Will Water Policies Further Imperil Funding to Local Schools?
An already bad month is about to get worse, and we are only a third of the way through August. It seemed like, just a few months ago, a rebounding economy was triggering less deep cuts to education and other state programs.
“While July’s revenues performed remarkably similar to last year’s, they still did not meet the budget’s projections,” said Controller John Chiang. “While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year.”
His monthly report, covering California’s cash balance, receipts and disbursements in July, shows revenues were down $538.8 million (-10.3 percent) below projections from the recently-passed state budget.
Recall that in order to make the budget be more than just a “paper” balanced budget like those of the previous administration, automatic cuts would be triggered if revenues fell short. Cuts include a reduction in school spending that shrink the academic year by up to seven days in some districts.
Water Rate Hikes Could Put Local Funding in Jeopardy
On the heels of this bad news, is a taste of local reality. The Davis schools have avoided the most draconian cuts, due the generosity of local voters who have passed three parcel taxes since 2007. However, that might be about to end.
While there were some clear missteps along the way, voters only very narrowly approved Measure A with 67.2 percent of the vote that required 66.7 percent in order to pass. That measure put into place a $200 parcel tax for the next two years, in hopes that by the time it expired, the economy in the state would be improving and thus future extensions would not be necessary.
Already there was bad news, as experts expected the state’s high unemployment rate to remain in place until 2013.
Yesterday the Federal Reserve announced that low interest rates would remain in place until at least the end of 2013, meaning that they expect the current slowdown to continue, if not worsen.
Things then get tricky for the school district that right now has already scheduled a parcel tax renewal of Measures Q and W, worth $300 per unit, to be on next spring’s ballot. By that point, the city will have already implemented, unless ratepayer and/or voters stop them, the first of several large water rate increases.
For residential ratepayers, they are looking, on average, around an $800 increase over the next four or five years in their water rates. Will those water rates put another parcel tax extension in jeopardy?
Already people were seeming to be at the point of saying “enough.” A large enough percentage was willing to, on a temporary basis, pass a parcel tax last May, but with water rate hikes and another city parcel tax on the horizon, will that change?
A $300 parcel tax means roughly $5 million for the schools, enough to cover a lot of the past state cuts to education. In 2013, the district would then see the $200 parcel tax passed this May come off the books.
This is not a one-time increase in water rates. They will occur over a four-year period, and will have a chance to impact multiple school parcel tax efforts.
Local business owners have already questioned the timing of the water rate hikes during a struggling economy, but this week’s news is likely to add more fuel to that fire as we face the very real possibility now of a second recession.
And that just covers the status quo.
Things look about to get a lot worse.
Back in June, the governor suddenly went from a pessimist or realist to an optimist. In actuality, he became a realist, in the sense that he realized he was not going to get revenue from the extension of taxes and therefore he knew he needed a more optimistic budget.
So the June budget relied upon the projection of $11.8 billion in higher revenues over the next 18 months.
The state saved this money in the spring, but revenues fell well short in June and July.
The projections earned criticism from lobbyist Bob Blattner who said on Tuesday, “You would have had to be foolhardy to think we’d float our way out of this whole thing just on the economy. We should have smelled something.”
While Mr. Blattner is undoubtedly correct, back in June things were looking up, but since then the Dow has fallen nearly 10 percent and economists are now downwardly revising revenue and growth expectations.
Where does that leave the school district? We do not know yet. Even the state officials are not sure when cuts would be triggered.
The Bee reports this morning, “The impact may not reveal itself until September at the earliest because of when quarterly filers report their estimated tax liability.”
Department of Finance spokesman H.D. Palmer, whose department will release their own revenue figures in the next few days, suggested that his sales tax data may be more positive than the controller’s.
“A lot of things still have to happen that are going to have a far greater impact relative to what happens to the trigger,” he told the Bee. “The biggest is when we revise our economic and revenue forecast in the fall.
Jason Sisney, for the Legislative Analyst’s Office, agreed that it is too early to judge when the triggered cuts would take effect. However, he warned, “The odds are definitely tougher than they were a few weeks ago. A significant part of our revenues are correlated with the performance of the market. Such a large turn in the market is clearly not helpful to the state’s revenue situation.”
