Al's Opinions

Jerry Brown, recently elected governor of California, has some bit problems.  He has to present a balanced budget to the legislature for the next year.  At present the revenue collected in the form of taxes is less than the annual expenses of the state by about twenty or more billion dollars.  Governor Brown would like to distribute the pain somewhat fairly between rich taxpayers and relatively poor people who depend on state services.  A minority in the legislature does not share Mr. Brown's belief in spreading the woe and oppose that part of his budget that calls for some increases in taxes.  Not only does this minority reject having the legislature enact the increases in taxes, but even refuses to agree to submit the proposed increases to the voters in the form of a legislative initiative.

If the minority has its way (in case you've forgotten, the California legislature can enact a tax increase or propose a ballot proposition only if 2/3 of the members agree) certain services will have to be drastically reduced.  State universities, public schools, and community colleges all depend on the state for most of their revenue.  They will have to accept big cuts.  Medical, assistance for handicapped persons, and other medical services will be cut.  I won't try to describe the hardship and misery that these cuts will make.

What can Jerry do?  At least, if the additional revenue is not forthcoming he must make sure that the minority in the legislature are shown to be largely to blame.  Even though the Democrats have majorities in the Senate and Assembly, and even though Jerry is a Democrat, independent voters (i.e., voters who don't pay enough attention to politics to belong to a political party) will naturally blame the party in power for the misery and the protection of the rich from experiencing any of the misery.  Some will conclude that the Democrats are incompetent and will try to put the Republicans in charge of running the state.

If I thought the Republican intransigence were merely a political trick to discredit the Democrats and that, if Republicans were given power to propose and pass budgets, they would act responsibly and let everyone share the misery, I wouldn't bother writing this post.  Evidence indicates that the Republicans are not interested in acting responsibly.  The previous governor, Arnold Schwarzenegger, a Republican, had just as much trouble with the Republicans as Jerry Brown is having. Instead, Republicans are hewing to the line laid down by such leaders as Grover Norquist and the late Howard Jarvis.  The line is that people depend too much on government and that government should stop trying to relieve the misery of being both poor and disabled, of being poor and poorly educated, of being unable to pay for needed medical care, and the like.  The way to make government stop doing such things is to cut off the supply of money.

Jerry Brown, as governor, must make sure that every California voter understands what the Republicans in the legislature are up to and that they, making use of the 2/3 vote requirement, are bent on putting California at the bottom of the list which ranks states on how much they spend per pupil on education, how much they spend per person on health care, etc.                     

Labels: California budget, cuts to necessary and compassionate services, Jerry Brown

A Los Angeles talk show host (Larry Mantel of KPCC) is promoting the idea of a constitutional convention for California to solve the problems that make the State ungovernable and lead to yearly deadlocks on the budget. I oppose the idea. I don't think it's possible to solve the problems in California with a single convention to draft a new constitution for the State.

Why is the State ungovernable? One important reason is the requirement for a 2/3 vote in each house of the legislature to pass a budget or to amend the tax code. We don't need a constitutional convention to change the 2/3 requirement to a simple majority. A simple majority is the rule in most of the other States. We can change it by initiative. Don't expect the legislature itself to draft a proposition to do away with the 2/3 vote. A constitutional amendment also requires a 2/3 vote in the legislature. The minority party very much wants to keep the 2/3 requirement in place.

There is the question of whether the voters would approve a change from 2/3 to majority voting in the legislature. I think a majority favors such a change. However, the minority in favor of keeping the 2/3 vote is very passionate and is willing to spend a lot of money to scare the public into keeping the requirement. You can expect to see ads with arguments like these:

• If you let a simple majority in the legislature raise taxes, they will. You'll pay more taxes if this change is made.
• This requirement forces legislators to think in terms of how to reduce the cost of government to fit within the available tax revenue, rather than think of how to spend more of your money.
• This requirement also prevents the majority from shutting out the minority in planning the budget. The Republicans are the minority party now, but the Democrats could be the minority party a few years from now.

