Posts tagged budget
Finished!
Jan 17th
I can’t believe it! I just finished the manuscript for Crazifornia, wrapping up the difficult but ultimately very entertaining budget and pensions chapter. Here’s an excerpt:
Hooting and Hollering on the Budget
Californians witness the challenges of running a progressive state every year as the legislature struggles to develop a balanced budget in the face of fundamental fiscal imbalance. The resulting budget is always a work of fiction, projecting more income than will come in, and promising more savings than will ever occur. A mid-year correction is always needed to account for this, but the charade goes on in all seriousness year after year. It’s a tragedy; it’s a comedy; it’s California.
Over 50 state budgets ago, in 1966, the legislature’s top budget leaders and Governor Pat Brown fled Sacramento for Palm Springs to try to sort out yet another horrific California budget mess. Nothing was getting done in soggy, cold Sacramento to fix chronic problem of revenues not covering ever-increasing government expenses, and since Brown would face the voters in November hoping to win a third term, the Democrat was adamant that the budget would be balanced without raising taxes.
Joining the senior legislators in Palm Springs was a young legislative staffer, David Doerr, who felt very lucky to get the chance to travel with the delegation, not so much because it involved a boondoggle trip to the desert, but because he actually hungered to see how California’s budget sausage was made. And see it he did. Ultimately, the budget was balanced on a number of gimmicks, including one that was unusually elegant: a switch to accrual accounting from cash. With the change, all the money due the state could be applied against expenses, no matter how far back it was in the pipeline. With this trick and a few others on the books, Brown was able to face Ronald Reagan in November armed with a balanced budget and no tax increase.
There were plenty of other gimmicks that came out of the Palm Springs session, but one really stuck in Doerr’s mind. Showing his uncanny ability to remember financial matters from the distant past in exquisite detail, Doerr told the tale in a small conference room at the California Taxpayers Association, the wall behind him lined with shelves displaying his 811-page tome, California’s Tax Machine, A History of Taxing and Spending in the Golden State. He spoke in the light, wispy voice of a man who had heard far too many politicians argue far too loudly, and his hair was as white as snow – an expected side effect of being the single Californian who knows the most about the state’s budget-making process.
“After not really getting much of anywhere in the negotiations,” he said, “one of the suggestions that came up, casually, just sort of a throw-away was, ‘Why don’t we just delay paying the state employees by a day so one pay period will go over into the next year?’ At first everyone was quiet and I wondered if they would really do something like that, but then they began to hoot and holler, laughing like this was the craziest thing they ever heard of.”
Doerr, who ultimately spent three decades as chief consultant for the Assembly Revenue and Taxation Committee before becoming the Chief Tax Consultant of the California Taxpayers Association, continued the story: “Jumping forward over 50 years, no one in the legislature hooted or hollered one bit when the idea of shifting one pay period into the next fiscal year came back, this time as a way to balance the 2008-2009 fiscal year budget. The legislature just did it, knowing full well their action would come back to haunt them a year later, when they would have to balance a budget that had one extra payroll period in it.” The subterfuge saved $1.2 billion for the moment – that’s what it cost per payday to pay the state’s bloated payroll.
The 1966 junket to the desert ended up not doing Brown any good, as Ronald Reagan drubbed him by 16 points that November, sweeping all but three counties in the state. And the 2008 roll-over of one payday didn’t help Governor Schwarzenegger either, and he declared upon announcing the inevitable budget revise that May, “We’ve run out of Band-Aids.”
“Gimmicks and band-aids aren’t new,” Doerr said. “There have always been battles over the budget and crazy balancing tricks as long as I’ve been here, and that’s been 50 years, more than one-quarter of the time California’s been a state.”
There’s a lot more good stuff in the chapter and in the book. If you haven’t already, be sure to fill in the box in the upper right, so I can notify you when this baby rolls off the press.
That will be a while longer, since I have four dedicated editors marking up the manuscript. They’re making some really great suggestions, so I’ll be doing a fair amount of rewriting before I can claim, finally, that it’s ready for the publisher. I’m still on target for a May publishing date.
