As the new Legislature is sworn into office there are hopes that the change in personalities might lead to a resolution of the budget crisis. Many of the new members are hoping to produce exactly that. And while their desire to solve the crisis is admirable, they may not yet have realized that solutions lie outside the Capitol, not inside it.

The San Francisco Chronicle article on the new lawmakers explains their desire to produce change:

Paul Fong, previously a community college trustee, said his first priority will be "to make friends with Republicans and get them to see the light" when it comes to approving new taxes and fees to ease the state's budget shortfall.

I have to guess that's a remark for the media - hopefully Fong realizes that the Republicans are in no mood to "see the light" on the budget. They have shown themselves to be quite happy obstructing the budget and demanding destructive, reckless cuts that will push California deeper into an already severe recession. Many of the new Republican legislators made a show of signing anti-tax pledges, making them even less willing than their predecessors to agree to new revenues.

More importantly, Fong's desire to "make friends with Republicans" is misplaced. It's not Republican legislators he needs to court - it is Republican voters, constituents of Republican legislators. They're the ones who can force the obstructionists to give way to common sense and dire economic necessity.

The most important thing the new class of legislators must learn is that the budget crisis will not be solved in Sacramento. Not in the back rooms, not on the chamber floor. The last few years should have proved that already.

Instead it will be solved in the public - in the streets, at the kitchen tables, at the ballot box. The most consequential budget-related actions in this decade came not from legislators but from the people, whether it was the 2003 recall or the 2005 defeat of Arnold's right-wing agenda.

It's Californians themselves who need to be reached out to, mobilized, engaged. Don't stay holed up in the Capitol - get out there and get the public involved in solving this crisis. Reach out not to obstructionist Republican who will *never* give in, but reach out instead to the decline to state and moderate Republican voters.

Follow the Obama model. Take your message to the places where Democrats have traditionally not organized. Mobilize your base and then use them to reach out to the millions of Californians desperate for change, desperate for solutions.

Democrats have to build a coalition with the people of California. Arnold has been a complete failure as governor, and the Republicans are busy thinking up new anti-labor, anti-environment demands for the hostage crisis they've provoked.

Californians voted overwhelmingly for people-powered change on November 4. It's time for the new legislature to bring that home and engage the public more directly and fundamentally on solving this crisis.

The legislature voted yesterday on the Democratic budget plan and, predictably, Republicans refused to vote for it, unwilling to support a tax increase. Closing a $17 billion hole in the budget with cuts alone would pretty much destroy government, which is of course their goal. In turn that would send California from a recession into an outright Depression, as the safety net would crumble and job losses would skyrocket.

The media's coverage of the budget debate is equally predictable. The Sacramento Bee framed yesterday's vote as a "last ditch effort" and the article opened with phrases like "debated, complained and pointed fingers of blame Tuesday." Arnold compared the legislature to a kindergarten, which I am hoping is not a set-up for some 1990 movie flashback.

The result of such coverage is to further depress public interest in and engagement with the budget process. Reporters make it sound like the Legislature is dysfunctional or doesn't care, conveniently sliding past the fact that the budget delays are *solely* the product of Republican obstructionism.

That means we need to look beyond what the media says to the actual plan the Democrats put forth:

• $8.1 billion in new revenues, from a tripling of the VLF and from freezing the current income tax tables



• $8.1 billion in cuts, including $4 billion to schools and $100 million to community colleges



• $800 million in fund transfers and other gimmicks

It's not a great plan, and the Democrats' united opposition to education cuts from the spring seems to have melted away. That's not a good sign, as the budget fight that began in 2007 seems to move inexorably toward the Republicans.

At the same time, this plan needs to be seen as a first step toward a budget solution. Legislative support for a restored VLF is a big step in the right direction, reversing 10 years of supporting that flawed tax giveaway. Action on the income tax is also a good move, although I would like to see Democrats return to their summer budget plan that called for a restoration of the 1990s tax brackets for higher income Californians.

That dovetails with the winning tax platform Obama used in his campaign. Note the word *campaign*. Sacramento Democrats need to start campaigning on the budget. Too often they have been focused on deal-making inside the Capitol and failed to aggressively sell their plans and their framing to Californians.