These are plausible arguments. Those of us who favor a simple majority vote in the legislature for budgets and taxes will have to prepare good arguments against them. In any event, we should study how other States enact budgets and taxes and see whether in practice any of the warnings of the "status quo" faction have any merit in actual experience.

Another necessary but more difficult change is to modify the property tax rules of Proposition 13. Many home owners are naturally nervous at the possibility of a big increase in the property tax on their homes. In my case, Proposition 13 limits the tax on my home to about $1700 a year. If it were taxed at the rate of 2 percent of its market value, the tax would increase to at least $10,000 a year. This extra revenue would be a boon to the City of Los Angeles, struggling now with a structural deficit of over a billion dollars a year. I have enough income to pay the extra tax, so I have no fear of being dispossessed by the marshal. There are many retired persons in less fortunate financial situations than mine who would have to go in debt, probably by taking out reverse mortgages on their homes, to pay the tax. They would stay in their homes and survive, but their heirs would not inherit the houses. The banks would repossess them and sell them to collect the amounts owed on the mortgages.

I don't think a simple repeal of Proposition 13 is politically possible. It may be possible to amend the proposition such that commercial property - property that produces income for the owner - is taxed at a higher rate than residential property. This change would not, or should not, alarm the retired homeowner with a modest retirement income. There would be powerful resistance to such a change, mostly from landlords. The Howard Jarvis Taxpayers Association would go full bore in putting out ads and sound bites to scare the retirees. The purpose of the change would be misrepresented. Persons who live in rented houses and apartments would be told how much their rents would have to be increased to cover the change in the tax rate. Perhaps rental property would have to be left out of the proposed change, so that only property supporting a manufacturing or service business (e.g., Macy's, Boeing Aircraft) would pay the increased tax.

Another problem that promotes the ungovernability of California is the extreme partisan divide in the legislature. Members have to face voters at a primary election before they can campaign in the general election. Primary election voters tend to be ideological purists. They want their candidates to be as pure as they are. Mr. Schwarzenegger thinks this partisan divide can be diminished by changing the way legislative boundaries are drawn, so that districts contain a more even mix of Republicans and Democrats. In that way, the winner of the primary in a "safe" district would not be guaranteed election in the general election. The voters approved this change and it will go into effect after the 2010 Census, when State Assembly and Senate Districts are redrawn. My own view is that it won't have much effect on the extreme partisanship.

I have an idea for an election system that would reduce the effect of the extreme partisan ship. I will have to think about it for a while and present it in another post.

Labels: 2/3 vote requirement for budget, California budget, Governor Schwarzenegger, Proposition 13, ungovernable California

It's about the California Budget Agreement. In the end, the Democratic majority had to accept the Republicans' budget, with no tax increases and deep cuts in education, medical help, Medicaid (or MediCal), subsidies to local governments, and others. In fact, under the agreement, local governments have to help bail the State out of its budget hole.

How did this happen? It was the power of 1/3 + 1 in the legislature and the power of 1 Republican Governor. By now everyone knows that the California Legislature labors under the quaint restriction that budgets and taxes require 2/3 votes in each chamber for passage. Everyone also knows that Republicans in California are required by party leaders to take an oath to oppose any and all tax increases in order to have the support of faithful Republicans in the primary elections.

Although the 2/3 vote is required for increasing taxes, it is not required for establishing or increasing a fee. With a sympathetic Democratic Governor, the majority Democrats in the legislature could have found the money to pay for education, medical care, and the like by establishing or increasing some fees.

Republicans in California should be happy to have the effective support of their Republican Governor. Howard Jarvis in his grave should be spinning with glee and happiness.

Labels: California budget, Governor Schwarzenegger, Howard Jarvis

The following letter was printed on the editorial page of the Los Angeles Times for Saturday, April 25, 2009:

The voters have recently "combined to straitjacket the state's budgetary process"? How ludicrous!

Both Proposition 10 and Proposition 63 mandated not only spending but taxes to pay for them -- and them only. These two initiatives took nothing from the general fund. That is hardly spending like a drunken sailor, nor is it irresponsible.

