Sharpening the knife

May 11, 2012

California's budget woes are intensifying as tax revenues run some $3 billion below expectations, and when the governor's revised budget is unveiled Monday, Californians can expect to see some deep cuts. But Brown says those cuts, plus the tax increases he's proposed on the November ballot, will put the state in a stronger fiscal position.


From the LAT's Anthony York and Chris Megerian: "It's become a familiar refrain from the governor — telling Californians to trust that he is being frugal while asking them to open their wallets wider. Brown hopes the message sticks even as the mood in Sacramento turns grim."

"Tax revenue has lagged by $3.5 billion and the state has shelled out $2.1 billion more than expected so far in the current budget, according to the state controller. Brown said Thursday that his new spending plan will fall between $85 billion and $90 billion, down from the $92.6 billion proposal he released in January."

"A budget for the new fiscal year, which begins July 1, is due from the Legislature by June 15."


Speaking of taxes, Brown submitted signatures to qualify his tax-increase for the ballot. The Chronicle's Marisa Lagos tells the tale.


"Gov. Jerry Brown and backers of his tax initiative submitted petitions Thursday to county elections officials they said contain nearly twice the number of signatures needed to qualify for the November ballot, but the governor acknowledged the measure isn't a cure-all and warned he will unveil "severe" new cuts to state spending next week."


"Brown and his wife, Anne Gust Brown, hand-delivered several boxes of petitions to the Sacramento County registrar of voters as teachers, firefighters and other supporters cheered amid barking from gubernatorial canine Sutter. The governor said the tax measure, which would temporarily raise income taxes on the wealthiest Californians by up to three percentage points and hike the sales tax by a quarter-cent per dollar, would help the state take another step on "the road to recovery," by raising an estimated $9 billion in new revenue next fiscal year alone."


"Brown says the money would go to K-12 schools, higher education and courts - but if voters reject the taxes, he and Democrats would make deep midyear cuts to those same programs."


Meanwhile, the state budget just confronted a new threat: A critical piece of California's bullet-train project relies on getting money from the federal government, but that money may be jeopardized unless the Legislature acts on the issue by June. That means  state lawmakers -- and the governor -- must set aside some $2.7 billion in the state budget for high-speed rail at a time when the budget already faces huge funding shortages.


From  Ralph Vartabedian and Patrick McGreevy: "In a series of meetings with key lawmakers in Sacramento, Transportation Secretary Ray LaHood said that the recent proposal by state Senate leaders to delay a $2.7-billion decision on the high-speed rail project until August is not acceptable."


"We need the Legislature to make the strongest commitment possible," LaHood said in an interview. "The way to do that is to include the money for high-speed rail in the budget that is passed in June. August is too late for us."


"Asked whether the administration might attempt to take back the funding, LaHood said, "Correct," adding that if the state does not move by June then he will begin discussing a response within the Obama administration and Congress. "We may begin looking at other places in the country," LaHood said."


Meanwhile, California's stem cell agency likes lawyers -- or at least likes hiring them.


From David Jensen at the California Stem Cell Report: "The California stem cell agency is spending $2.4 million a year on lawyers, a figure that one agency director has described as "awfully bloated."

"More than one dollar out of every ten that CIRM spends on its operations goes for legal advice, and the subject came up at a meeting last month of a meeting of its directors' Finance Subcommittee. The issue triggered a sharp exchange revolving around a proposal to hire an additional attorney to deal with intellectual property issues."
"In the next fiscal year, the agency expects to have legal team of six (four lawyers and two administrative assistants) on board out of a total CIRM staff of 60. It also has three outside lawyers or firms under contract at an annual cost of $1.1 million. Overall, CIRM is spending 13 percent of its $18.5 million operational budget on legal matters. Its budget for legal services will increase $50,000 next year."


Not all the bad fiscal news is limited to the budget. The price of gasoline is going up -- again -- and within the next few days it may go up dramatically. Why does this always seem to happen when the weather turns warmer?


From Gary Richards in the Mercury News: "At midday Thursday, Rotten Robbie President Tom Robinson was stunned to find out that West Coast spot prices were 70 cents higher than on the New York Mercantile Exchange. The exchange handles billions of dollars worth of energy products and other commodities and is the basis for prices that people pay for various commodities like oil throughout the world."


"Only a few weeks ago, we were lower than the Merc," Robinson said. "Because it is related to refiner problems, I don't believe the increases will last long, but they are currently very ugly."

The California average was $4.23 a gallon Thursday, up more than a dime from the end of April. San Jose-area motorists were paying $4.23, San Francisco $4.30 and those around Oakland $4.22."


"Nationally, drivers are paying $3.74 a gallon, down 6 cents from last week."


Another set of figures is rising, but this time it is good news: California's increase in exports


From the Bee's Mark Glover: "California businesses shipped merchandise valued at $14.62 billion in March, up 4.8 percent from $13.95 billion in March 2011, according to an analysis of Thursday's U.S. Commerce Department trade figures by Beacon Economics, a consulting firm with offices in the Bay Area and Los Angeles."


"March marked the 29th straight month of year-over-year growth, coming off a 2011 that was an all-time record year for California exports."

U.S. Sen. Dianne Feinstein, who said she lost some $4.5 million in campaign dollars because of a fraud committed by her political accountant, Kinde Durkee, can't go back to her donors and resolicit the funds, according to the Federal Elections Commission.


From Roll Call's Amanda Becker: "The Federal Election Commission today failed to approve either of two draft proposals that it had circulated on the matter. Commissioners asked their general counsel to come up with a new draft that covers the areas of consensus between the two groups."


"Lawyers for the Feinstein for Senate campaign had argued before the commission last month that barring the California Democrat’s constituents from writing new checks would trample on their rights because their original contributions were not used for their intended purposes."


“Donors have a constitutional right to associate with and support a candidate of their choice. ... That right has [currently] been extinguished by a criminal act of the treasurer,” attorney Marc Elias of Perkins Coie told the commissioners during an April meeting."


Democratic Rep. Jim Costa, a wily fixture in California politics and veteran of both the Assembly and Senate, faces another tough race this year. Last time around, he won by an eyelash. This time, Republicans again think he's vulnerable and are lin ing up to choose him on.


From the Fresno Bee's John Ellis: "On the surface, at least, the odds seem to favor Costa, who is running in a new district that includes almost half of Fresno, parts of Fresno and Madera counties and all of Merced County."


"Almost a quarter of Costa's old 20th Congressional District is in the new 16th Congressional District -- and it's a heavily Democratic part. Democrats have a 14-percentage-point registration advantage over Republicans in the district, according to the Secretary of State..."


"The three Republican challengers are Stanislaus County businessman Mark Garcia, 41, Fresno County dairyman Johnny Tacherra, 36, and Fresno attorney Brian Whelan, 28. The other candidate in the race is a Democrat -- Madera doctor Loraine Goodwin, 64."


And from our "Making Waves" file comes the tale of the biggest wave ever surfed -- at least that's the word from the experts who measure these things. The actual size of the monster wave varies from account to account, but who care about the details, dude.


"Thrill-seeker Garrett McNamara has taken the Guinness World Record for the largest wave ever surfed after riding a 78-foot tall break off the coast of Portugal in November."

"Confirmed by a panel of experts at the annual Billabong XXL Global Big Wave Awards, McNamara, 44, beat the previous mark held since 2008 by surfing legend Mike Parson by just one foot."


"Barreling down the enormous wave at Nazaré, McNamara risked being drowned or crushed by the enormous wall of water he was riding to take the coveted crown."

Don't believe it? Here's the video.


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