Next week dozens of new members will be sworn into the legislature. Their new energy can help take this plan, improve it, and build the public support necessary to implement it by breaking Republican resistance.

Let's hope that the new members bring a fresh attitude to the budget - one that recognizes this thing will NOT be solved inside the Capitol with a vote or a backroom deal.

Outrage is the easy part. Heck, it's the part that's tough to escape even if you want to. Outrage without action will only take you so far though, and Republicans in the state legislature are making on living on turning outrage into obstructionism and obstructionism into the elimination of fundamental services. The calculation is that a Republican can't win any other way- without adhering desperately to a government philosophy that does nothing but erode the ability of the state to do anything. To run it into the ground; break it all apart.

Fighting back requires turning outrage into action. It's calling out irresponsible behavior, but it's also making the case to your friends and neighbors. There's no real substitute for personal interaction, but you can reach a much larger audience by writing a letter to the editor of your local paper demanding that Republicans get serious and responsible on the budget. Democratic leaders in Sacramento are fighting to protect vital services in the face of a serious deficit, but they need everyone's help to make the case throughout the state and make the message heard.

Robert Cruickshank wrote Courage members today explaining what's at stake and what can be done:   Read More »

Today's New York Times examines the nationwide state budget deficit problem - the total deficit faced by the states is at least $66 billion (and is likely higher since the NY Times didn't include, for example, the $1 billion deficit in Washington State). California figures prominently in their story, of course, but the story makes it sound as if our deficit is solely the product of the economic crisis:

The plunging revenues -- the result of an unusual assemblage of personal, sales, capital gains and corporate taxes falling significantly -- have poked holes in budgets that are just weeks and months old and that came about only after difficult legislative sessions.

"The fiscal landscape," said H. D. Palmer, a spokesman for the California Department of Finance, "is fundamentally altered from where it was six weeks ago."

There's no doubt that the worsening economic picture is partly responsible for the budget deficit. But the NY Times article does not explain to its readers that reckless tax cuts have created a structural revenue shortfall - for decades the state hasn't taken in as much money as it needs to fund core services. Arnold's reckless VLF cut is responsible for nearly $6 billion of the deficit.

Still, given a deficit of this size, and the fact that numerous states are facing deficits, suggests that a federal response is a necessary part of the solution. Already cities such as San José are seeking part of the $700 billion federal bailout to help ease their cash crunch. Henry Paulson isn't interested - gotta keep the funds flowing to his Wall Street cronies - but a federal bailout of state and local governments needs to be a central part of President Obama's economic stimulus come January.

That bailout could be focused, for example, on filling gaps in health care, education, and transportation. The bailout funds could be made contingent on state-level solutions - here in California, for example, a smart and fair revenue proposal linked with a federal bailout could eliminate the deficit.

A revenue solution MUST be part of this - given the likelihood of state budget deficits for the next several years. The alternative is massive and crippling cuts to schools like that described in today's LA Times:

District officials -- already in the process of identifying $400 million in cuts for next year -- almost certainly will have to reopen this year's budget and find about $200 million to $400 million to meet an anticipated shortfall. The budget-cutting is becoming a painfully familiar routine: Officials had to eliminate 680 jobs just to balance the books last June.

"It was hard enough to do that, so doing it again, in the middle of the school year" could be chaotic, said Megan Reilly, the district's chief financial officer.

Those cuts would push LA even deeper into recession. Without a coordinated state and federal response, the economic picture is going to get MUCH worse.

With the latest figures about the state budget deficit - $28 billion over the next 2 years - it seems beyond all doubt that Arnold Schwarzenegger is a failure as governor. The sole reason he took office in 2003 was to replace Gray Davis, who faced a similarly large budget deficit. Arnold promised to end this, and it is clear he has failed to deliver. Instead the state of California stands on the precipice of bankruptcy and crippling service cuts that will dramatically worsen the economic downturn.