If legislators on both sides of the aisle were as responsible as the electorate, we'd probably be in far better fiscal shape than we are.

The electorate did nothing to straitjacket the Legislature. Lawmakers are just jealous and envious of funds they cannot access. We'd be fools to let them strip the funds out of these programs to fund other programs.

My first reaction to this letter was that the writer was either misinformed or uninformed. The voters placed a straitjacket around the Legislature years ago when they imposed a 2/3 vote requirement for passage of the budget and for increasing taxes. It is this requirement, the hard economic times we now experience, and the stubbornness of a certain faction among the Legislators that has forced the Legislature to agree on a funding plan with the various take-aways that the writer decries. Agreement requires 2/3, not a majority. Other more reasonable budget and funding plans were not acceptable to the stubborn ideological minority, a group that contains more than 1/3 of the legislators in each chamber.

My next reaction was that the writer was concerned only about the diversion of funds from the programs established by Propositions 10 and 63. The writer lives in an affluent region. He has the education, the spare time, and the means to write a letter to the editor. He does not depend on any of the state programs for the poor, the disabled, the homeless, etc. He no longer depends on state support for education or he would be less critical of some of the decisions of the Legislature.

Rather than simply condemn the members of the Legislature as jealous and envious, I'd rather that the writer take up the cause of getting rid of the 2/3 vote requirement to allow the Legislature to adopt a reasonable, non-ideological budget that does not take funds away from mandated, self-funding programs.

Labels: 2/3 vote requirement for budget, California budget, diversion of funds, Proposition 10, Proposition 63

# posted by Albert Saur @ 3:53 PM 0 comments

I have two friends that I call "H." One is Harry and one is Harold. Yesterday I had an animated discussion with H (I won't say which one) about the current budget problem in California. The Governor and the Democrats in the Legislature agree that a solution to the problem must involve a combination of program cut-backs and tax increases. H disagrees. He, along with the Republicans in the Legislature, assert that the problem can be easily solved without tax increases if only the unnecessary programs could be eliminated. State spending should be restricted to providing only necessary services.

We didn't get to specifics as to which services and programs are not necessary.

I argued that, because we don't have Thomas Jefferson's angels to make decisions for us, we have to use our regular democratic processes to determine what's necessary and what isn't. It turns out that some blocs or pressure groups have more influence on legislation than others. If the bloc or group of which you are a member doesn't have much influence, then programs and services that benefit you are "unnecessary" and will be cut or eliminated. Services and programs that benefit blocs or pressure groups with influence are "necessary" and will be continued.

The trouble remains that even after the programs and services that benefit those groups and blocs that lack political influence are scaled back or abolished, the remaining programs and services still exceed the income from taxes. For years the State has been able to borrow money to make up the difference between tax revenue and "necessary" expenditures.

The present stand-off in the budget is made possible by the arcane 2/3 vote required for the Legislature to enact a budget or a tax increase. The process is blocked by the Republicans who have greater than a 1/3 representation in each House of the Legislature. They have determined that, no matter what, the existing tax revenue is enough and that all programs and services provided by the State must fit into this available money. They have not, however, specified which programs and services they think ought to be eliminated.

The Governor, himself a Republican, thinks that the solution is to elect a more open-minded group of Republicans to the Legislature. He has sponsored a plan to have legislative district boundaries determined by a commission rather than by the Legislature itself. The Legislature's habit of drawing boundaries to create safe districts for incumbents allows the incumbents the security to take extreme positions about taxes and budgets. He believes that if more of the districts were competitive, a group of legislators would be elected that are more willing to compromise. The redistricting plan won't take effect until after the census in 2010. The Governor has no plan for what to do in the meantime about the die-hard Republicans in the Legislature today.

Mr. Schwarzenegger had a chance to head off these recurring budget impasses shortly after he became Governor in the Recall Election in 2003. Later that year there was an election with several ballot measures that he favored. In addition, there was a measure on the ballot to change the required vote for budgets and taxes from 2/3 to 11/20. He refused to support the measure and it was defeated, along with several measures that he favored.