The school district has likely already maxed out the amount that they can get locally through parcel taxes, and the Measure A vote was clearly a sign of that. The question is really, at this point, whether they will be able to maintain the level of the current parcel taxes, with local policies on water appearing likely to put that into jeopardy.
—David M. Greenwald reporting
With the stock market downturn revenues are going to be way down from their projections. As an example I had done a Roth conversion in which thousands of dollars of tax was to be paid to CA this and next year. Due to the market decline I will be cancelling that conversion. With higher water rates and an economy heading back down I doubt anything will pass which reaches into voter’s pocketbooks. By the way David, you were wrong about Wisconsin. GOP still in charge with two democrats on the block next week. It’s good to know that the people of Wisconsin get it.
Yes I was wrong about Wisconsin, I thought it would give Democrats more of a backbone than it did. I was also wrong about the economy, I thought it would start to turn around quicker than it. Unfortunately I was right about being cynical about government.
“I was wrong about Republicans, I knew I disagreed with them, I didn’t know they were suicidal and crazy.”
Please explain, this should be good.
I think you’ll be disappointing. I expected wiser heads to have prevailed much sooner on the debt crisis. I think the country is in far worse shape for having gone through it, and I don’t think the Republicans gained nearly enough to justify it.
This just adds another “interest group” to oppose the surface water project at this time, namely DAVIS HOME OWNERS. The argument made over the years was that our school system was critical to keeping the resale value of our homes HIGH and that the additional education parcel taxes were a good “investment”. My anecdotal observation is that people are hunkered down and not considering selling their homes for the foreseeable future until their home values significantly improve. The surface water project cam be postponed until better times while slashing support for Davis’ education system now would REDUCE the resale value of Davis homes when the economy inevitably will improve. It is politically very likely that the water standards will be eased in the near-term and that, in any event, drastic fines for non-compliance will not be implemented under the present conditions.
“It is politically very likely that the water standards will be eased in the near-term and that, in any event, drastic fines for non-compliance will not be implemented under the present conditions.”
Thanks Davisite, I’ve been saying that same thing. I’ve tried to find what the current fines would be and is that a better way to go than the drastic rate hikes?
“Yes I was wrong about Wisconsin…”
David….Perhaps you can take heart in Winston Churchill’s observation about Americans,i.e. “they usually do the right thing after they have tried everything else”.
Is anyone surprised that the economy/budget is deteriorating?
THis will be a long drawn out affair. Many affluent school districts in the bay area (e.g., Menlo Park, San Rafael) essentially expect families with kids in school to donate to the schools. This mandatory fundraising has been successful. We may be headed in that direction.
[quote]Yes I was wrong about Wisconsin, I thought it would give Democrats more of a backbone than it did. I was wrong about Republicans, I knew I disagreed with them, I didn’t know they were suicidal and crazy. I was also wrong about the economy, I thought it would start to turn around quicker than it. Unfortunately I was right about being cynical about government.[/quote]
Perhaps the Wisconsin situation is more about the electorate agreeing with Governor Walker’s position than that of the unions/Democrats stance on the issues of fiscal responsibility.
As far as the economy goes, pay attention to what is going on at the local level, and pay less attention to misleading media spin that is going on at the national level. I predicted at least a year ago the economy was not going to rebound, but get worse. I could see what was happening at the state level, with layoffs and budget tightening as the order of the day.
With layoffs, you have people who cannot pay taxes. With housing devaluing, you have less property tax revenue. How could anyone possibly think the economy was going to recover with all these negatives going on? Only those who want to believe Obama’s hype that big gov’t is the total answer for a better tomorrow and the media’s spin that things were not as bad as they seemed. There was also complete and utter reliance on meaningless economic indicators that did not reflect, and never have reflected, the true state of affairs of the economy, e.g. unemployment rate.
I was also fairly certain the Wisconsin GOP would stay in power. The Wisconsin governor at least started to put his state’s fiscal house in order, and the electorate knew it. Nor did the electorate care for the Democrats cowardly decamp out of state instead of allowing a fair up or down vote on the proposed ecomomic reforms put forth by the Governor. While it is true the Wisconsin governor perhaps did not need to be quite so divisive, in a sense I suspect the electorate recognized he was forced into the situation because of the Democrats desertion from their legislative duties. Sometimes you have to fight fire w fire when the other side is not playing fair.