Brown Wants New Anti-Business Super-Agency
Jan 6th
Governor Brown’s proposed 2012-2013 budget – rushed out yesterday after a staffer inadvertently published it – includes what we’d expect from a liberal democrat governor … and more.
Sure, it’s got more spending (7 to 9 percent more, depending on who’s crunching) and class warfare (higher taxes on the “wealthy,” defined as $250,000 and up). But its real surprise is buried deep down: a new super-agency charged with making life even more miserable for California businesses … if such a thing can be fathomed.
The Daily Caller picked up my column on the budget and the new super-agency this a.m. It’s worth reading the whole thing – and I hope you do, because they count clicks! – but here’s the relevant material on the new super-agency:
Brown is calling for the creation of the Business and Consumer Services Agency, a new mega-agency that apparently will “service” businesses in the way male farm animals “service” female ones. The agency will combine habitually anti-business departments handling consumer affairs, “fair” employment and various business licensing and inspection functions, and into this fetid anti-business environment drop “the newly restructured Department of Business Oversight.”
Restructured from what? The department doesn’t currently exist, so it appears that Brown is creating an entirely new arm of government, surrounding it with anti-business zealots and charging it with increasing the amount of oversight of California businesses that are already suffering from too much oversight.
What lunacy is this? The five and a half companies a week that are leaving California are sending the clearest possible signal that California is death to business, but Brown still proposes to make things worse. Meanwhile, his budget barely tweaks public employee pensions and keeps the California High Speed Boondoggle Rail Commission alive and spending.
Oh … I’d better explain that picture of Brer Fox and Brer Rabbit. It’s about this, the column’s conclusion:
In reality, though, the governor’s proposed budget means virtually nothing. Even as Brown was announcing it, a judge ruled unconstitutional the health care cuts the governor had proposed in his budget last year. Then the Democratic Senate leader lined up against it, pledging to fight proposed cuts to social services. And of course, the state employee unions and their armies of lawyers and lobbyists are busy today planning their campaigns to force Brown into more spending and more taxes — which is sort of like forcing Brer Rabbit into the briar patch, where he’s right at home.
Crazifornia Highlighted in Flash Report
May 26th
Flash Report, the top conservative news aggregator in the state, has linked to just about every opinion piece I’ve written, so I wrote an exclusive for Jon Fleishman, the site’s politically powerful patriarch. It ran today at the top of the site, in its #3 slot.
The subject is the growing trend of outsourcing by California cities that are struggling to deal with salaries that are too high and benefit/pension plans that are out of control. As an afterthought, it just occurred to me that Jerry Brown’s Sacramento is not following the cities’ lead. Why not? Could it be because he, unlike electeds even in liberal strongholds like Marin County, remains a cowering coward in the face of public employee union bosses?
Maybe. So, here’s the lead of the Flash Report piece:
In June of 2010, the tiny Los Angeles County city of Maywood admitted what many of us have known for some time – city employees are just too expensive. Maywood’s admission came in the form of laying off every single one of its employees.
The city, a neighbor of the infamous city of Bell, had already outsourced its parks department, landscaping and street sweeping to private contractors and was happy with the results. City officials said, in what CNN called “an odd twist,” that the outsourcing the rest would allow Maywood to provide its residents with better service for less. There’s nothing at all odd about that, unless one has a CNN-style belief system.
The New York Times later found the city council’s prediction that Maywood’s residents wouldn’t notice a difference in service to be true, writing, “The [expected] apocalypse never arrived. In fact, it seems this city was so bad at being a city that outsourcing – so far, at least – is being viewed as an act of municipal genius.”
Cities don’t have to be bad to benefit from outsourcing, and many municipalities across the state are following Maywood’s lead.
To read the rest of the piece, click here.
Crazifornia a Neal Boortz Reading Assignment
Mar 17th
Crazifornia got a great plug this morning as Neal Boortz included my Daily Caller column from yesterday among this “Reading Assignments” for the day:
Here’s the latest example of how Governor Moonbeam in California Brown is not going to deal responsibly with the state’s unfunded government employee pension liabilities. In other words: he isn’t going to stand up to the unions.
