State of California

Local official are bracing for the May revise to the state’s budget.  The Governor was able to close a portion of the more than twenty-five billion dollar deficit through an initial round of cuts.  However, his plan was to extend the tax increases to deal with most of the remainder of the budget deficit.

Politics have derailed this effort and it appears increasingly likely that the budget gap will be closed through an all-cuts budget, despite a strong majority of the public who prefer the opportunity to at least vote on the Governor’s tax extension package.

One of my chief complaints about the management of the budget deficit in the City of Davis was the state of denial the former city manager was in, and thus by extension the rest of the city, most particularly city employees and to some extent the broader community.

As we look to a new city manager, we must keep in mind the fact that, just because things are not as bad here as elsewhere does not mean we are not on the brink.  The brink being looking down the barrel of huge increases in the cost of pensions and retiree insurance, based on huge and growing unfunded liabilities.

While Governor Brown has had some success in his plan to close the budget deficit, his plan has hit a number of critical stumbling blocks.  It is well known that the Governor is now unlikely to get a chance for voter approval of a tax extension.

Another key provision of the his plan was the elimination of redevelopment and the transfer of those funds to state purposes.  Last week, the Legislative Counsel declared the Governor’s redevelopment plan unconstitutional.

Unions and other defenders of the current pension system are fighting back with a new website launched yesterday called “DontScapegoatUs.com.”

The website strongly criticizes eight figures who they say are leading the charge to change public pensions.  These include Dan Pellissier, president of California Pension Reform; Marcia Fritz, executive director of the California Foundation for Fiscal Responsibility; and an “anonymous out-of-state billionaire.”

Most Californians are very concerned that the state’s budget deficit will result in cuts to public schools, the area of the budget they most want to protect, according to a statewide survey released earlier this week by the Public Policy Institute of California (PPIC).

According to the poll, strong majorities of Californians (68%), likely voters (65%), and public school parents (74%) say the quality of K–12 education will suffer if cuts are made.

Both the media and Republicans slammed Governor Jerry Brown’s contract deal with the prison guards.  However, Governor Brown struck back, arguing that “the deal is virtually identical to pacts his Republican predecessor made with other unions that they readily supported.”

However, critics say that the proposed contracts will not cut state spending by nearly enough.

We took up the public pension issue primarily based on what was happening to local governments as the result of increased pension plans in the early part of the last decade, and rising public employee salaries.

From the standpoint of local government, the need for statewide pension reform exists because local government cannot roll back their pension obligations or change the rules under which they and CalPERS operate, but the legislature can change many of those things.

The key to understanding politics is to understand that most political claims are largely political spin.  It is not that they are manufactured lies (at least most of the time), but rather that they are claims taken out of context and presented without nuance or qualification.

The sophisticated political observer learns to take such claims with a grain of salt and not to merely repeat these claims as facts.

As the California governor and legislature are being forced to find new ways to cut fourteen billion dollars in order to balance the California budget, after Governor Jerry last week dropped plans to find ways to get four Republican legislators to back his tax extension, voters have come up with their solution.

A new poll released last week showed strong and bipartisan support for raising taxes on the wealthiest state residents – those making over $500,000 per year, according to the poll.

There was a mixed reaction to Governor Jerry Brown’s 12-point pension reform plan that he unveiled on Thursday.  Five of the proposals are described as “proposals under development.”

Unions argued that the proposal should take place at the collective bargaining table, while reform groups called it “unambitious,” and Republicans said that, while it is a good start, they would prefer something put before the voters.

On Tuesday, Governor Jerry Brown made the announcement that he was ending negotiations with Republicans in an effort to extend taxes to resolve the budget deficit that remains after the spending cuts were passed last week.

In a video statement Governor Brown said, “Today I have broken off discussions with the Republican Party in Sacramento regarding solutions to our budget crisis.”

One of the most contentious issues that has arisen with regard to the new Governor’s budget has been a proposal to eliminate redevelopment agencies in California. 

How serious a threat was this?  Serious enough that the city has already authorized bonds to encumber as many redevelopment projects as possible.

I will never forget the day, at the behest of a mutual friend back late in 2009, I met with two organizers from a prominent union organization in California, the California Labor Federation.

I understood that there were concerns about my view on the local firefighters union, as well as my view on pensions in general.  What I did not expect was a nasty and unpleasant experience unlike any I had ever encountered before.

While it remains a clear Plan B, it is becoming increasingly clear that Governor Jerry Brown is moving closer to a contingency that would circumvent the need for two-thirds legislative support and move toward spending the millions it would require to circulate a petition for the November ballot, placing his plan before the voters at that point.

As recently as yesterday afternoon, a spokesperson for the Brown Administration said that the Governor remains committed to negotiating with the Republicans in the Assembly and Senate – needing two votes in each house from Republicans – and still believes he can reach agreement.

Someone wanted outrage last week. Well, there is plenty of outrage to go around, especially with two reports showing the utter devastation that budget cuts and our economic downturn have caused to our educational system, both K-12 and the UC system.

At a local level, we have had some cutbacks to K-12, but Davis has mainly come out of this all right, presuming that the voters pass Measure A in May.  However, statewide the news is pretty grim.

Someone wrote with regards to the threats to UC Davis facing serious cutbacks due to the budget, “This is too bad, no doubt. But I think Californians need to realize that the State does not OWE them a college education.”

Actually, that was the pledge the State of California made back in 1961 when it formed the CSU system, creating an affordable system to allow everyone who had the desire to go to college.

On Thursday, the legislature completed roughly half of the budgetary equation – approving most of the spending cuts and transfers that Governor Brown proposed.  They made deep cuts that will disproportionately impact college students, low-income families, and the disabled.

However, the hard part remains, about 13 billion dollars of the 26.6 billion deficit as the legislature did not address either the elimination of redevelopment or the extension to higher taxes.

A Field Poll released Wednesday indicates the voters are willing to consider an extension of the tax measures that Governor Jerry Brown has proposed, as a means for closing the deficit and avoiding an addition 11 to 14 billion dollars in cuts to the state budget.

In a release from the Field Poll, they find, “Voters generally do not favor simply increasing taxes as a way of dealing with the estimated $25 billion budget deficit facing the state over the next eighteen months.”