Governor Jerry Brown unveiled his budget plan Monday, but critics have already scoffed that it looks remarkably like that of former Governor Arnold Schwarzenegger, and GOP leaders have already said that the tax plan will get none of their votes.
In a statement, Governor Brown said that his proposed budget will be comprised half of budget cuts and half tax increases in order to attack a deficit that is estimated at $25.4 billion.
In an Op-ed in the LA Times yesterday, Joe Mathews asked if the failures of Arnold Schwarzenegger will save the state. He argued, “Nothing worked for Schwarzenegger because the system itself doesn’t work.”
He went on to argue, “On fiscal and budgetary matters, Schwarzenegger suffered defeat after defeat. The state’s fiscal record after his seven years — California has the same budget deficit now as in 2003, with a much larger debt — has led commentators across the political spectrum to write him off as a failed governor. That conclusion has a factual basis — and is deeply wrong. And it obscures the most interesting and important lesson of his governorship. Put simply: The sheer number and surpassing scale of Schwarzenegger’s failures to fix the state budget constitute a grand and peculiar success, especially if Californians heed the lessons they provide.”
Last week we reported that Genentech, one of the chief backers of Prop 24’s efforts to prevent the closing of tax loopholes opened up in the 2008 and 2009 budget deals, had pumped 1.6 million dollars into the efforts to defeat Prop 24, only to turn around and eliminate over 800 California jobs.
Now Dan Morain, Senior editor of the Sacramento Bee, is reporting that Comcast is the latest to play “take our tax breaks and run.”
Davis has often lamented the fact that Dixon, rather than Davis, got Genetech’s expansion. In 2008, Genentech, a company based in South Francisco, decided to put a 140,000 square foot research facility in close proximity to UC Davis. But instead of building it in Davis, they built it in Dixon.
At the time, the facility was expected to house 120 employees starting in 2010 and expand to 160 employees in 2016. This was before the collapse of the economy in September 2008, and the plans have since been dropped (perhaps demonstrating the problematic nature of any investment by a large company).
Apparently Governor Arnold Schwarzenegger did not get the memo – he is a lame duck, he is no longer in charge, and even when he was in charge he did a poor job of getting budgets passed anyway. It is time to step aside and let Governor-Elect Jerry Brown have a shot at it.
In case you missed it, last week Governor Schwarzenegger, who is still refusing to be called a lame duck, called a special session of the legislature for December 6 when the new legislature is sworn in. The purpose?
We already knew it was going to be a problem because the last budget passed was largely smoke and mirrors covering up a deficit as high as ten billion dollars. But now we know it is much worse than that.
According to the Legislative Analyst’s Office, a non-partisan agency that scrutinizes the state budget, “Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011-12 state budget plan.”
Governor Calls Out Republican Legislators for Attempting to Block Reform – The reform was designed to roll back major state worker pension increases that were implemented in 1999 that set in motion a round of local government pension increases that critics have claimed are unsustainable and will increasingly eat up funds needed for general operating expenses.
They would not share the details on Friday night, but the Governor and legislative leaders from both parties apparently believe that they have reached an agreement that would end the state’s record-setting budget stalemate.
Last night, Senate President Pro Tem Darrell Steinberg announced that they had reached a “comprehensive agreement.”
One of the more innovative and far-reaching environmental proposals was defeated by the State Senate this week,…
There are a couple of noteworthy editorials in this morning’s Sacramento Bee pertaining to the issue of pensions and state workers. I have long supported both unions and public employees. However, we have allowed, particularly at the local level, the pension system to run out of control. Local entities simply cannot support the rate and length of pension benefits, particularly to non-unionized upper management and those otherwise rank-and-file making over $100,000 per year.
My fear has been from the start that if we do not fix this problem, the voters, as they have in the past, will pass the first and most draconian “reform” package that they get their hands on. The typical state worker and public employee is not the problem here. The typical state worker makes less than $40,000 per year and gets 2% at 60. Do the math and, even working for 35 years, such a worker would get no more than $28,000 per year in pensions. That is a healthy retirement, but not the type of pension we are fearing.
by Chris PrevattWhile I appreciate his highlighting the contributions of Dan Chmielewski and myself to the debate with Steven Greenhut and Supervisor John Moorlach, I do have to take issue with the way he presented some of my comments, including the attribution of some statements out of context.
For those who do not believe that pension reform is quickly becoming inevitable, the proposal by Democratic Governor Candidate Jerry Brown probably makes it exactly that. And while his opponent Meg Whitman was quick to attack the proposal, it has always been my hope that more moderate forces would get out in front on this issue.