And it is clear this is primarily Arnold's fault. His first act as governor was to roll back the VLF, blowing a $6 billion annual hole in the state budget (roughly half the annual deficit - remember that the $28 billion figure is for two years). That act of irresponsibility was compounded by using borrowing to close the rest of the 2003-04 deficit. As the budget deficit returned in 2007 Arnold stubbornly refused to admit the need for new revenues.

He has also refused to engage in the necessary lobbying to produce a budget solution - instead he wishes and hopes Republicans will see the light despite years of evidence suggesting they instead see a budget crisis as an opportunity to ram through far-right ideas that nobody really wants.

The Legislative Analyst Office, under its new leader Mac Taylor, directly calls for taxes as the solution to the budget deficit. The report is a bit too favorable to Arnold's plan and suggests too many cuts, but it makes this all-important point about spending cuts:

The state's main options for addressing its budget dilemma--cutting expenditures and/or raising revenues--would both have adverse effects on the economy. Either type of option would reduce money held by or received by individuals or businesses that otherwise could be used for consumption or investment purposes. Because the state's economy totals more than $1.7 trillion in economic activity each year, however, spending reductions or tax increases totaling between $20 billion and $30 billion would have a relatively small impact on the overall economy.

Here again I think the new LAO is being too moderate. The report notes that much of the upward pressure on spending is coming from increased usage of Medi-Cal, for example, suggesting that government services are becoming more necessary in a recession. It's the safety net at work - and cutting the safety net is the last thing we ought to be doing.

Republicans like Mike Villines might be peddling books by Arthur Laffer, but as the California Budget Project explains the evidence proves that tax increases are the best way to provide a budget fix that doesn't hurt the economy.

And of course, spending cuts and tax increases hit different Californians. Spending cuts hit working and middle-class people particularly hard, especially the truly insane proposals to increase student fees for higher ed. But a return to the pre-1998 tax levels would hit the wealthy while providing the working and middle classes with the safety net and economic opportunities they need.

That we have to face such choices at all is a testament to how epic a failure Arnold Schwarzenegger has been for California. The LAO's report is damning:

The state's revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013-14 absent corrective action. From 2010-11 through 2013-14, we project annual shortfalls that are consistently in the range of $22 billion, as shown below.

Those are shocking figures, and they should indicate to every progressive and Democrat just how important it is to push out our own fairer, sensible, long-term solutions.

Having barely escaped Arnold's demands for budget cuts this spring, education in California is in his crosshairs yet again. Arnold is announcing that California now faces a $10 billion deficit and as a result, held a closed-door meeting with education leaders warning them of cuts of $2 to $4 billion that could come as soon as next month.

The reaction was swift:

"There is just no way we would be able to cut that much," said Scott Plotkin, executive director of the California School Boards Assn., who was at the meeting. "For virtually every district I know of, this would be catastrophic."...

Los Angeles Unified School District Supt. David L. Brewer said that Schwarzenegger's proposal would cost the district as much as $440 million. He called cuts of that magnitude "impossible."

"They're going to have to go out and borrow money because we'd go bankrupt," Brewer said. "Fiscally, we can't do that without literally having to shut down schools."

By law, teachers cannot be fired unless they are told months in advance.

"You can't just hand out pink slips," Brewer said. Teachers "have protections, they have union agreements."

Plotkin was also quoted in the SF Chronicle saying he thought this was an effort by Arnold to scare the education community into backing a budget that wasn't cuts only. But I am not so sure this is the case. Arnold is talking as if education cuts are inevitable, and if he were truly interested in avoiding them, he would not have called a lame-duck legislature into session - he'd have waited until December 1 and allowed a new legislature with fewer Yacht Party members to take their seats and solve the mess.

Complicating matters is the fact that the budget deal that resulted from Don Perata's surrender in September is worse than we expected according to an analysis posted at the California Progress Report:

In a nutshell, the budget agreement includes new sweeping midyear cut authority for the executive branch, a restrictive new state spending cap that was billed as an expansion of the state's rainy day fund, and new corporate tax breaks that will cost the state more than $1 billion a year. The first two proposals require voter approval, presumably in a June 2009 special election, but the tax breaks are permanent unless reversed by the Legislature or at the ballot box.