We have interesting and intractable problems in California. They are much more interesting than the problem of having an unpopular Governor who is caught trying to sell a U.S. Senate seat.

Labels: California budget, commission to set legislative district boundaries, Republican intransigeance

We are having a budget crisis in California. Because of the 2/3 vote requirement for passing a budget and for increasing taxes, the Republicans are able to prevent any increase in taxes to provide more revenue to close the budget gap. They insist that the entire gap must be made by reducing the spending on State programs. These are programs that build highways, provide money for hospitals, provide money for schools and universities, provide money to help local governments provide police and fire protection, etc. Some of these programs, like Medi-Cal, provide health care for low-income residents.

As usual in American politics, each political party tries to put the blame for a bad situation on the other party. Republicans hold fast to their "no tax increase" pledge, but do not propose any schedule of program reductions to close the gap between revenue and expenses. Their position is that these cuts shall be made by Democrats, so that the Democratic Party will be blamed for short-changing education, health care for the poor, and other programs that are popular with the public.

One Republican legislator commented that he wasn't going to approve any tax increase that would benefit people who don't pay any taxes - i.e., the poor. The remark made news on an inside page of the Los Angeles Times for one day. Since then no one, no Democrat, has commented on it. In the battle of assigning blame it seems to me that the Democrats have lost a chance to make a point.

If the crisis in California isn't enough, consider the crisis in the domestic automobile industry. In the US Senate Republicans have killed the bill that would have provided a fourteen billion dollar loan to the firms to keep them going until March. I should say, Southern Republicans. Their motive is to punish the auto workers union, UAW. These gentlemen would agree to the loan only if the union would give up all advantages regarding salary, health insurance, and pensions that they have over the non-union workers in the auto plants in the South that are operated by foreign owners and without unions, such as Daimler-Benz, BMW, Toyota, and Honda. In other words, the price of the bail-out was that the UAW would simply cut its own throat. The alternative the Southerners offer is Chapter 11 Bankruptcy.

Bankruptcy of one of the big three auto companies would be different from bankruptcy of, for example, United Air Lines. United continued to fly while undergoing the restructuring of bankruptcy. Americans are willing to fly on bankrupt airlines. I doubt that Americans would continue to buy cars from an bankrupt auto company. An airline trip is a one-time event. A car purchase involves certain guarantees regarding defects in the car, contracts for service for a number of years, and the like. If the company is bankrupt, it can not offer such guarantees and service contracts. A bankrupt General Motors would be shut down and the various properties sold to satisfy the claims of the creditors. The workers would be laid off. The federal government would have to pick up the retirement pensions. Bankruptcy now, during a credit crisis, would undoubtedly lead to another Great Depression. This is what the Southern Senators are willing to risk in slapping down the hated auto workers' union.

Labels: California budget, General Motors, non-union auto plants in Southern States, United Auto Workers

After 82 days, the California State Legislature has agreed on a budget for the year ending nine months and ten days from now. As usual there is the chorus of blaming someone for the long delay in enacting the budget. The Republican Governor blames the entire legislature. He would like to impose a more serious penalty for having a late budget than simply withholding the legislators' salaries until the budget is approved. The Democrats blame the minority Republicans for refusing to compromise on the issue of providing additional revenue to make up the chronic shortfall between the State's income and expenses. The Republican leader of the State Assembly has it right. The LOS ANGELES TIMES reports that "He said the delay could have been averted if Democrats had accepted earlier on that GOP members would not support any tax increases."

Well, lah dee dah dah! Tax increases should be subjects of negotiation along with reductions in payments for services. If the State is providing more services than the tax revenue will support, it makes sense to consider increasing taxes along with cutting back on services. The Republican minority in the legislature wanted to discuss only the cuts: how much less should the State pay for emergency health care; how much less should the State pay for police and fire protection; how many fewer miles of highways should be repaired; etc., etc., etc.