From my perspective, the fiscal problems that cities face with pensions have little to do with the average worker’s pension and far more to do with the 3% at 50 safety enhancement, early retirement ages, pension spiking, and the large pensions earned by those in top managerial positions. The average state worker will earn roughly $27,000 upon retirement. My hope is to protect that average state worker while reforming the excess at the top.
On Friday a Sacramento County Superior Court Judge denied Governor Arnold Schwarzenegger’s request to pay state employees minimum wage. Judge instead is asking for a full hearing in August, which means that state workers will get at least two more months of full pay checks.
On July 2, the 3rd District Court of Appeals upheld a nearly year-and-a-half old ruling that would allow the Governor to order state workers’ pay reduced to minimum wage until a new budget can be signed into law. However, Controller John Chiang refused to pay it, and argued that he had legal room to maneuver.
The 3rd District Court of Appeals on Friday upheld a nearly year-and-a-half old ruling that would allow the Governor to order state workers’ pay reduced to minimum wage until a new budget can be signed into law. The timing cannot be mere coincidence, only a day after the governor ordered the Controller to pay all state workers 7.25 in wages until a budget is passed.
However, this fight is far from over. On Friday, Controller John Chiang argued that while he lost the appeal he still has legal room to maneuver.
Controller John Chiang Refuses to Implement Pending Court Ruling on Legality – In a letter from the Department of Personnel Administration Director Debbie Endsley, Controller Chiang is told, “Today is July 1,2010, and there is no state budget. Regrettably, we must take the steps outlined in the attached pay letter to adjust wages and salaries during this budget impasse. The six Bargaining Units with tentative agreements are not included because we are seeking and expect the Legislature to approve a continuous appropriation for these six units. We anticipate passage of a continuous appropriation for these bargaining units before the end of the month.”
One of the key differences that people need to understand is that the composition of the state budget is very different from the local budget. Locally, employees make up over 70% of the city’s costs. The result is that increases in compensation both in terms of salaries but also in terms of promises for pensions put a huge strain on the budget.
The city of Davis managed to survive first through the collection of a half-cent sales tax that produced around three million per year in revenue and also because property tax revenue was increasing at a very robust rate during the last decade. However once the real estate market flatlined in Davis and busted in the rest of the state, revenues could no longer keep pace with increases in employee salaries.
According to the Legislative Analyst’s Office (LAO) report that we released this year, showing state spending at a record low while the recession is the primary cause of California’s Budget deficit. In addition, the California Budget Project’s report shows a huge growth, not surprisingly in state spending on corrections over the past two decades.
According to the Department of Finance, state spending per $100 of personal income is at its lowest level in nearly 40 years. Under the Governor’s May Revision, General Fund spending, adjusted for inflation would at the lowest per capita level since 1993-94. And as a percentage of personal income, state spending in 09/10 is at its lowest level in more than a decade.
Given the state of California’s economy and cutbacks to education, perhaps it is not surprising that several different groups are threatening to sue. On Thursday a lawsuit was filed in Alameda County by the California School Boards Association, the Association of California School Administrators, and the California State PTA.
The suit calls for the courts to get rid of the current financing system and to direct the governor and Legislature to create one that is sound, stable and sufficient. They argued it prevents six million students from receiving the education that they are entitled to under the state’s constitution.
Just about everyone understands that there is a problem with the structure of the current pension system in California right now. It is a problem that was brought to the fore by the recent economic and market collapse that put a strain on a tenuous CalPERS investment system.
The problem is the solution is elusive at best. Recently the word came down that neither Governor Arnold Schwarzenneger nor Republican candidate for Governor Meg Whitman will back an initiative that would have reduced pension payments and extend retirement ages for new state and local government hires. Would have is the operative word because the initiative has been suspended in part because they were counting on major funding from Ms. Whitman.
Overall one has to say the news could have been far worse when the Pew Center on the State puts California’s state retirement system into the “needs improvement” category as opposed to the lower category of “serious concerns.” Moreover, the study show the impact on the public pension system due to the collapse of the financial markets, however it does not include the rebound that occurred at least on Wall Street after mid-2009.
Overall the numbers look like this: California’s state retirement systems have promised current and retired workers around $3.35 trillion in pension, health care, and other post-employment befits as of 2008 but have $2.35 trillion on hand to pay for them. Strictly looking at the retirement system, there were $454 billion in pension and benefits on the book in 2008, $59 billion was unfunded liability, that means that the fund had the assets to cover 87 percent of its obligations.