All three proposals were carefully crafted by their proponents but were jammed through the Legislature at the last minute without receiving property scrutiny and review. Democratic leaders have vehemently opposed similar proposals in the past but surrendered on all three proposals in one fell swoop--a boon to fiscally conservative Republicans who have fought for a restrictive state spending cap and midyear cut authority for years.

The spending cap and midyear cut authority undermine the power of Democrats to protect education funding. Apparently these aren't yet in effect, but Democrats have already given up as much as they can. Beginning November 5th their job is to fight, fight, fight. They will likely have a voter mandate to do so.

They will also have common sense on their side. Cutting education spending - or any other government spending - during a severe recession is an act of madness that guarantees the recession will get deeper and last longer. Arnold needs to not only look at a new sales tax, but admit his error and restore the Vehicle License Fee, which would restore $6 billion to the budget immediately and make this immeasurably easier to solve.

Only if Democrats hold their ground will that happen. And for them to hold their ground, we must make them do so.

It's really refreshing to see an article like this in a California newspaper. From today's LA Times comes a story with the headline California's next budget battle could get easier:

Democratic gains of even a couple of seats on Nov. 4 could ease California's annual struggle to match spending with revenue. Eight Republican votes are now needed to pass a budget by the required two-thirds majority of lawmakers. If voters reject Republican candidates in some districts, Democrats may have a smaller anti-tax bloc to battle and fewer arms to twist to pass a budget.

The media typically resists speaking this particular truth to the public. Instead they prefer to blame "partisanship" or some unknown budget god for creating this crisis. Of course the budget problems are a direct cause of Republicans, whether it was Prop 13, or their reckless 1998 tax cuts, or Arnold's VLF and budget balancing bonds, or recent Yacht Party-induced budget delays.

Yet another reason for California progressives to Stay for Change - don't travel to swing states, travel instead to the key swing districts in the Assembly and the Senate, races that will be the difference between a sane and fair budget and another crippling Republican-induced delay.

Three months late, California has found itself a budget. It satisfies no-one, fails to address the long-term systemic flaws in the budgeting system, doesn't provide the services that people expect to receive when they pay their taxes or cast a vote, and essentially accomplishes little more than keeping (most of) the lights on for a few months until this comes around again.

The problems will be the same, the partisan divisions and rancor will be the same, and we'll be another year down the road towards a completely ungovernable state. We simply can't keep doing this every year; it fails everyone, and we deserve better.

So Rick Jacobs and Courage Campaign floated an idea, but it's ultimately up to you: Should we call a Constitutional Convention?

It's clear that the system isn't working, and bold action is needed to break out of this perpetual stalemate. Rick Jacobs laid out the full case in an email Thursday, but it's up to you to vote and tell us what you think:   Read More »

According to the LA Times Don Perata is ready to wave the white flag and give in to Republican anti-tax demands:   Read More »

That's what the Correctional Officers are considering, according to Matier and Ross:   Read More »

After what was described in the Sac Bee as "hard lobbying" from the governor's office, the California Taxpayers Association has endorsed Arnold's plan to balance the budget with a temporary sales tax increase that becomes a reckless and nonsensical sales tax /cut/ - below the current level - in 2011.   Read More »

The primary reason Republicans continue to hold the state hostage and deny us a budget is they are afraid that if they vote for a necessary tax increase, they will face a primary challenge from within their party, either for their current seat or for another office in the future. All such a challenger would have to do is say "Joe Blow voted for a tax increase" and the challenger, flush with money from the Club for Growth, the Howard Jarvis Association, and the other usual suspects will take out the incumbent.

The only way to challenge that calculus is to suggest that these Republicans will face a greater backlash from voters than from other wingnuts. California voters, especially those in districts represented by Republicans, hold the most leverage in the current budget stalemate.   Read More »

One of the most important but so far overlooked narratives of this election cycle is the return of taxes as a major political issue. The recession is hitting government budgets just as that same downturn, combined with soaring gas prices and global warming is creating demand for new spending.

