The state has received anywhere from
$2-$3 billion in unexpected revenues. The money comes from corporations participating in the state's tax amnesty program. Or more correctly, from corporations reacting to a change in the state's tax law. Since it's a bit too early for us to try to explain, we'll leave it to
Dan Weintraub:"The companies making the payments are not participating in the amnesty, admitting fault, but instead have outstanding claims disputing the state's interpretation of their tax liability. Under the old law, if they lost those claims, the companies would pay the tax they owed plus interest dating back to the time the tax was due. Under the amnesty law, a company that loses such a dispute must now pay the interest plus a 50 percent interest penalty. So apparently many such firms decided to pay up front rather than risk having to pay the surcharge later.
Meanwhile, they are still disputing their cases."
Long story short. Businesses have put up a refundable deposit against outstanding potential tax liabilities. The state keeps the cash until the tax cases are adjudicated.
While the one-time cash won't help the state's long-term structural deficit, $3 billion could go a long way toward
closing this year's budget gap, estimated at
about $8.5 billion.Meanwhile, everyone's got an idea of
how to spend the new cash, including former budget chair
Darrell Steinberg. The LA Times quotes Steinberg, "If there is one area where that one-time money should be spent, it is K-12 education," he said. "Maybe for this year, it can help solve one of the major stumbling blocks between the governor and the Legislature."
Steve Westly wasted no time in gathering reporters in a teleconference to discuss the new windfall. And faster than you can say "tax amnesty," the fax machines and e-mail lists at Angelides Central were purring like a kitten.
Phil's take: $2 billion here, a little tax on the rich there, and the state's fiscal house would be back in order. "The Governor and the Legislature must not use this uncertain windfall as an excuse for failing to adopt a fairly balanced budget with no new borrowing, that protects education and other critical investments," said Angelides. "If we move quickly and courageously, with a
fair combination of spending cuts and new revenues, such as restoring the Reagan-Wilson tax rates for top earners, a balanced budget for California is within reach."
Republicans, meanwhile, would like to write a
$1 million check to the families of fallen firefighters and police officers. The Merc News's Kate Folmar writes that this is one of the ways the GOP is trying to
calm down the opposition to the governor's plan to eliminate defined benefit pensions.Even Speaker
Fabian Nuñez was preaching the gospel of fiscal austerity, with a little love toward bipartisanism to boot. "Democrats worked hard with the Administration to put this to work last year. It’s an example of being able to work together. It’s a positive sign.
But we have to see if it’s a real windfall or just some companies trying to protect themselves against potential liability. Let’s not kid ourselves. We still have a structural budget problem of billions of dollars. This shouldn’t be misinterpreted as a silver bullet that will solve all our problems.”
That said, the speaker is backing a
new $10 billion package for state transportation projects, most of which would come from
new borrowing. "The package would cut some taxes, increase others and place a $10 billion bond before voters to breathe new life into billions in planned transportation projects statewide," the Bee reports.
If you've got a better plan for spending the state's money, you can try it by
playing a new online game.Bill Lockyer ruffled some more feathers in the Republican ranks last week when his office released the title and summary of the so-called "
Live Within Our Means Act," the budget spending limit that is backed by the governor and Citizens to Save California. Instead of focusing on restricting state spending, Lockyer's office focused on the impact the measure would have on public education, and revising the forumlas by which public schools get paid.
The story was in a mid-issue update sent to
Political Pulse subscribers yesterday.
"Phil Angelides announced his candidacy for governor by having press conferences up and down the state," said Joel Fox, one of the leaders of Citizens to Save California.
"Lockyer is announcing a different way by writing titles and summaries." Dan Walters also mentions the title and summary game, but
puts the blame on Gov. Schwarzenegger's political team. "Had Schwarzenegger and his allies settled on details of the measures earlier, as they intended, they would have had time to challenge Lockyer's actions in court. But by delaying, they gave Lockyer an opportunity to slant things the other way without leaving themselves time to go to court."
Avoiding Armageddon: Previously on
this page, we reported that leadership for the
Pharmaceutical Research and Manufacturers Association (PhRMA) and the
Consumer Attorneys of California met in San Francisco to discuss PhRMA's ballot measure to cap attorneys fees. Apparently,
Willie Lewis Brown, Jr. (who was negotiating on behalf of PhRMA) still has that old napkin magic. PhRMA
dropped the ballot measure yesterday, but it's unclear what they got, if anything, from the attorneys in return.
The fight over
Casino San Pablo moves to Washington D.C. today, as the U.S. Senate takes up a bill by
Dianne Feinstein "who is looking to advance a bill that would essentially dismantle it," the Chronicle reports.
Continuing with the now ubiquitous topic of gaming and politics, local government officials are crying foul in Sonoma County. They claim that AG
Bill Lockyer dropped his vow to fight the River Rock Casino after
he made a trip to Texas to take $25,000 from the casino's backers last November.
"Tribal gaming interests are a powerful political interest in California. The fact that
the attorney general's efforts have ground to a halt does raise a question, are politics involved?" Sonoma County Supervisor
Paul Kelley said. At the least, he said, "the status of the land deserves a legal opinion from the attorney general. ... They need to complete it, good, bad or indifferent."
Gay rights activists scored another victory in court Monday, as the
state's domestic parter law was upheld by an appeals court. "In a 26-page opinion, the justices rejected the argument from opponents who said the domestic partners' law was void because of Proposition 22, the defense of marriage initiative. The March 2000 measure passed by a majority of voters declared that the only 'valid or recognized' marriage in California is between a man and a woman," the SacBee reports.
Does this mean the recall activists have
three more targets?The governor's deputy cabinet secretary,
Paul Miner, is leaving the administration. "Miner was much more than deputy cabinet secretary. The 40-year-old has been by Schwarzenegger's side for much of the last four years, working with him on his 2002 after-school initiative and playing a key policy role during the recall. The two would work out together at the gym and play chess, a favorite Schwarzenegger pastime. (Miner said he won only once in the dozens of times they played, a victory about which he said he has private suspicions.)"
Parks to endorse Villaraigosa: After picking up the nod from former mayor
Richard Riordan,
Antonio Villaraigosa gets another boost from Councilman, and former police chief,
Bernard Parks. It's not a big surprise, since most figured Parks got into the mayor's race just to get some revenge on the mayor who fired him. But it is
another piece of the Villaraigosa electoral puzzle. From our "Miscarriage of Justice" Files, the Pulitzer Committee announced this year's awards for journalistic excellence. The
LA Times picked up a pair, the SacBee's
Tom Philp also walked away with an award for editorial writing, and the
Chron received an award for feature photography. But somehow,
the Roundup was left out. Which begs the question: Why is there no award for smart-assed state political news digests?
