On July 12th the California State University Trustees increased tuition by 12 percent for the fall term. This follows the 10 percent hike last year. Both tuition hikes are blamed on the $650 million in state budget cuts for the Cal State system. Undergraduate tuition at CSU goes up to $5,178 for fall 2011 or $948 more than it was in fall 2010.
But the budget cuts must not have hurt too badly since the trustees then approved the compensation package for the new university president at San Diego State, a part of the CSU system. The Trustees approved a $400,000 compensation package for Elliot Hirshman which was 33.6% HIGHER than his predecessor. Hirshman thus becomes the 29th officer of the Cal State system to make more than $240,000 according to the Sacramento Bee.
Governor Jerry Brown sent the trustees a nasty letter complaining about the size of the increase in salary and dissing them for setting a bad example for other public employees. Lt Governor Newsome, a member of the trustees voted against the increase and legislative leaders issued press statements with mildly masked threats of retaliation with even more cuts if he CSU trustees approved the package.
They did it anyway. Why?
The trustees argued that the market for university presidents is fiercely competitive and they must keep up or fall behind. And let’s face it, compared to corporate salaries for officers of organizations of similar size these salaries are not out of line for their level of responsibility.
But the problem is the universities want it both ways. They want to be subsidized by the tax payers arguing that the world class education for the next generation of leaders is at stake from persistent budget cuts. They want to protect their merit increases and bonuses and defined benefit pensions. We understand that since we all want the same thing.
But competition, the recession and a slow recovery forces business to make tough choices, rationalize costs, and scale back spending to reflect the realities of the economy we have. The universities hate doing that so they raise tuition and blame it on the State. The State complains as they are doing now but is secretly happy to see the tuition hikes because it enables the Governor and the Legislature to look good the next year by making more “cuts” in the university budgets. This is nothing more than a pseudo-tax increase on parents.
There is a solution for this!
IPO the California State University System and the University of California System, and free the universities to compete in the marketplace for students, research grants and faculty. The State can budget a fixed amount each year for grants to California higher education students for instruction and let them compete for a place in class. If they can’t find one in the CSU or UC system then the student and his parents can apply the grant to tuition at a private school or out of state.
No drama. No political games.
The universities are wealthy beyond measure in the creation of intellectual property and if they harnessed the patents and IP and encouraged the faculty to turn it into commercial, revenue producing products, services and expertise the endowment would grow and the faculty would get paid for the time they teach and be free to supplement that teaching stipend from their research work and consulting.
I suspect several things would happen. First, the attitude of the faculty would become much more entrepreneurial. Second, teaching would be a priority for those who choose to teach. Third, students would find many great learning opportunities from the start-ups and work experiences created from that research and entrepreneurship and find taking yoga or underwater basket weaving much less attractive. Fourth, tax revenue and state GDP would grow again as these incubators for learning got back to the business of teaching students what they need to know to be productive citizens.
There ends the rant.
- CSU tuition now twice 2007 cost (sfgate.com)
- Cal State board to vote on 12 percent tuition hike (seattletimes.nwsource.com)
No Budget, No Payday!
That was the stunning decision yesterday by California State Controller John Chiang. Under California law the State Legislature must adopt a balanced budget (Proposition 58) and they must do so by June 15th by a simple majority vote instead of the previously required 2/3 vote (proposition 25).
Yesterday the other shoe dropped when State Controller John Chiang, also a Democrat, said the Legislature failed to meet the tests under both Proposition 58 to pass a balanced budget and Proposition 25 to do so on time. Therefore, he was just following the law (Proposition 25) and ordered that the Legislators would forfeit about $260 per day in salary and $142 in tax-free travel and living expenses. Under Prop 25 that money is forfeited meaning it cannot be later paid back once the budget is adopted.
Since the Legislature is a full-employment act for politicians with members making $95,291 getting cut off cold-turkey is the voters’ equivalent of a furlough, and legislators are not accustomed to being disciplined especially by other Democrat elected officials.