[quote]Already people were seeming to be at the point of saying “enough.” A large enough percentage was willing to, on a temporary basis, pass a parcel tax last May, but with water rate hikes and another city parcel tax on the horizon, will that change?
A $300 parcel tax means roughly $5 million for the schools, enough to cover a lot of the past state cuts to education. In 2013, the district would then see the $200 parcel tax passed this May come off the books.
This is not a one-time increase in water rates. They will occur over a four-year period, and will have a chance to impact multiple school parcel tax efforts.[/quote]
So your position is that we should not do the surface water project bc it might jeopardize the passage of the schools tax and the city’s parks tax?
“I was wrong about Republicans, I knew I disagreed with them, I didn’t know they were suicidal and crazy.”
The first evidence, in from Wisconsin, is that a Republican stand for sane budgeting is not suicidal and not crazy. There are still enough voters that realize that government spending is not free and limitless for Republicans to have some chance of survival as the fiscal realists.
By the way, I am the first to acknowledge that Bush and his congresses were fiscally irresponsible, to say the least. I think history will view this period as the time of the “Bush-Obama” years and both will be regarded as failed presidents who were incompetent at running foreign and domestic policy.
ERM, I feel good today. It’s great that Wisconsin voters stepped up against the money and political machine of the unions. Some on this blog want to claim that the GOP is in decline and that in 2012 they will lose many seats. The Wisconsin results shows that to be false.
[i]So your position is that we should not do the surface water project bc it might jeopardize the passage of the schools tax and the city’s parks tax?[/i]
David has been saying that over and over.
[i]It’s great that Wisconsin voters stepped up against the money and political machine of the unions. Some on this blog want to claim that the GOP is in decline and that in 2012 they will lose many seats. [/i]
They lost two seats, and now have a bare one-seat majority in the WI senate. I wouldn’t be jumping up and down and celebrating if I were you. Gov. Walker’s recall election will be early in 2012. His poll numbers are very low.
CNN polls released yesterday show that Republicans are at their lowest approval rating yet nationwide.
“Just 33 percent of Americans approve of the Republican Party, while 59 percent disapprove…”
[url]http://www.politico.com/news/stories/0811/60952.html[/url] Based on analysis by Cook Report and others, I don’t think Democrats will take the House in 2012, but will rebound strongly. They do have a shot at a majority.
The Tea Party is driving down GOP numbers. “The tea party movement fares slightly worse than the GOP and has its most dismal ratings since CNN began asking about the movement in polls in January 2010. Thirty-one percent said they see it favorably while 51 percent see it unfavorably.”
Most voters supported a combination of tax increases and spending cuts in the debt debate.
Here is where we are headed for public school funding. This is bit from an article in the WSJ.
[url]http://professional.wsj.com/article/TPLATM000020110215e72f0001u.html[/url]
[quote]”Douglas County, a swath of subdivisions just south of here that is one of the nation’s wealthiest, is something of a public school paradise.
The K-12 district, with 60,000 students, boasts high test scores and a strong graduation rate. Surveys show that 90% of its parents are satisfied with their children’s schools.
That makes the Douglas County School District an unlikely frontier in the latest battle over school vouchers.
But a new, conservative school board is exploring a voucher system to give parents — regardless of income — taxpayer money to pay for their children to attend private schools that agree to abide by district regulations. If it’s implemented, parents could receive more than $4,000 per child. [/quote]
The plan is for the school district to give 75% of the total per student revenue to the parents, and retain 25%. This allows wealthier families and families with the means to send their kids to religious schools to subsidize the cost of these private shools, while giving the public schools more money per student to spend on those choosing not to, or unable to, attend private schools.
I think this idea will be a great test of the true motivations of the teachers unions. This approach would seem to be a win-win for all. However, my guess is that it will be blocked with the argument that it is not fair that the poorer kids would be stuck at the public school… which will then identify the obvious fact that the public schools are known to be crappier.
