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 »

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 »

The AP has gotten a hold of the governor's May Revise speech and therefore the major budget proposals that are to be unveiled later today. The key elements are described below and over the flip I provide some analysis of each proposal.

• Arnold will float bonds using the state lottery as security. $15 billion over 3 years will be raised but $10 billion goes into "rainy day fund"



• If that fails, 1% sales tax hike to last no more than 3 years



• Prop 98 suspension abandoned; instead COLA will not be paid



• State parks closures abandoned; instead fees to rise $1 to $2



• $6 billion still left to cut or balance out somehow."

Overall thoughts: Here we go again. Arnold Schwarzenegger came to office in the recall of Gray Davis in 2003 promising to solve our state's budget problems once and for all. Instead he immediately blew a $6 billion hole in the budget with the Vehicle License Fee cut and then borrowed to close the rest of the gap - costing the state around $3 billion in annual debt service.

Now that Arnold's solution has predictably failed, he is predictably offering more of the same. Borrowing against the lottery is a problematic concept for many reasons, the main one being it avoids the core issues of our budget. It's yet another one-time fix that does nothing to solve the structural revenue shortfall that has plagued our state for 30 years.

It is significant that Arnold seems to be backing away from his most significant cuts - especially the K-12 cuts. Obviously the details released tomorrow will be key, and we should fully expect higher ed to take another crippling blow. But this does indicate that the activism many of us have launched against the primary schools cuts has had an impact.

And of course, there's still $6 billion left over - $6 billion that the Yacht Party will insist come in the form of destructive cuts that damage the economy, $6 billion that Democrats will - we hope - insist come in the form of wise, long-term revenue solutions.

Finally, Arnold seems to be gambling that the economy will make a quick recovery and that the current woes are just a dip and not the opening stages of a deeper recession. That, I think, is a major and probably reckless gamble to make.   Read More »

Here in the dog days of April, as the state awaits the governor's May Revise, frustration seems to be setting in over the budget. The real political battles will begin in earnest after the May Revise, but the jockeying for position has been going on for some time, including in the state's media. Unsurprisingly, the media wants to spin the budget crisis as a failure of all Sacramento politicians, when in fact the current impasse is the responsibility of one group alone: the Republicans.

As an article in Sunday's Sac Bee would have us believe, there is "scant support for budget changes." But a deeper look shows that while Democrats have already proposed budget fixes, such as closing the yacht loophole and creating an oil severance tax (as exists in nearly every other state), it is the Republicans alone that have blocked meaningful budget action.

And why have they done so? Republicans want us to believe that *any* revenue solution is economically damaging:

However, Sen. Dave Cogdill of Modesto, the GOP's incoming leader, said the state should not take away credits at a time when the economy is struggling.

Other ideas that have yet to gain traction would raise income taxes on high-wage earners or amend Proposition 13 to assess businesses in the same way as residential property. The latter, known as "split-roll" property tax, would require that commercial and industrial properties be reassessed more regularly, bringing the state an estimated $3 billion annually.

Cogdill dismissed all as non-starters.

"We should help the general fund by stimulating the economy and be a more beneficial partner with industry, rather than stifling them," Cogdill said.

But whose economy is stimulated by revenue cuts? Who actually sees this so-called economic growth? And who suffers from the spending cuts that are forced by the revenue cuts? A closer look at the overall situation shows that the Republicans' claims are nonsense. Tax cuts provide economic growth for a wealthy few, but cause economic distress for pretty much everyone else - *especially* when those tax cuts come at the expense of education. More below.   Read More »

What began in Alameda last month is now beginning to spread around the state. As their future is taken from them by a Yacht Party determined to protect wealth and aristocracy through crippling education cuts, California students are beginning to fight back. In rallies that are unfolding across the state, they are speaking out for opportunity, for education, for democracy.

And on April 18 and April 21, they are poised to make the loudest statement yet against the destruction of education in California.

More on that below. But first, how is Arnold responding to the crisis in public education? The governor, whose own children attend private schools, made a fundraising visit to St. Margaret's Episcopal School in San Juan Capistrano yesterday at the request of Mimi Walters, GOP assemblywoman and parent of two St. Margaret's students. He was met by over 200 protestors who denounced Arnold's education cuts:

Chanting "Save our schools" and "Shame on you," about 200 teachers, students and parents from across South County lined the narrow sidewalks in front of a Mexican restaurant Thursday afternoon, protesting Arnold Schwarzenegger's proposed education cuts as the governor rolled up for a fundraiser.

Sheriff's deputies on foot and motorcycle ordered protesters to stay off the private driveway of El Adobe de Capistrano restaurant in the moments leading up to the governor's 6:15 p.m. arrival. Schwarzenegger entered the downtown San Juan Capistrano eatery through a side entrance and did not address the protesters.

Schwarzenegger's communications director, Matt David, told reporters the governor "wishes he could be outside with these protesters" and that he applauded their efforts.

"This is the last thing he wants to do," said David, explaining that the governor hoped to work with lawmakers to find a different solution to the state's budget crisis. "He understands how important it is to fund education."

Of course, nobody forced Arnold to propose a $4 billion cut to K-12 funding. And he can reverse those cuts in his May revise. But he will get his chance to join these protestors over the next week, as California students are about to unleash an unprecedented wave of activism to stop Arnold and his attacks on public education.   Read More »

Tomorrow night, thanks to your help and contributions, the Yacht Party video will air on cable TV  in Sacramento - specifically CNN, MSNBC, The Daily Show, and the Colbert Report. And our success has been getting attention. Lisa Vorderbrueggen at the Contra Costa Times writes:

The ad has gotten quite a bit of attention. It’s a clever poke at Assembly Republicans who refused to close a tax that allows purchasers of boats, RVs and other recreational toys to keep them out-of-state for 90 days and and avoid paying sales taxes....

But at a time when the state may have to lay off thousands of teachers and cut services to the poor, the symbolism of allowing a yacht buyer to sit in Mexico for three months to avoid paying taxes is hitting a nerve. 

This is a fantastic development - and as noted below, in the email we sent out to our members, it can get much better.

   Read More »