The piece, also linked in the post below, shows how the new contract for California’s prison guards shows Brown’s true colors, as the union suffered no losses in the latest contract, despite the state hemorrhaging money because of ridiculously lucrative public employee union wages and pensions. Thanks, Neal!
Daily Caller: Brown’s Hand Is Union Made
Mar 16th
As California Budget Battle Sequel XXXVIII (Or is it LXXIX? I get so confused.) heats up, I actually got so ballistic I wrote a Daily Caller op/ed just one day after the one you see in the post below. Note the headline – they’ve agreed to brand my pieces with the “Crazifornia” moniker. Very cool.
CRAZIFORNIA: JERRY BROWN SHOWS HIS HAND – AND ITS UNION-MADE
California’s 32,000 prison guards and parole officers — notorious for enjoying political clout wildly exceeding their meager numbers — tried to negotiate a new contract with former governor Arnold Schwarzenegger for four years but got nowhere. After just three months of negotiations with Jerry Brown, they got their contract, and hapless Californians got the clearest signal yet that Brown is not going to deal responsibly with the state’s unfunded public employee pension liabilities of as much as $500 billion.
The details of the new California Correctional Police Officers Association contract haven’t yet been made public and haven’t yet been analyzed by people who, unlike me, can tell a POFF from a PLP. (If you’re curious, POFF II contributions are suspended for two years under the new contract and one PLP will be granted every 12 months.) Still, it’s easy to read the net result.
In a letter yesterday to his board of directors, CCPOA executive director Chuck Alexander wrote, “The majority of the rights and protections that exist in our old MOU have been carried forward in this new MOU.”
Any objective California governor would realize the state can’t afford to do that. It’s not like this is a union that needs more coddling. It has grown at a rate of almost 1,000 members a year since its formation in 1980. It has a 70-person staff that includes 20 lawyers. Even that’s apparently not enough, since Brown’s new contract with the union includes even more new positions. You’d think California was a state that’s not in a fiscal crisis. [Continue reading]
Daily Caller: Unions Sinking Brown’s Budget
Mar 16th
The good folks at The Daily Caller ran this piece by me on March 14:
In California, Unions are Sinking Brown’s Budget Proposal
Talk about crappy timing for California’s Democrats: An oversized colon was sitting on the California capitol’s north lawn Monday, even as budget talks broke down and the powerful California State Employees Association and the California Teachers Association rallied on the capitol’s south lawn for higher taxes.
The colon was a publicity stunt by a Democrat assemblywoman from San Francisco, Fiona Ma, whose cause was fine even if her timing wasn’t. She put the 20-foot-long replica intestine on the capitol lawn to promote a resolution that declares March to be Colorectal Cancer Awareness Month, but it can’t help but be seen as a symbol for the constipation that’s blocking the state’s budget process, and the colon-full of bad news that’s hit California governor Jerry Brown.
The worst news for Brown broke early Monday morning when it became public that the “Gang of Five” Republican senators who were trying to find a middle ground with the governor have ended their budget talks. Both Connie Conway, the GOP Assembly leader, and a spokesman for Bill Emmerson, a Gang of Five senator, confirm that the talks are dead, but Brown’s camp insists they are continuing. [Continue reading]
Please do click through to read the rest. Not only is it brilliant and informative, but the folks at The Daily Caller want to know you’re interested in this stuff, so every hit helps.
A Public Pension Solution … From California?
Feb 27th
Last week, California’s Little Hoover Committee, which studies ways to improve California’s government, issued its recommendations for dealing with public employee pensions. The recommendations were nearly Scott Walker-esque in their scope, but we didn’t see California’s teachers and their comrades take to the street. Why? I explain why in this Daily Caller op/ed:
Unlike their brethren in Wisconsin, California’s teachers and their allies in other public employee unions haven’t been chanting and waving signs at the state capitol. After all, why should they? The very man who gave them collective bargaining rights in the first place is back in the governor’s office. The Democrats they funded and voted for have overwhelming majorities in the Senate and Assembly — and thanks to their funding of Proposition 25 last November, a mere simple majority will be needed to pass Jerry Brown’s budget, which doesn’t lay a finger on state employee pensions.
