes (59% of all voters).

Conclusion:  Voters Would Support a Balanced Approach

Even so, the budget will have to incorporate deep cuts no matter what the solution.  The only question is how much, and whether some of the cuts can be made less deeply because revenue solutions are part of the answer.

Next:  A Possible, Though Still Painful, Way to Balance the Budget

Did the results of the special election on the budget propositions really show that the public is against taxes and government, as the Republicans claim?  Recent polling looked at the reasons the propositions failed.  Polls are a useful way to understand what people really thing because they take a scientific sample, actually asking the voters what they think, instead of just repeating something that Republicans just say.  Let's see what the voters give as their reasons for opposing the propositions.  From the polling:

• 74% of voters polled thought the election was just a gimmick, not an actual fix for California's budget problems.
• 70% of the voters polled said the legislature is a captive of special interests (possibly because people are learning that the "budget deal" that they came up with in the middle of this emergency included a huge tax cut for large, multi-state corporations.)
• In a budget battle dominated by Republican demands for spending cuts instead of asking the rich and corporations to pay their fair share only 19% of voters polled said that Californians are being asked to share the pain equally. 
• And to drive that point home, only 29% of voters polled said that the budget should be balanced only with spending cuts.  According to the polling "even among 'No' voters, less than half (46%) say the government should rely entirely on spending cuts with no tax increases."

In summary, voters resented that the legislature is held captive by the 2/3 rule, and want them to address that instead of coming up with short-term gimmicks to get through another year while making things even worse later.

Additionally, and completely contrary to anti-tax and anti-government claims, the polling showed "broad support for new revenue streams."  According to the polling report, the public supports:

As we face this state budget crisis, we would like to remind people that it didn't have to be this way. The Democrats in California's legislature tried to do the responsible thing to keep the state running and head this off, and passed a good budget in January. The Republicans and the Governor instead wanted to create a crisis and force the state into bankruptcy.

From January, Schwarzenegger vetoes budget bills,

Gov. Arnold Schwarzenegger this afternoon vetoed the Democratic plan to reduce the budget deficit by $18 billion and will urge lawmakers to use his January proposal as a template for implementing midyear cuts...

The move forces leaders to start over in their efforts to close a budget deficit estimated at $40 billion over the next 18 months. It jettisons -- for now -- what Democrats hailed as "the only game in town" -- because it included tax increases approved without Republican votes.

Schwarzenegger rejects latest budget proposal,

Democratic leaders sent Gov. Arnold Schwarzenegger an $18 billion deficit-cutting package on Tuesday, a plan he quickly vetoed as anti-tax groups filed a lawsuit to stop it.

The activity came amid the Legislature's third special session since the November election to deal with California's worsening budget deficit, projected at $42 billion over the next 18 months.

For some reason, it has been forgotten that this budget would have solved this problem and avoided the May 19 election and resulting chaos. But the anti-tax extremists blocked it because they don't want government to work, they want it to shut down. It is a strategy they are following because it keeps their base active and brings them corporate donations. They do not believe in government, they have said so, and they have all signed a pledge to that effect.

The Democrats should be strategic as well as responsible and pass this budget again. This time if the Governor vetoes it or the anti-tax extremists take it to court they will be doing so while people's own schools are forced to lay of teachers, and their own police departments are being forced to reduce patrols. It won't be hypothetical, it will be happening in their neighborhoods and their cities. The public will be able to see for themselves who is trying to keep the state running, who is trying to keep their schools open, and who is trying to shut the state down. And if it goes to court they will be forced to ask why we do not have majority rule in California, how there can be a law allowing a small number of extremists to block everything.

Over at Calitics there is an interesting diary from 'zeroh8' asking "Why Are We Spending So Much More?"  zeroh8 looked at the changes over the last ten years in how the state spends money.  The result, according to the diary, is a per-capita increase of $1088 as follows:

California Government Department
2007-08 less 1997-98 Per Capita Spending

Criminal Justice $185
General Government $14
Health $265
Higher Education $109
K-12 Education $399
Resources & Environmental Protection $27
Social Services $59
Transportation $30
Total $1,088 

Robert Cruikshank commented that the appearance of an education spending increase is an illusion, (sadly California still ranks 47th in education spending-per-pupil)

Much of the "increase" in K-12 funds is illusory. When Arnold cut the VLF in 2003 that money had to be backfilled by the state. That backfilling is listed on the books as "spending" and so it appears as a huge "spending increase" when in fact it is no such thing. Schools didn't actually get more money. It's an accounting trick.

