A Weblog by Sacramento Bee Columnist Daniel Weintraub
May 05, 2003
Recall supporters clear first milestone
Davis Recall organizers plan a noon press conference at which they say they will display the first 100,000 signatures needed to place the question on the ballot. Submitting the signatures is supposed to trigger a process by which county registrars begin verifying the names as they come in, with official updates on the totals at least monthly. Organizers are counting on those reports to fuel interest and give momentum to the drive. The deadline for collecting 900,000 valid names is Sept. 2, but recall proponents want to complete the task by July to trigger a special election. If they don't finish the job early, any election would probably be combined with the March presidential primary, where Democrats are expected to turn out for their contested race. I am beginning to question that conventional wisdom. Seems as if an historic attempt to recall the governor might actually trump the presidential primary in California, skewing turnout on its own. But there's still a long way to go before anyone needs to worry about that.
A car for $15.95 per day? Hardly.
We went through Las Vegas over the weekend to a wedding in Death Valley. Rented a car for $15.95 a day, unlimited mileage. When we returned the vehicle, the tab for less than three days was $89. Hmmm. OK, part of the cost run-up was the $25 refueling option. But other extras included $4.80 labeled "concession fee recovery" and $1.50 to process my airline frequent flyer credit. Huh? And then there was the 16.75 percent special sales tax on top of everything. I wonder if a rental car company could gain customers with an "honest rates" marketing campaign that boasted of no hidden charges. Kind of like some banks are doing these days. I know I'd give them my business.
Abuse in state's preference program for disabled vets
Excellent investigative piece Sunday by the Bee's John Hill, exposing abuse in the state program that gives disabled veterans preference in contracting. The game is for existing businesses to create fronts nominally run by disabled vets. Hill shows how this is done frequently in the business of leasing equipment to the state for fighting forest fires. I suspect the same was true among many minority or women-owned businesses in the era before Proposition 209 ended such preferences.
May 02, 2003
Tax receipts close to target
State income tax receipts for April, key to shaping the size of the growing budget shortfall, came in fairly close to projections. Total collections, including withholding and refunds, were about $470 million below the estimate of $6.35 billion. Bank and corporation taxes, meanwhile, arrived in amounts a bit above estimates, leaving the total tax take down by about $225 million in April. That's not good news for budget writers but represents barely a speck on the state's $70 billion budget balance sheet. Given revenue softness earlier in the year, plus spending pressure from rising program caseloads, expect the shortfall to grow by $1 billion to $2 billion when the gov revises his budget numbers May 14. The gap would expand by another $2 billion if Davis concedes that the last round of bonds borrowing against the state's tobacco industry litigation settlement won't be sold before the end of the fiscal year.
May 01, 2003
Half way there
Here is today's column, on why the Republican proposal to balance the budget doesn't.
Minimum wage for state workers?
In a decision expected to shape the length and political fall-out from any budget stalemate later this year, the state Supreme Court ruled today that state employees who work regular time during a budget impasse are entitled to no more than minimum wage until a new budget is adopted, after which they must be compensated in full at their regular wage level. Acting on a lawsuit brought by the Howard Jarvis Taxpayers Foundation, the justices ruled unanimously that state law prohibits the payment of employees without a budget or other appropriation. But the court also found that federal law requires the payment of at least minimum wages, and of full wages plus overtime to workers who put in more than a normal full workday. How this will play out is unclear. Controller Steve Westly, whose department cuts the paychecks, has said his computers can't separate the regular payroll into employees who work overtime and those who do not. The court, essentially, said Westly’s potential logistical nightmare wasn’t its problem. In any case, the decision is likely to ratchet up pressure on lawmakers and the governor to resolve the budget by the July 1 start of the next fiscal year. Either that or pass separate legislation continuing this year’s appropriation for payroll on a month-to-month basis until a budget agreement is reached. Here is a link to a PDF file containing the court's opinion.
April 30, 2003
Despite generally gloomy press, Davis recall proponents say they are still on track to collect the 900,000 valid signatures needed by Sept. 2 to put the recall on the ballot. Ted Costa, the chief organizer of the campaign, says his group will submit 100,000 signatures by the end of this week or the beginning of next. He also says the campaign will soon have raised $500,000 -- five times the amount it reported on hand at the end of March. Both developments, if they pan out, would raise eyebrows in political circles -- and concerns in the governor's office.
