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Calitics

San Francisco Chronicle

Sac Bee

State Controller John Chiang announced today that beginning February 1st a number of tax refunds, welfare payments, college aid, aid to for the disabled, and a whole bunch of other payments will be delayed by at least 30 days. Here’s why (from Controller Chiang’s press release):

With no signs of an economic recovery in sight, it is critical that the Governor and the Legislature enact a sound budget solution that provides much-needed cash by February 1. If not, the State will be $346 million in the red at the end of February, and $5.2 billion in the red in April.

In order to preserve cash for education, debt service and other payments that are deemed by the State Constitution, federal law or court rulings as having first claim to available General Fund cash, the Controller announced he will begin delaying, for 30 days, payments to all other programs that are funded out of the State’s depleted General Fund.

Those payments that will be delayed include thousands of payments to businesses for services and products they provide to the State; to assistance for more than a million aged, blind and disabled Californians that goes to pay their rent, utilities, or put food on their tables; to State agencies that use the payments to fund critical public services, ranging from public safety to health and welfare.

If the budget crisis is not resolved by March 1, then the state may issue IOUs — which may not be any better, especially if banks refuse to accept them.

Read Controller Chiang’s entire statement here.

For a detailed list of all delayed payments by February 1st, click here.

Our question is this — if this isn’t resolved by April 15th, why should we be required to file our state taxes by then?

The speech itself was awful.  It was like watching a the father-of-the-bride give a wedding toast when he and everyone else in the room knows the wedding is doomed.   The first 25% was just thanking other state officials and their staffs.  The last part was a (deserved) thank you to the state’s firefighters for their handling of last year’s wildfires. The middle part was nothing but a bunch of fluff about solving the budget crisis.  The only specific proposal he laid out was a plan to dock the every legislator’s paycheck for each day they are overdue on passing a budget.  nobody seemed to like this idea very much.

Here’s a link to the video of the speech

Here’s the text of the speech as delivered:

GOVERNOR SCHWARZENEGGER:   Thank you very much. Thank you. Thank you very much, Lieutenant Governor Garamendi, for the nice introduction. Chief Justice George, President Pro-tem Steinberg, Speaker Bass, Senate Republican Leader Cogdill, Assembly Republican Leader Villines, members of the legislature, ladies and gentlemen.

First of all, I want to congratulate the four that have been responsible for creating, really, the Martin Luther King holiday. So I want to say thank you because Martin Luther King has been a great hero who has given his life for justice and for equality and has been a great inspiration not only to Americans but to people all over the world. So congratulations to all of them. Let’s give them a hand, again, for the great work that they have done. (Applause)

I also want to take this opportunity to just thank a few people, because all this hard work is not done just by me or the Horseshoe, there are a lot of people involved. First of all I want to say thank you very much to my wife and the First Lady of California for her extraordinary work on the Women’s Conference or on promoting earned income tax credit or the volunteers, California Volunteers, or the Hall of Fame or the California Museum and the list goes on and on and on. Let’s give her a great hand for the great work that she is doing. (Applause)

Then I also want to take this opportunity to say thank you to my staff that has been working so tirelessly, not only during the day but sometimes at night and on the weekends and so on and especially also my Chief of Staff Susan Kennedy. Thank you very much for all the great work that all of you are doing. Thank you. (Applause)

And I also want to say thank you to the staffs of the legislature, because we are not by ourselves down there; you guys, you have terrific staff, hardworking staff that come down there and work with us also again many hours during days, nights and weekends, so we want to say thank you also to them for all of that. (Applause)

Now, we meet in times of great hope for our nation, although we hear the drumbeat of news about bailouts, bankruptcies and Ponzi schemes, the nation with great anticipation is also awaiting the inauguration of a new president. Our nation should be proud of President-elect Obama’s election and what it says to the world about American openness and renewal.
You know, President Reagan used to tell about a letter that he got from a man who said that you can go and live in Turkey but you can’t become a Turk. You can go and live in Japan but you can’t become Japanese. And he went through various different countries like that but the man said anyone from any corner of the world can come to America and become an American. (Applause)

I know that we know that any American child now also, no matter what corner of the world his father or mother comes from, can even become president of the United States. What a wonderful national story for us. This nation rightfully feels the hope of change.
Californians, of course, desire change here in their own state as well. Yet they have doubts, if that is possible, because for months in the face of a crisis we have been unable to reach agreement on the largest budget deficit in our history. We are in our third special session and we have declared a fiscal emergency and every day that goes by makes the budget problem that much harder to solve.

As a result of all of this, California, the eighth largest economy in the world, faces insolvency within weeks. The legislature is currently in the midst of serious and good faith negotiations to solve this crisis, negotiations that are being conducted in the knowledge that we have no alternative but to find agreement.

The importance of the negotiations’ success goes far beyond the economic and human impact. People are asking if California is governable. They wonder about the need of a Constitutional convention. They don’t understand how we could have let political dysfunction paralyze our state for so long. In recent years they have seen more gridlock in Sacramento than on our roads, if that is possible.

I will not give the traditional state of the state address here today because the reality is that our state is incapacitated until we solve the budget crisis. The truth is that California is in a state of emergency.