Robert is pointing out that this appearance of a large increase in education spending is actually just replacing spending that was already there, but that was cut from local budgets when Governor Schwarzenegger cut the Vehicle License Fee, so the state had to make up (backfill) the loss.  The state is spending more because local governments are spending less, but the total hasn't increased.  Lesson: you have to look at the whole picture including local budgets to see the whole story because the state has to step in when local governments lose their funding sources.

Health care spending increases are certainly not isolated to California state government.  This is the health care crisis that is eating up government, business and family budgets around the country.  So far We, the People, in our wisdom, had avoided the kind of "socialized medicine" that the rest of the world has, which means we spend vastly more for health care with vastly worse results.  There is little California can do about it, except to further deny health care to people.  Is that the kind of people we will decide to be? 

Then there is that huge increase in criminal justice (prison) spending.  Was that necessary?  Well, we decided to pass laws that put people in prison for life for stealing a pizza or for years for smoking a joint.  And in the last few decades we have cut education spending, which to some extent has necessitated the increases in prison spending, because we know where that inevitably leads,

"18-to-24-year-old male high school dropouts have an incarceration rate 31 times that of males who graduated from a four-year college"      

We're seeing the health care crisis eating the state budget, and the problem of the prison costs.  Part of our problems today are because yesterday we were "penny wise and pound foolish," saving some money by cutting education only to spend it on prisons (and who knows how many other ways) later.  Along with foolish tax cuts like cutting the VLF, and cutting property taxes for big corporations, and instead borrowing which has led to huge interest payments, those are the spending problems that brought about the budget crisis and that keep our government from being able to spend more on things We, the People need.

About those choices:  zeroh8 did a ton of research because no California citizen would know any of this from sources available to most of us.  The corporate media is not explaining the state budget and the functions of government to the public.  The example of the state making up local revenue losses in order to save our schools is a great example -- instead it is just presented to people that the state is "spending even more".

So what is the point of this exercise? To give the people the facts, not the phony sound-bites designed to further anger people against government and rail even further about having to pay taxes to fund the programs and services. The goal of the conservatives is to simply unfund government, thus making "We the People" powerless against the big moneyed interests -- the people who brought you the sub-prime fiasco, the Wall Street boondogles, the Haliburton no-bid contracts and the Blackwater mercenaries.  As long as the bucks are flowing, what do they care if government can't do its job.... what do they care about long lines at the DMV, wildfires that burn down communities, gangs that take over our streets and oh, yes......swine flu epidemics that kill millions?  They can just fly away in their private jets or sail away on their yachts -- that california won't tax.

This is an interesting strategy: Just vote against everything, and leave it to the responsible people to come up with ways to get around this obstruction.  And then, when citizens are angry about the huge mess this creates, send them letters saying you supported whatever spending they wanted, and that's why you voted against everything.  Meanwhile, you collect your state paycheck, and receive hundreds of thousands of dollars in corporate "contributions."  Nice work, if you can get it.

This is a dilemma for responsible legislators.  When you face an extremist group with just enough votes to block everything, how can you keep the kids in schools, provide oxygen tanks and other necessities to the elderly, provide police and fire protection and continue other essential government services?  When the state's major media just won't inform the public of the facts and makes this budget standoff seem as though government is little more than children squabbling over some cookies, with "both sides" refusing to compromise, the state slides toward becoming ungovernable.

What you you do about this?  There will be a ballot initiative tp roll back the rule that any revenue increases require a 2/3 majority to pass.  This initiative is currently named Restore Majority Rule, and you can visit the early website at ca.restoremajorityrule.com. Please sign up to help pass this initiative, and tell your legislators, friends and family that you support this change.