The Democrat Legislative Leaders were furious believing Governor Brown stabbed them in the back. The Republicans were largely quiet observing the age old political proverb—‘when your opponent is committing suicide, let him’.
Brown told the Legislative leaders to go back to the budget negotiating table and try to talk the Republicans into a short-term extension of the current sales and income tax increases and to allow voters to decide whether to extend them further. Otherwise he told the Legislature to send him a budget with cuts deep enough to close the $9.6 billion gap.
The Controller’s action was refreshingly gutsy and the blogosphere was alive with calls of “Chiang for Governor.” In the short-term Chiang’s action strengthens the hand of Governor Jerry Brown in getting the Legislature to act responsibly enough to allow State Treasurer Bill Lockyer to sell the bonds needed to keep the state in cash.
Republican have resisted calls for a tax extension arguing that past use of that strategy has resulted in the Legislature spending all the money and then some. The problem Republicans have is voters surveyed have repeatedly said they want the opportunity to vote up or down on taxes. So if Republicans continue to hold out they risk irritating voters on a core issue. But voters also passed Prop 25 reducing the vote needed in the Legislature to approve the budget to a simple majority thus depriving the minority party—almost always Republicans in California—the ability to hold the budget hostage. So Democrats have the votes but not the will to adopt a balanced budget making deep cuts, but they don’t have the votes to call a special election on the tax questions.
Checkmate as usual—but this time no paycheck as usual.
- California State Controller Sticks Lawmakers’ Face In It (cehwiedel.com)
- California Controller to Pols: No Pay for You! (reason.com)
- Chiang Cuts Off Legislators Pay As California Budget Saga Continues (economy4abc.blogspot.com)
- California Budget Rapture is Near (civicchoices.wordpress.com)
- California Voter Revenge Hits Politicians Hard! (civicchoices.wordpress.com)
- Jerry Brown vetoes budget – Democrats ‘dismayed’ (sfgate.com)
A fist fight between opposing views on the State budget broke out at the California Legislature just before the Democrat-sponsored State Budget was approved anyway and sent to Democrat Governor Jerry Brown. But Brown vetoed the budget sent him by fellow democrats saying it was full of gimmicks and did not solve the problem.
He told them to talk the Republicans into allowing voters to decide whether to extend the current temporary sales and income tax increases as a bridge and to find more cuts in budget categories or else.
This is Jerry Brown at his finest!
He knows every legislative and political trick in the books and he obviously surprised the Democrats by not rolling over for their latest attempt to kick the can down the road.
Why were they doing it?
Voters approved a ballot Initiative last election that stops legislative paychecks if they fail to approve a balanced budget on time. So the Legislature approved a budget they called balanced in time—the first time in decades—to meet that paycheck deadline betting that fellow Democrat Jerry Brown would let them get away with this smoke and mirrors trick.
The Governor knew he would have to live with a flawed budget and thus would get all the blame for making draconian cuts needed to make up for the gimmicks the Legislature approved. So in vetoing the budget he told them to try again.
So angry was Senate President Pro Tem Darrell Steinberg that he announced he was halting Senate consideration of Governor Brown’s appointments and there would be no further confirmations for an indefinite period of time.
Pressure on the Legislature to approve a realistic state budget is compounded by bad economic news. California employers shed 29,200 jobs from payrolls in May after several months of job growth had boosted California’s estimated revenue for the year. California’s unemployment rate still fell to 11.7% from 11.8% in April, according to Bureau of Labor Statistics.
California was not alone in this bad economic news as only 54,000 jobs were added in May and the national unemployment rate grew to 9.1%. First quarter job growth averaged 220,000 jobs a month. Add falling home prices and lower retail sales and consumer confidence numbers and you see why Governor Brown was tired of waiting for the Legislature to do its job.