To Don Shor: I can find sources that say Republicans are gaining, to wit from hotair.com:
[quote]For those reading tea leaves ahead of the 2012 elections, the latest survey from Pew on party identification provides plenty to analyze. The only good news for Democrats is that the bleeding from 2010 appears to have stopped; party identification has remained largely stable in 2011. But Republicans have made inroads in two key constituencies for Democrats, and have narrowed the gap between the two parties since 2008 by two-thirds:[/quote]
Bottom line is that 2012 is a long way off, and anything can happen in between. I tend not to believe polls much either way, as they have not been great indicators of anything in the past. They are more part of the media spin machine on both sides of the aisle…
Don, I can cherry pick polls too:
Presidential Tracking Poll for Wednesday shows that 21% of the nation’s voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -21
Sixty-seven percent (67%) think that spending cuts should be considered in all federal programs.
Forty-five percent (45%) of voters trust Republicans more when it comes to handling economic issues, while 35% put more trust in Democrats. Voters now trust Republicans more than Democrats on nine of 10 issues regularly tracked by Rasmussen Reports. Two years ago Democrats were trusted more than Republicans on most issues.
It never ceases to amaze me how republicans no matter what the situation is on this blog, become targets. No soul searching on the part of the democrats, merely, they did not argue enough for strong liberal big govt takeovers, and that is why they lost, not because of their failures, or the failure of their policies.
Excuse me, but how much money did obama pump into the economy to turn it around? Now Paul Krugman wants more money, as if what did not work twice already is going to work now. And yet even on this blog the same people are arguing what Krugman is – to repeat the same failed policies.
I would also like to point out to Don that Obama’s own numbers are slipping, so I would not be so optimistic if I were him either.
Someone mentioned the tea party – yes some of them are kooky, but come on, they are simply the fringe groups of the GOP just like the ACLU, Moveon.org, and Greenpeace are for the dems.
I also find the headline on this blog “sluggish recovery” amusing, as if the economy is recovering? I mean come on, if the housing market is declining, less tax revenue, layoffs with no end in sight….. THERE IS NO RECOVERY.
AND THERE NEVER WAS TO BEGIN WITH
[i]”Bottom line is that 2012 is a long way off, and anything can happen in between.”[/i]
There are just 454 days until the November 6, 2012 election. That might seem like “a long way off.” However, considering that our solar system is 1,668,169,800,000 days old*–according to the latest, best science ([url]http://www.wired.com/wiredscience/2010/01/solar-system-age/[/url])–454 days doesn’t look like too much to me.
—————-
* 4.5672 billion years x 365.25 days per year = 1.668 trillion days. I realize, of course, that there is no reason to think that 365.25 was always the number of days it took the earth to rotate around its star. Likewise, a billion years ago and more, the hours it took for the earth to rotate one revolution on its axis was likely not 24. So those caveats aside, 454 is still a very small fraction of 1.668 trillion.
Also, if the earth originally rotated a whole lot faster, that may explain how Eve popped out of Adam’s rib on that Famous Friday, the sixth day, 4.5672 billion years ago.
[img]http://ecx.images-amazon.com/images/I/51MK3WA1N5L._SL500_AA300_.jpg[/img]
[i]”THERE IS NO RECOVERY.”[/i]
Recovery is a technical economic term. It simply means the period after we experienced negative growth of two or more quarters. From the third quarter of 2008 to the second quarter of 2009, we had negative growth. That was the recession. (It’s worth pointing out that first quarter of 2008 was also one of negative growth.)
2008 03 -3·6629
2008 04 -8·8903
2009 01 -6·6663
2009 02 -0·6900
Ever since the third quarter of 2009, we have had a growing economy. That is, we have been in recovery:
2009 03 1.6940
2009 04 3.8027
2010 01 3.9339
2010 02 3.7875
2010 03 2·5074
2010 04 2·3493
2011 01 0.3576
2011 02 1.2822
Nonetheless, 91 Octane might be correct for California or our region of California. I don’t know what the regional or state numbers are for economic activity, but it does not seem unlikely that this national recovery has missed us up to this point.