Against this backdrop conservatives are now convinced that their way out of an ugly election cycle is to rally the public behind their rabid anti-tax politics. Constant attacks on Obama as a tax-raiser are partly to blame for McCain's recent rise in the polls.

And here in the states Republicans are again turning to the tax revolt, their bread and butter for 30 years. Republican intransigence on the California budget is best seen as part of this national strategy to break Democrats on the tax rack.   Read More »

It's 1995 all over again, as Republican-induced government shutdowns are all the rage. Congressional Republicans are planning a shutdown in September if they don't get their way on drilling, which looks to be their core electoral strategy going into November.

Here in California the possibility looms as Republicans show no sign of budging on the budget. Saturday is the deadline for adding propositions to the November ballot, and as most budget solutions proposed have involved going to voters - whether it's Arnold's lottery bonds, his sales tax plan, or the Republicans' spending cap demands, the deadline becomes all-important:   Read More »

A few months late and several billion dollars short, Arnold has finally gotten around to making a serious revenue proposal - a 1 cent increase in the sales tax for a duration of three years. The SacBee reports this is expected to raise around $4 to $5 billion.

Not one to offer a solution without strings, Arnold insists that this would only happen in exchange for "long-term budget fixes" such as a rainy-day fund. A rainy day fund is a good idea but that needs to come AFTER we fix the structural revenue shortfall.   Read More »

That's what California Republicans are planning this summer, according the LA Times:

GOP lawmakers hope to use their leverage over the state budget, which cannot pass without some of their votes, to roll back landmark policies implemented by Democrats and the governor. Among them are curbs on greenhouse gas emissions, regulations banning the dirtiest diesel engines and rules dictating when employers must provide lunch breaks for workers.

   Read More »

Today's LA Times has an interesting series of op-eds by historians and authors examining how past governors dealt with budget crises. It's an interesting look not only at how those governors all helped build the prosperous state that we're living off of today, but also how the real problem with the budget isn't a lack of pragmatism or deal-making, but ideology. And since the articles were commissioned by California Forward they are particularly important in shaping how we will respond to this crisis.   Read More »

I know, I know, it's too easy. But what better headline can one come up with to assess the ridiculous and ineffective solutions proposed by Leon Panetta's high-powered, high cost group of high Broderists to solve the budget crisis?

George Skelton's column provides some of their early recommendations:   Read More »

There have been several bittersweet anniversaries in the past week. The Tiananmen Square massacre happened on June 4 in 1989 followed by the "Unknown Rebel" on June 5 (actually my earliest political and blogging inspiration) and June 5 marked the 40th anniversary of Robert Kennedy's assassination (died June 6). Less dramatic but certainly casting a long shadow here in California is the 30th anniversary of Prop 13.

With new leadership in the legislature comes a new approach to wrangling with Prop 13's continuing impact and legacy. Courage's Julia Rosen discussed the current climate and how you can get involved earlier today:   Read More »

Yesterday, Al Gore emailed a special video message to members of the Courage Campaign discussing how vitally important it is that our budget priorities not abandon education. And he asked everyone to tell him what we think about the current threat to education funding here in California at Current.com. Already, 18 members of the State Assembly have recorded video responses and posted them at Current. But even more impressive is that there are already close to 200 (probably more by now) responses by people from all over.

For instance, CarolynGillis said:

We need to increase our investment in financial and economic literacy for all our K-12 students and their parents so they have a chance to use their earnings wisely and to choose skills that empower them to create a future for themselves and their families.

commenter lritz noted:

If we want to retain our competitive edge in this world, we need to refocus our priorities on education, and turn the system upside-down. Make people want to be teachers. Make kids want to go to school. Reward those that show potential with scholarships, and squash the myth that sports is the only way for underprivileged kids to escape their situation. Make college affordable and available to anyone who wants it. Stop grading kids on their ability to take tests. Dismiss the idea that we have to constantly boost self-esteem by not failing kids or holding them back a grade.

This is the sort of dialogue our education system needs if we're going to save it. But I certainly can't say it any better than Al Gore himself:   Read More »