Jan 9, 2008

A modest proposal

In a speech that was short on major, new policy proposals, Gov. Arnold Schwarzenegger laid out a modest vision California in his state of the state address. The speech focused much more on structural reforms than specific new initiatives. But the speech itself was vintage Schwarzenegger, citing FDR, while defending his decision to cut the car tax.

The LAT's Michael Rothfeld reports: "The speech lacked the sweep and ambition of the Republican governor's address a year ago, when he was basking in his reelection, legislative achievements and a budget he said then was under control.

"Today, by contrast, Schwarzenegger faces a deficit driven partly by spending increases and borrowing that he oversaw, despite his election on promises to fix California's chronic fiscal problems once and for all. And as First Lady Maria Shriver watched from a balcony, the normally ebullient governor spoke in somewhat reserved tones.

"'For several years, we took actions that balanced the budget as long as the economy was booming,' he said, speaking in the Assembly chamber in midafternoon. "For several years, we kept that budget wolf from the door. But the wolf is back."

"Lawmakers applauded nine times during the 25-minute address, but the mood in the room was generally tepid."

"The centerpiece of Schwarzenegger's proposals was a constitutional amendment that would impose a spending cap. He said it would end the 'binge and purge' nature of the budget process by automatically reducing expenditures when tax revenues increased more slowly than average. When revenues were flush, it would put extra money aside for the future.

"The idea mirrors Schwarzenegger plans that were rejected in 2004 by state legislators and the next year by voters. He has repeatedly decried the state's "autopilot" spending -- funding guaranteed by legal formulas and state contracts, which his aides said accounts for 87% of the general fund budget.

"'When we see a budget problem developing during the year, we don't have any way to stop it,' he said Tuesday. 'We just keep the spending accelerator to the floor. . . . We need some brakes. We need an alternative to crashing.'"

Dan Walters looks at the proposal to divert revenues during good times to a reserve fund. "Educators, especially, are likely to oppose automatically diverting windfall revenue into the special reserve, thus denying schools their automatic share of those dollars, even if the administration says that in the long run, schools would benefit from having a more predictable revenue stream. It would indirectly tamper with the most cherished tool of the powerful "Education Coalition," Proposition 98, which voters enacted in 1988 to place a constitutional floor under school financing.

"Schwarzenegger's proposal may be fine as far as it goes, but taking revenue off the table could be its fatal flaw, and a more comprehensive approach would include reforming the state's lopsided, loophole-ridden tax system that generates that boom-and-bust syndrome. Schwarzenegger referred to it obliquely during his address, but couldn't bring himself to address it directly."

"The governor made clear that he would not raise Californians' taxes – as Democrats have demanded he consider – and defended his 2003 multibillion- dollar tax cut on vehicles in California, because "it's not fair to punish people who can barely afford the gas to get to work, and on top of that ask them to pay for a tax increase to cover Sacramento's overspending," reports Kevin Yamamura in the Bee.

"GOP legislators applauded.

"'He sounded very Republican today,' said Assembly Republican leader Mike Villines, R-Clovis. 'I think the truth is, whenever you get into a crisis, you know, there's always the line – once somebody gets a job and starts working, they become Republican. I think this speech today was a recognition that we're in a very, very difficult position. There's no gray area. There are no gimmicks to use.'"

The governor did have his fingers crossed regarding that whole "no tax" thing.

"Gov. Arnold Schwarzenegger will propose hiking the cost of insurance for millions of California homes and businesses in the budget he unveils Thursday, with the money to be used for firefighting efforts," write Marc Lifsher and Evan Halper in the Times.

"The proposal, a copy of which was obtained by The Times, calls for new charges to be tacked onto the insurance bill for every residential and commercial property in the state. Administration officials call the charges fees and defend them as consistent with the governor's pledge, repeated in his State of the State address Tuesday, to not raise taxes.

"Anti-tax groups and consumer advocates say the assessments are a tax.

"The plan, which the insurance industry has agreed to support, would cost California property owners and renters $12.50 for every $1,000 in insurance premiums, for a projected $125 million.

"It would most benefit Californians who live in areas vulnerable to wildfires."

Meanwhile, Hillary Clinton got a respite from that Obama Drama, while John McCain shook up the GOP field giving Californians a glimmer of hope that their vote might actually count when it comes to choosing the two parties' candidates for president.

Despite another second-place finish in a state he was once favored in, Mitt Romney vowed to soldier on.

While the talking heads will be disecting New Hampshire's independent voters today, the Bee's Dorothy Korber and Phillip Reese write that California's independent (decline-to-state) voters will only be able to vote in the Democratic primary.

"This could make a difference. In New Hampshire on Tuesday, analysts said nonpartisan voters significantly boosted the tallies of Democrat Barack Obama and Republican John McCain. There, independents can vote for candidates of either party.

"In California, though, McCain will not be able to count on nonpartisan votes. Only registered Republicans can vote for that party's candidates – and that's how the state's GOP leadership wants it.

"The decision was controversial, said Hector Barajas, a spokesman for the state party. In a July advisory vote, California Republican party leaders voted 10-8 not to allow independents to cast ballots in their primary.

"'We are allocating delegates to our national convention, so the decision should be made by members of the party,' said Barajas, summing up one side of the debate. On the other side, he said, some state party officials argued that opening the primary would bring new faces to the table and expand the party's influence."

"Unemployed workers in California who appeal their state benefits are not getting answers as quickly as they should, a federal official told a state board Tuesday," reports John Hill in the Bee.

"For reasons that remain unclear, the state is falling far short of federal benchmarks for deciding unemployment appeals cases, Dale Ziegler, deputy administrator of the U.S. Department of Labor's Office of Workforce Security, told the California Unemployment Insurance Appeals Board.

"'We're looking at the data and saying, 'OK, something's wrong,' Ziegler said.

"Initial decisions on unemployment benefits are made by the state Employment Development Department. Unemployed workers can then appeal to the board – first to an administrative law judge, and then to the seven-member board itself. The board considers about 200,000 cases a year."

"Mayor Gavin Newsom was sworn in for a second term Tuesday, promising to make San Francisco a greener city and a national leader in health care reform while praising "San Francisco values" like support for same-sex marriage and protections for undocumented immigrants," report Cecilia Vega and Heather Knight in the Chron.

"Newsom's father, retired Judge William Newsom, administered the oath of office using a family Bible under City Hall's palatial dome in a ceremony that organizers billed as low-key. The mayor was sworn in alongside his sister Hillary Newsom Callan, her two young daughters and his new fiancee, Jennifer Siebel, to whom Newsom referred in his inaugural speech as 'the love of my life.'

"'On the most important issues of the day, San Francisco is providing leadership for our nation and the world,' Newsom said.

"Newsom ran virtually unopposed in November and easily won re-election despite a rocky year that included a high-profile sex scandal and his admission of a drinking problem."

And from our Weekend at Bernie's Files, AP reports, "Two men wheeled a dead man through the streets in an office chair to a check-cashing store and tried to cash his Social Security check before being arrested on fraud charges.

"David J. Dalaia and James O'Hare pushed Virgilio Cintron's body from the Manhattan apartment that O'Hare and Cintron shared to Pay-O-Matic, about a block away, spokesman Paul Browne said witnesses told police.

"'The witnesses saw the two pushing the chair with Cintron flopping from side to side and the two individuals propping him up and keeping him from flopping from side to side,' Browne said."