Addressing this emergency is the first and most important and greatest thing that we must do for the people of California. The $42 billion deficit is a rock upon our chest and we cannot breathe until we get it off. It doesn’t make any sense for me to talk here today and stand in front of you and talk about education or infrastructure or water or health care reform and all of those things, when we have this huge budget deficit. I will talk about my vision for all of those things and much more as soon as we get the budget done. So no, I did not come here to deliver the normal list of accomplishments and proposals. I came just simply to encourage this body to continue the hard work that you are doing behind closed doors. I know we’re going to get it done.

There is a context, of course and a history to the negotiations that are underway. It is not that California is ungovernable; it is that for too long we have been split by ideology. Conan’s sword could not have cleaved our political system in two as cleanly as our own political parties have done. Over time ours has become a system where rigid ideology has been rewarded and pragmatic compromise has been punished. And where has this led us? I think you would agree that in recent years California’s legislature has been engaged sometimes in civil war. Meanwhile, the needs of the people became secondary. Our citizens do not believe that we in government are in touch with their needs.

Now, these needs are not unreasonable, may I remind you. At the end of the day most people do not require a great deal from their government. They expect just simply the fundamentals. They want to live in safety, they want good education for their children, they want jobs, they want to breathe clean air, they want water when they turn on the faucet, they want electricity when they turn on the switch and they want those things delivered efficiently and economically.
One of the reasonable expectations that the public has of government is that it will produce a sound and balanced budget. That is what the legislative leaders are struggling to do right now. There is no course left for us but this; to work together, to sacrifice together and to think of the common good and not our individual good.

Now, of course no one wants to take money from our gang fighting programs or from Medi Cal or from education. Of course not.  No one wants to pay more taxes or fees. But each of us has to give up something, because our country is in an economic crisis and our state simply doesn’t have the money.

In December we even had to suspend funding that affects 2,000 plus infrastructure projects that were already underway. So now the bulldozers are silent. The nail guns are still.  The cement trucks are parked. This disruption has stopped work on levees and housing and schools and roads, on everything. It has thrown thousands and thousands of people out of work at a time when our unemployment rate is rising and when people really need the jobs. How could we have let something like this happen?

I know that everyone in this room wants to hear again the sound of construction. No one wants unemployment checks replacing paychecks. So I’m encouraged that meaningful negotiations are underway.  And as difficult as the budget will be, good things can come out of it. Because in spite of the budget crisis, when we have worked together in the past, we have passed measures, extraordinary measures that move the state and even the country forward.

When a budget agreement is reached, when some of the raw emotions have passed, I will send the legislators the package of legislative goals and proposals that the Governor traditionally sends. These proposals are sitting on my desk right now.

And let me tell you, I have big plans for this state. They include action on the economy, on water, the environment, education and healthcare reform, government efficiency and reform, job creation and the list goes on and on.

But our first order of business is to solve the budget crisis. And talking about budget, I have a great idea going forward. As you know, for the last 20 years of budgeting only four budgets have been on time. So if you don’t mind, let me just make a little suggestion. We should make a commitment that the legislators and the Governor too, lose per diem expenses and our paychecks for every day that the budget goes past the constitutional deadline which is June 15th. I mean, you have to admit this is a brilliant idea and look at the happy faces I see now. I love that.
I mean, if you call a taxi and the taxi doesn’t show up, you don’t have to pay the driver.  So if the people’s work doesn’t get done, I think the people’s representatives shouldn’t get paid either. That is common sense in the real world.

And, of course, I will send you some other reforms as well. I thought that this line would get a great applause in this hall but I understand why not.

Let me close by saying something about the fires of 2008. At one point I got a phone call that we had 875 wildfires burning all at the same time. I said to myself, how could we deal with this?  The next morning I got another phone call:  Governor, there are now 2014 fires burning all at the same time, the largest number on record. Imagine, 2000 plus fires. What a huge challenge. But every one of those fires was put out. And you know why?  Because we have the best trained and the most selfless and the toughest firefighters in the nation. Let’s give them a big hand. (Applause)

Thirteen of whom lost their lives. They gave their lives for this state. Think about that. They gave their lives for this state.

Ladies and gentlemen, the courageous example of those firefighters should not be lost in us. In our own way we too must show courage in serving the public.

Ladies and gentlemen, let this be the year of political courage. Let us be courageous for the people. Let us be courageous for the common good of California. Let us resolve the budget crisis so that we can get on with the people’s work.

Thank you very much. Thank you.  (Applause)

Here’s the latest example:  Last week,the Governor  issued an Executive Order closing state offices every other Friday with the workers going on unpaid “furlough” for those two days.   Unfortunately for the Governor,  this Executive Order does not apply to state offices run by other state elected officials.  The SacBee reports:

Schwarzenegger’s executive order — which applies to most state workers — cannot be mandated on the offices of California’s other statewide elected officials.