A POX ON BOTH YOUR HOUSES
Jim Boren, an editorial writer for the Fresno Bee, summed up the nasty mood pervading the State with this editorial:
“Here’s more evidence that we need a part-time Legislature in California: It took lawmakers almost six months to come up with a phony budget, which Gov. Jerry Brown vetoed within hours of its passage. Part-timers couldn’t have done any worse, and likely would have solved the problem.
The Sacramento political establishment scoffs at the thought of a part-time Legislature for many reasons. If lawmakers are part time, their staffs would be part time. The public relations professionals and lobbyists, who operate full time, would have less work.
A full-time but dysfunctional California Legislature works for everyone except the taxpayer. We have a system in Sacramento that has morphed into a moneytree for the political class.”
And so it goes.
- Calif. Gov. Jerry Brown vetoes state budget (marketwatch.com)
- Uncertainty reigns as Jerry Brown vetoes ‘questionable’ California budget (csmonitor.com)
- Gov. Jerry Brown vetoes Democratic budget bill (abclocal.go.com)
- Jerry Brown Vetoes California Budget, Cavanaugh on 10 O’Clock News Again Tonight (reason.com)
There is good news and bad news in California. The good news is state tax revenues grew $6 billion more than expected in the latest report reducing the state budget deficit from $16 billion to $10 billion for the year with less than a month to go before the Constitutional deadline for approving a budget.
The bad news is there is no legislative agreement on the budget and little prospect of getting one by the deadline. The Legislature rarely meets its deadline for budget approval.
Governor Brown proposed to close the deficit with extensions of sales and incomes tax rate increases scheduled to expire to cover half the shortfall and budget cuts to close the rest. Democrats scream soak the rich, Republicans scream stop spending money you no longer have.
So while Sacramento dithers, out here in the real world stuff happens:
A Pox on Both Your Houses. California voters in the last election approved a ballot initiative to reduce the legislative votes needed to approve a budget from 2/3 of each House to a simple majority. But Californians are not stupid so they also approved another measure that requires a 2/3 vote of the people to raise taxes so Governor Brown can propose tax increases and the Legislature can put them on the ballot but the people will decide.
California bad-mouthed as not being business friendly. Newly elected Lt Governor Gavin Newsom, former mayor of San Francisco, lead a delegation to Austin Texas to investigate why so many California businesses were moving out of the Golden State and end up on the Lone Star State. In one meeting covered by the media, executives of companies that quit California complained of burdensome regulation, high costs of mandates, and deteriorating business conditions. One fast food chain executive said it takes more than 2 years to get permits to build one of his restaurants in California compared to 6 weeks on average in Texas—so his company is building 200 more restaurants in Texas and only 4 more in California and those are relocation of existing establishments to better locations.
BayWatch Salaries. Newport Beach’s 13-member full-time lifeguard crew salaries, benefits and overtime pay average over $100,000 each and the top two cost more than $200,000 each(with $400 for sun protection) as the city struggles to rein in pension costs.
Vacation Scams. Despite a policy limiting vacation carryover from year to year to 80 days (640 hours) total accrual, the State of California was forced to pay $2.75 billion for more than 75.5 million hours of excess vacation accrual because its managers failed to enforce its policy. One prison doctor accumulated more than two and one-half years worth of vacation and was paid $594, 976 upon retirement. An audit report says 29% of state employees leaving the system were paid for excess vacation time and 400 received an amount equal to more than one year of salary.
We Pay them HOW MUCH!#@? The San Jose Mercury Newspapers have posted an online database of public official salaries creating a controversy over intrusions into employee privacy not that pales next to the controversy the facts revealed. Public officials are well paid in California—very well paid. Some part-time elected city council members are paying themselves nearly $100,000 per year while others get $100 per meeting for their service. Some cities, counties and special districts pay the health insurance costs and pension contributions for part-time elected officials. In some instances the annual cost of benefits is a multiple of the salaries paid.