I can remember a time, not too many years ago, when there were reasonable Republicans. There still are some, but not in the California Legislature. In comparison with his "allies" in the State Legislature, Republican Governor Schwarzenegger seems pretty reasonable. I can think of several other "reasonable" Republicans. Unfortunately, none of them are holding office at present. I suddenly realize that, in comparison with the Republicans in our State Legislature, even George W. Bush seems reasonable. I need a stiff drink!

Labels: Arnold Schwarzenegger, California budget, George Bush, Republican intransigeance

It's a crisis, all right. Health care organizations that depend on the State for funding are in danger of going bankrupt and having to cease operations. For those of us who, like me, are retired, on Medicare, have supplemental health insurance provided by my former employer, and enjoy a fairly good income, the budget crisis doesn't affect us at all. I suspect it doesn't affect the legislators, either, except that they are not getting paid for the duration of the stand-off.

California has a requirement that a 2/3 majority vote is required in each house of the legislature to pass a budget or to create or raise a tax. The minority party in the legislature has vowed not to vote for any tax increase. The proposed budget submitted by the Governor required an increase in taxes to make up for years of eking out the available revenue with borrowed money. This year the gap between revenue and expenses is too great for any more borrowing or accounting tricks.

Today the minority party (Republican) in the legislature has announced that it will submit its own budget next week. It will be interesting to see which services they plan to cut or eliminate. Actually, the Republicans are doing a good service to the citizens of California. Californians generally don't pay attention to the problems of governing the State. They keep voting into law various proposals that seem good at the time. At one time it seemed that property taxes were increasing at such a rate (proportional to the run-up in property values) that many people of modest means were in danger of losing their homes. Accordingly, the People of California joined the Tax Revolt of Howard Jarvis and enacted the property tax limit (Proposition 13). The same proposition made it almost impossible for local governments to increase any taxes and almost impossible for the State legislature to increase taxes. In each case, a 2/3 vote was required. In the case of local governments, the 2/3 applied to the voters at an election. In the case of the State, the 2/3 applied to the legislature. At the same time, a 2/3 vote was mandated for enacting the State Budget.

Since that time, it has been nearly impossible for the legislature to agree on a budget on time. The State's fiscal year starts on July 1 and the budget should be in place by June 30. Each year the process has dragged out while the minority (1/3 + 1) holds out for some special goodies or for some draconian limits on future State spending. This requirement is one of several that the good people of this State have enacted that make it almost impossible to govern the State. This year, at last, some of the political leaders are proposing an initiative constitutional amendment that would do away with the 2/3 vote requirement in the legislature. If such a proposal gets to the ballot, it will have to be by way of gathering signatures. The legislature can not put a constitutional amendment on the ballot except by a 2/3 vote.

The People of California are getting what they deserve for enacting such a crippling provision. The Republican hold-outs in the legislature are doing the people a service by illustrating the result of such crippling.

Labels: California budget

I've decided I don't like any of the leading contenders for the Presidency of this nation. I don't like McCain because he will appoint more federal judges like Alito, Scalia, and Thomas. We have too many conservative "federalist" judges now. I don't like Clinton or Obama because they won't be advocates for a universal health care plan that gets rid of the profit motive in deciding which medical procedures to pay for and which ones to deny. I also don't like them because recent polls indicate that neither of them can beat Senator McCain.

The only hope I see is that the Democrats will prevail in several Senatorial contests this coming November and get rid of several Republican obstacles to progress. Perhaps the country can tolerate President McCain if he has a Senate with fewer than 40 Republican supporters of his war and his judges. The Democrats may pick up a few House seats. However it's unlikely that they will pick up many because House districts have been gerrymandered to protect incumbents.

Another bit of cheerful news (I grasp at straws for this one) is that our Republican Governor here in California is now willing to talk about doing away with some tax loopholes to increase the State's revenue. I guess getting rid of a loophole doesn't count as increasing taxes, a phrase that Republicans choke on. Closing some loopholes, according to our governator, will raise an additional two billion dollars or so. The additional money can be used to reduce the proposed cut in the State's budget for schools.

Every little bit helps. I'm still a grouch this morning.

Labels: Arnold Schwarzenegger, Barack Obama, California budget, Hillary Clinton, John McCain, Universal health care