This issue will likely be added to the Governor’s “State of the State” address which he delivers this Thursday.  It’s going to be a bummer. The San Jose Mercury News reports:

Gov. Arnold Schwarzenegger will be hard-pressed to find good news for his State of the State address on Thursday as he continues his search for a budget compromise with state lawmakers before California runs out of cash in a few weeks.The Republican governor will focus his annual speech on the state’s dismal revenue outlook amid a deepening national recession. He also is likely to press for a combination of spending cuts and tax increases, as he has done for months.

On Monday, he was meeting with legislative leaders from both parties after vetoing an $18 billion Democratic budget proposal last week.

“We are starting again. As the governor said, we are turning the page on negotiations this week with all four legislative leaders at the table,” Schwarzenegger spokesman Aaron McLear said.

California is expected to run out of cash in February, which would force the state to issue IOUs to vendors for only the second time since the Great Depression. It last gave IOUs during the recession of the early 1990s.

Running out of money also means California might have to delay checks to taxpayers owed refunds or issue them IOUs.

Schwarzenegger has described the current situation as “financial Armageddon.” Nevertheless, his pleas have failed to coax majority Democrats and, most notably, members of his own party out of their ideological corners.

It seems that the Central Valley news media has had enough of the budget and financial mess.  The newspapers in Fresno, Sacramento, Stockton, and Bakersfield are calling for an end to the fighting.  [San JoaquinValleyfornia]

So we got an email from Equality California Exective Director Geoff Koors, explaining:

It is extremely disappointing and hurtful that President-elect Obama has chosen California Rev. Rick Warren, who actively supported Prop 8 and the elimination of existing civil rights for LGBT Californians, to give the invocation at his inauguration.

Accordingly, I have decided to decline the invitation to attend the inauguration as I cannot be part of a celebration that highlights and gives voice to someone who advocated repealing rights from me and millions of other Californians.

Mr. Korrs is really missing the point here.  First of all,  nobody, and we mean nobody in the Obama administration or in the larger Democratic party cares if you are or anyone else from Equality California show up to the innauguration.  Second, stop picking fights with the religious right.  There’s lots of voters out there who like Rick Warren but could also be convinced to repeal Prop 8, this tactic alienates those voters.  It’s stunts like this that alienated moderate voters during the campaign.   As we’ve said time and again, the Prop 8 fight is not about activism it’s about winning.    Go to  the inauguration and get in the game.

The plan from Assembly Speaker Karen Bass (D-Los Angeles) would have raised $11.3 billion in revenue by raising the state sales tax by 1.5%, adding a tax on oil extraction and increasing taxes on alcoholic drinks — all ideas Schwarzenegger has proposed. The proposal would have reduced spending on schools and social programs by $6.9 billion.

The SacBee reports:

The spending cuts portion of the Democratic-sponsored plan fell six votes short of the two-thirds margin of 54 it needed in an initial tally. The tax hike portion fell eight short in initial voting as none of the 29 Republicans supported it.

The votes come the night before a state board is expected to suspend financing for hundreds of public work projects either underway or about to begin, costing thousands of jobs.

Why did it fail? The LA times says:

The plan’s reliance on tax increases ensured its rejection by the Republican minority, which has the power to block spending plans. Though GOP lawmakers rejected an earlier proposal that was more evenly balanced between cuts and tax hikes…

But if it was ensured to fail, why bother voting on it in the first place?   Assembly Speaker Karen Bass (D-Los Angeles/Culver City) had this to say to the LA Times:

Bass told reporters she was holding the vote because “if we don’t vote on anything, people feel we are doing nothing.”

Speaker Bass, we appreciate the honesty, but unless you’re going Bullworth on us or if this comment is part of some serious inside strategy, you’re really misreading the statewide mood. We already think you’re doing nothing, holding a useless vote only makes things worse.  Admitting to doing it for cosmetic or PR reasons  shows disdain for the people you are supposed to serve.  If it’s a joke, it didn’t translate in print and it’s still insulting.  Boo hiss.

But maybe we shouldn’t second guess Speaker Bass.  According to the SF Chronicle, after it became clear the budget proposal would be defeated, the Speaker pulled this move:

… rather than closing the final vote count on the measures and ending the floor session, Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), announced that lawmakers were locked in, preventing them from leaving the Assembly floor and nearby meeting rooms.

Bass said she ordered the Republicans’ budget proposal to be ready in bill form so that lawmakers could vote on it Tuesday night. But it was unclear how long it would take for the GOP proposal to be ready.

And since there’s no new budget and no one in the legislature has figured out how to stop the state from running out cash by February, it looks like today is the day the plug gets pulled on public works projects.   The LA Times reports:

On Wednesday morning in Sacramento, Lockyer, state Controller John Chiang and Schwarzenegger’s finance director, Mike Genest, will meet to vote as members of the obscure Pooled Money Investment Board on a staff recommendation that new loans for construction projects be stopped and public agencies be barred from spending money they have already been given. The staff estimates that $3.8 billion in project funds would be affected.

“Exceptions may be made for specific projects,” Lockyer spokesman Tom Dresslar said in an e-mail, if the officials determine that “a financing cutoff would expose the state to unacceptable financial penalties, or prevent the state from paying required loan interest or administrative costs.”

If you want to see a big ‘ol list of the projects that are on the chopping block, click here.

Stay tuned…

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