Wined, Dined and Termed Out. California has more than 300 state boards and commissions many of which have turned into ‘way-stations’ for termed out legislators and others with political connections. In the most egregious cases, these board appointments are paid $125,000 per year or more to attend a monthly meeting lasting several hours. Governor Brown responded to the last newspaper expose by proposing to eliminate a handful of these boards which met with howls of resistance from legislative leaders and the appointed politicians.
California is careening down the freeway out of financial control with the radio blaring the song “ Do You Know the Way to San Jose” hoping desperately that Silicon Valley will take off again and refill the treasury with gold except Intel decided to build its two new chip making plants in Arizona and all those millionaires California needs changed their legal residence to Texas which has no income tax or capital gains tax.
California is broke and our state government is broken and even the Terminator failed us so we hired back Governor Moonbeam who is busy negotiating new labor agreements which do include some pay and benefit concessions from state employees but do little to change the fundamental flaws in the benefits structure that got us in trouble.
Oh, there is one more thing, The San Francisco Chronicle reported that former Speaker Nancy Pelosi’s office sought and won waivers from who said they could not afford the required coverage mandates under the new law and unless they received waivers they would terminate their health insurance plans. They got them quietly until the press found out. requirements for major San Francisco employers
Have a nice day!
- Lt. Gov. Gavin Newsom: CA still has no clear economic plan to “get back in the jobs game” (sfgate.com)
- Texas, America’s Land of Opportunity – Pursues Calif. Businesses After Jobs Summit (timesoftexas.com)
- California’s Brown sees “good chance” for budget (reuters.com)
- S&P: ‘Important crossroad’ for California credit rating (fresnobeehive.com)
- Deep in the heart of Texas: Lt. Gov Gavin Newsom and Gov. Rick Perry keep it cordial (sfgate.com)
- California bishops decry breakdown on budget deal: ‘Devastating for poor’ – Catholic San Francisco (news.google.com)
- Rich People Underappreciated in Golden State (reason.com)
I didn’t vote for Proposition 8 but it passed anyway. The battle over California’s Proposition 8 banning same sex marriage is working its way through the courts. The 9th U.S. Circuit Court of Appeals accepted the case but now are wondering who will represent California in the matter after proponents of Prop 8 filed a petition for standing. The 9th Circuit asked the California Supreme Court to decide whether voters who favor the ballot proposition have standing in the case.
So what’s the big deal?
It may sound logical that voters would be able to be heard in the matter, but in her amicus brief to the California Supreme Court, Attorney General Kamala Harris said that only public officials exercising the executive power of government have authority to represent the state when laws passed by voters or the Legislature are challenged.
This case is messy because former Gov. Arnold Schwarzenegger and now current Governor Jerry Brown refused to appeal Federal District Court judge Vaughn Walker’s decision to overturn Proposition 8 as a violation of civil rights. Unless an appeal is made in the case, Judge Walker’s decision will stand by default despite the fact that a majority of California voters approved the ballot measure.
Proponents of Proposition 8 cry foul! They accuse the state’s elected leaders of failing in their duty to defend the laws of the state. They say that failure by the State officers to act in this case should give them standing to defend the law themselves.
So the big deal is that California’s elected officials have decided to sit on their hands and not file an appeal of Judge Walker’s decision because they don’t support Prop 8 notwithstanding the inconvenient truth that it was approved by the voters. By sending the matter back to the California courts, the US Court of Appeals is effectively saying California needs to be represented by SOMEONE so who will it be, folks?
The Supreme Court should allow citizen standing in the case because of failure to act by state executive officials. To do otherwise makes a mockery of the initiative and referendum process and undermines the rule of law.
Both the proponents and opponents of Proposition 8 deserve an expeditious resolution in this case. To taint that decision by allowing elected officials to selectively support the laws they like and ignore the ones they do not like would be a miscarriage of justice on top of the malfeasance in office they already have committed by playing games of political correctness instead of doing their job.