[i]”Also, if the earth originally rotated a whole lot faster, that may explain how Eve popped out of Adam’s rib on that Famous Friday, the sixth day, 4.5672 billion years ago.”[/i]
LOL. I think you are mixing metaphors with meteors.
As an aside, do you think it is possible that God designed humans with large enough egos and just enough intelligence that some would believe their own theories of evolution? After all, if God was talented enough to create the heavens and the earth, and design animals with all their biological complexity, might he also been able to create enough “evidence” to occupy the percentage of the population owning these large egos and brains to prevent them from destroying themselves without something else to focus on?
Steven Hawking claims God does not exist, but also claims time is not real and there are at least six other dimensions coexisting. He hopes to peek into one before he dies.
Don’t you think it is possible he will peek into one after he dies?
Jeff: [i]to attend private schools that agree to abide by district regulations.[/i]
I have no problem with vouchers on a limited basis, to find out what the demand is. I wonder what the ‘district regulations’ are. I would have serious problems with tax dollars subsidizing schools that don’t have broadly-accepted curriculum, for example, on science issues, or that discriminate as to who they accept. They should have to accept any school-age child that lives within the district boundaries, just as the public schools do. And if there are too many for their facilities — too bad, they’ll just have to keep accepting them. Just as the public schools do. That would be an interesting experiment.
I prefer public charter schools as a way of testing different teaching styles within a district. It is really too bad Valley Oak’s charter wasn’t approved. We’d have a couple of years now and would be able to compare results.
Should taxes be raised to reduce deficits? [url]http://capitalgainsandgames.com/blog/bruce-bartlett/2341/23-polls-say-people-support-higher-taxes-reduce-deficit[/url]
@ Octane: fortunately, Krugman is not advising Obama. His analyses are always interesting, but his policy prescriptions are very predictable. The advisers who favored more stimulus are no longer in the administration.
I don’t favor any more stimulus. From what little I know, I think it would be pointless. I think we have run out of fiscal ideas, and just have to ride this out. I do think that drastic cuts in federal spending would not be desirable either in the short run. Increasing public sector unemployment isn’t beneficial in any way. So I think targeted public spending to shore up local and state governments wouldn’t be unreasonable. Would it increase the pace of recovery? I doubt it. It would just help prevent further costs to state and local governments and reduce the human cost of this recession. I also favor extending unemployment benefits, job training programs, and more funding for WIC et al. I think maintaining current levels of college scholarships helps to keep people in school, which is beneficial.
The public strongly supports a balanced approach to reducing the deficit. Whichever side is perceived as being intransigent will lose public support.
Here is a quote from a left-biased CNN article entitled “New CNN Poll: Majority want tax increase for wealthy and deep spending cuts”
[url]http://politicalticker.blogs.cnn.com/2011/08/10/new-cnn-poll-majority-want-tax-increase-for-wealthy-and-deep-spending-cuts/?hpt=hp_t2[/url]
[quote]”According to the survey, only a third say that taxes on wealthy people should be kept low because higher-income Americans help create jobs, with 62 percent saying that taxes on the wealthy should be high so the government can use the money for programs to help lower-income Americans.
“That sentiment has changed little since the 1990s,” adds Holland.”[/quote]
The headline obvioulsy does not match the facts given the poll results have remained the same since the 1990s. A more appropriate title would be” “Even in this economy, little has changed supporting increasing taxes on the wealthy”
Another example:
[url]http://www.washingtonpost.com/opinions/on-newsweeks-cover-an-injustice-to-bachmann/2011/08/10/gIQA5rhu6I_story.html[/url]
But of course there is no liberal mainstream media bias…. right.
With due admiration, noted without comment:[quote]”Yes I was wrong about Wisconsin, I thought it would give Democrats more of a backbone than it did. I was wrong about Republicans, I knew I disagreed with them, I didn’t know they were suicidal and crazy. I was also wrong about the economy, I thought it would start to turn around quicker than it.”[/quote]
Jeff, you’re probably not a fan of Jon Stewart, but you might want to check out last night’s show. He took on the Newsweek cover with great humor.
I disagree with David (obviously) about the impact of water rates on the likelihood of local taxes passing. I believe Davis voters will support their schools. I do think the school board will have to work harder to sell the taxes than they have in past decades.