Peace stretching the truth
Finance Director Steve Peace's take on the Republican budget plan was generally accurate. The volatile former lawmaker gently took the GOP leadership to task for ignoring the automatic growth in state spending that would make their plan badly out of balance in its second year. But Peace, in his comments to reporters Tuesday, stretched the truth on two side issues.
He said repeatedly that the Republican proposal to borrow $10 billion and then repay that loan from existing revenues would somehow run up against the strictures of Proposition 98, the constitutional provision that guarantees schools a minimum share of state revenues. But that's only a problem if you want to raise taxes to repay the loan, because 98 would normally require the state to give a portion of any new revenues to public education. If, as the Republicans propose, you do it with existing revenues, that's not a problem. Exactly the opposite of what Peace was saying. He's right that any such transaction will be a legal nightmare to construct and a tough sell in the financial markets, but not because of Prop. 98.
Second, Peace, in confirming that the worsening economy will lead to a reduction in the governor's revenue estimates, tried to link that reality back to the discussion late last year of Davis' attempt to overstate the size of the shortfall. Peace is saying see, we were criticized for being too pessimistic and now it turns out we were too optimistic. But he is conveniently ignoring the fact that the difference between the Davis budget shortfall estimate (34 billion) and that of the legislative analyst (26 billion) was made up of two distinct parts. One was a difference over revenue estimates, which everyone acknowledged at the time could go either way. The more serious criticism was that Davis was inflating his projected spending numbers and then taking credit for reducing that phantom spending, in order to portray his plan as a more balanced mix of tax increases and spending cuts. That criticism had nothing to do with the economic forecasts and isn't related at all to the change in revenue numbers Davis will unveil next month.
GOP plan is progress but not complete
The Republican budget plan unveiled Tuesday is a huge step toward a bipartisan solution. But it is not, as party leaders claimed, a balanced budget. The plan simply shifts the tough decisions one year into the future, leaving the state with an $11 billion structural gap between spending and revenues. And that's before the governor revises his economic forecast downward and widens the gap by a few billion more. Still, Republicans swallowed hard and proposed some things they clearly don't like, including a $10 billion loan to repay the accumulated deficit, and cuts in local government, even law enforcement. Their outline will probably frame the budget discussion from this point foward and increases the likelihood of the state getting a spending plan in place by the July 1 start of the fiscal year. I'll have more on this in my column Thursday.
April 29, 2003
Spend now, pay later
I missed this story yesterday. An excellent piece by LAT reporter Jeff Rabin dissecting Phil Angelides' policy for refinancing California's general obligation bond debt and structuring new bond issues to defer payments as much as possible. There are debates about how much all of this is going to cost us, but it's clear that the treasurer's methods are one more way for the state to spend now and pay later. This is why I have come to support the concept of moving the state's budget deficit off book and financing it openly--along with a rock-solid plan to balance the operating budget once and for all. Otherwise the state just continues to drift from year to year, spending more than it's taking in, disguising or ignoring the long-term effects and hoping for the best.
The price we'd pay
Here's today's column, on a Blue Shield of California study putting the cost of universal health care at about $8 billion a year.
April 28, 2003
Is it bad, or really, really bad?
The green eyeshades among you may have noticed that the San Francisco Chronicle and I have reported dramatically different assessments of the income tax receipts rolling into the state treasury this month. I said in this space Friday that April collections looked as if they’d fall short of projections by maybe $500 million—not great but not the end of the world. The Chronicle reported in Sunday’s editions a far more alarming prospect, projecting that the state was running $3 billion short of expectations this month alone. This stuff can be tricky, but my sources at the legislative analyst’s office suggest I am correct and that the Chron might have miscalculated. One hint: The $7.5 billion the Chronicle said the state was expecting for the month includes money withheld from paychecks, but the $4.3 billion the paper reported the state collected through April 25 does not. And payments from withholding, unlike from tax returns, are running just about on target at $2 billion. As for the take from tax returns alone, my latest figures show that the state received $4.3 billion through Friday, with the possibility of another $300 million or $400 million in the pipeline. The projection for the month was $5.5 billion.