- Proposition 8 backers: Gay judge’s ruling should be thrown out – CNN International (news.google.com)
- California AG Harris Argues Against Standing of Prop 8 Sponsors (towleroad.com)
- Calif AG: Prop 8 backers can’t defend marriage ban (seattletimes.nwsource.com)
- California AG Kamala Harris Files Brief- Proponents of Prop 8 have No Representative Authority … (lezgetreal.com)
- California Judge’s Partner Cited in Push to Uphold Same-Sex Marriage Ban – Fox News (news.google.com)
California license plate numbers follow a pattern of number-letter-letter-letter-number-number-number, but the state is running out of possible combinations.
The Contra Costa Times asked readers for suggestions. A few wise-guys responded:
“The obvious, quintessentially California answer is this: Once we get to9ZZZ999, the state will simply declare that there can be no more cars registered in the state. A cap, if you will. This will be explained as a necessary measure to preserve air quality and reduce our energy usage. The only way you’ll be able to buy and register a new car is to take an old one off the road.”
“I agree that this will probably happen, replied another, with one small variation. When the state institutes the cap, the only way to register a different car will be to find someone to swap cars with you: cap and trade.
Still a third said: “Rebellious citizens will quickly set up a black market where you can buy new cars, incandescent light bulbs and (for San Franciscans) Happy Meals, which will soon replace crack and other controlled substances.”
I think a reverse auction might work where new car owners bid on the license plate numbers of older cars. Think of it like buying a renewable energy credit. When the price is higher than the residual value of the old clunker someone will raise their hand and take the deal. The state will keep half for the politicians to spend flagrantly on essential purchases. You know, like the $258,000 the state motor pool just spent to buy the newly elected state legislators new cars—more than half of which were gas guzzling SUVs.
But there is hope for California.
Governor Jerry Brown told 48,000 state employees to cancel their cell phones saying that when he was last governor we didn’t even have cell phones and things worked better. Besides, he said, he did not understand why 40% of the state employees or 96,000 of them needed state paid cell phones.
New inaugurated California Governor Jerry Brown wasted no time putting on the Legislative table a proposed state budget he said would require sacrifice from every part of the state. Now we know how he was able to get this budget prepared so fast—there are no good options left for California so it’s pretty much the same deep spending cuts former Governor Schwarzenegger proposed last year that the Legislative leaders declared dead on arrival plus the same extension of temporary tax increases the voters rejected in 2009 together.
The only thing different is Jerry Brown is a democrat and the voters chose him over Meg Whitman. So the Democrats in the Legislature are in a political as well as a fiscal bind. Jerry is on their team so DOA is not going to cut it as a response this time around and every vote will count to get the 2/3 needed to put the tax measures back on the ballot. So trying to make nice with Republicans is necessary.
The Republicans can just say no to putting the tax measures on the ballot and risk legislative gymnastics to configure the measure to require only a simple majority. Or the Republicans can agree to let the public decide on the tax questions assuming the same “NO” the public said last time and demand even deeper cuts as the price for doing so.
Either way it’s going to be a food fight.
As expected California’s three major investor owned utilities will not meet the 20% RPS goal by the end of 2010 as required by law. We have known this outcome for more than a year, but pressure has been applied on all sides to get as close to the goal as possible. The failure to meet the goal is not causing major heartburn because procurement is continuing and the CPUC and CEC have been approving new projects at a frantic pace over the last six months to ‘show progress.
At the end of the third quarter reporting period the RPS performance was about 15% of retail electricity sales allocated as follows:
- Pacific Gas and Electric (PG&E) – 14.4%
- Southern California Edison (SCE) – 17.4%
- San Diego Gas & Electric (SDG&E) – 10.5%
Despite the inability to meet the 20% target California pressed on nonetheless setting an even higher 33% PRS goal by 2025 by executive order. By increasing the goal to 33% and pushing it beyond the term of office of the current politicians responsible for failing to meet the 20% target—this is considered ‘good news’ in Sacramento.
There is an additional 352MW of renewable projects that are working feverishly to come on line by year end 2010 to meet the federal financing requirements. But Congress granted an extension to the end of 2011 for compliance. To date, the sum of all renewable energy capacity installed that counts toward achieving the California RPS goals is 1, 049 MW or about the size of one typical nuclear power plant or—bite your tongue—typical Midwest coal plant. Remember we don’t allow either new nuclear or coal plants to be built in California—that’s one of the reasons our electricity rates are so high.
But we still feel good about trying to meet our RPS goals and save the planet even if we fail. And the voters seem to think that’s OK since they rejected Proposition 23 to suspend the Global Warming Solutions Act on the November ballot effectively telling Sacramento to keep doing what you are doing.
Now Jerry Brown is on the hook to finish what he started the first time he was Governor. The 33% RPS goal is set by executive order not legislation and the state can hardly afford any more subsidies of anything.
The sum of our fears is the perfect storm of higher state taxes, higher electricity rates and continued high unemployment.
Forget it, I’m not giving up my old beer refrigerator in the garage to save energy!
Election officials finished counting the ballots in the remaining undecided contests and guess what?
Not a single incumbent was defeated in the election for Congress in California nor among major state office holders. Resisting the tide of change California voters stuck with the people who brought them to the current party even as they sought to change the rules for hosting the next party.
It is tough to explain this outcome—maybe California voters were all too busy lined up at their nearest medical marijuana facility refilling their prescriptions to notice that the state is sinking in red ink and bad karma.
Jerry Brown is back but no one can figure out why he or anyone else would want the governor’s job staring a $20 billion state deficit and 12%+ unemployment rate. Given the support of the public employee unions that helped him defeat Meg Whitman the prospects of real change are small in the major cost areas affecting the state budget.
The loss of the US House of Representatives to the Republicans also means California can kiss goodbye prospects of a Federal bailout. But the outcome does give President Obama hope for his reelection chances in 2012—at least California still loves him.
And then there is this:
Kamila Harris the District Attorney of San Francisco was declared winner of the race to be State Attorney General defeating LA County DA Cooley. She will be the first woman to hold that post except she has one of the worst conviction rates among the big city prosecutors and she refused to ever bring a death penalty case to court.
Oh and I almost forgot—-despite the failure of Proposition 19 to legalize pot possession Oakland is preparing to usher in the new year with actions to authorize as many as five “pot factories”—IKEA sized facilities designed to produce the product for the medical marijuana clinics which the City plans to’ tax to the buds’ to help close its financial gap.
You won’t need to smoke anything illegal in California—just drive around Oakland!
Proposition 23 got a stay of execution with 60% of Californians favoring the Global Warming Solutions Act. California voters see themselves as responsible environmental advocates and thus are emotionally and–some say—spiritually tied to anything green.
There is much to admire in this willingness to lead rather than follow. California’s leadership in energy efficiency, as one example, has succeeded beyond all expectations in reducing the energy intensity of the state to 50% of the national average.
But Politico reports that in the rest of the country 30 House members who voted for Waxman-Markey were defeated Tuesday. With even a growing number of Democrats lining up against Cap and trade legislation and Senator-elect from West Virginia won a tight race by running a commercial using his gun to shoot a hole through Waxman-Markey nailed to a Mountaineer tree.
I don’t think California is going to get much help with AB32 from Congress. And to make matters worse, several states are lined up to sue California over AB32 because, they allege, just like ObamaCare, AB32 violates the interstate commerce clause of the US Constitution by imposing California terms and conditions on out of state power producers and manufacturers.
And California voters also approved Proposition 26 which reclassifies administrative impact fees like those the California Air Resources Board expects to use to enforce AB32 as “taxes” and thus subjects them to the same 2/3 vote or voter referendum as increases in income or sales taxes.
Jerry Brown said it best in his remarks after the election summarizing the voters message. He said California voters believe in creating a clean energy economy but they also said loud and clear that the state should take it hand out of our pocket.
It won’t be easy being green even though Proposition 23 was defeated.