Why should the teachers care if their pension fund is “sliding down a steep slope towards insolvency?” in the words of the San Jose Mercury News (hardly a conservative mouthpiece). After all, it’s the taxpayers, not the teachers, who will have to pick up the tab for tens of thousands of comfy retirements from the classrooms when the fund can’t cover the costs. It is a matter of “when,” not “if,” because the teachers’ retirement fund portfolio’s value has plummeted by 25 percent, opening a $40.5 billion unfunded liability.
Why should they worry about coming elections, like the one last November in Wisconsin, which gave Scott Walker and his GOP buddies a mandate for real hope and change? Not a single Democrat seat was lost in Sacramento last time around and not a single Republican won a statewide office, despite the best efforts of Tea Party activists and pension watchdogs. The state remains unapologetically and defiantly blue — in fact, even though the state’s population has grown by 10 million since Ronald Reagan was president, there were more Republicans in the state to vote for him then than there are today.
Still, even in California, public employees have something to worry about and it’s called the Little Hoover Commission. Lucky for them there’s no Big Hoover Commission because the Little Hoover Commission is generating headaches enough for public employee union bosses.
Read the rest of the piece here.
CA Forward Offers Slate of Phony Fixes
Feb 15th
CalWatchdog picked up the op/ed I wrote after sitting disgustedly through two hours of dangerous ideas, mumbo-jumbo and government-speak from the reformers at California Forward – the folks who brought us the insane “budget with a 50% majority” and open primaries propositions. Here it is:
One of my daughters is an esthetician, and as she studied for her state certification so she could be sanctioned by Sacramento as worthy to give facials and wax eyebrows, she had to learn two completely separate and conflicting approaches to her chosen work. First, she learned how to give facials and wax eyebrows. Then she learned how to pass the California’s esthetician certification exam, which is based on practices no one uses anymore and maybe never did.
I thought of her experience on Friday afternoon as I found myself in a conference room with several other business people, trying as hard as we could to share our point of view about how to fix what ails California with two representatives of California Forward, the outfit that brought us open primaries and new state budgets on a simple majority vote. They’re cooking up some new reforms that made me so frustrated I could have ripped out my eyebrows – if I didn’t have a daughter who knew how to wax them. At the same time in Sacramento, a group of state employees was in another conference room with another group of California Forward representatives, sharing their perspective of the same topic. I have a feeling they had a much easier time of it.
The two meetings were part of California Forward’s current effort to gather input from all over the state so it can by synthesized into a new model for governing California, one that would fix things for good, with consensus support. Or, as the group puts it on its Web site, “We want a government that is small enough to listen, big enough to tackle real problems, smart enough to spend our money wisely, and honest enough to be held accountable for results.” Good luck with that – especially that last bit about honesty and accountability. After all, we live in the state that designed the California esthetician certificate examination.
Read the rest of the piece – and my proposed California reform measure – here.
Catching Up
Feb 5th
It’s been a busy week, so let me catch you up quickly with a couple of my op/eds – published here first – that have hit the big time.
The Daily Caller picked up “California’s public universities are the best. No really,” detailing Berkeley’s recent designation as the world’s (yes, the world’s) greenest college campus. The award was based more on sustainability practices than on its excellence in turning normal students into raving eco-warriors, but it’s all the same game, as the key paragaph of the piece points out:
Now don’t get me wrong. Green space is great and eco-sustainability policies are as cool as it comes. Whether there’s a looming eco-catastrophe or not (I think it’s “not”), nothing feels better than whipping out that re-usable grocery bag at Safeway. No, the problem with Berkeley’s newfound glory is that it’s the outgrowth of the deeper commitment to deep green brainwashing that goes on at UC campuses. If it weren’t for regents who have bought into environmentalist doctrine, a faculty that’s bought into environmentalist extremism, and a curriculum that ensures wave after wave of freshly minted environmentalist soldiers will graduate every spring and go into battle for Mother Earth, Berkeley would not be at the top of the green university rankings.
Read the rest here.
Also last week, California Watchdog ran “A clue to Governor Brown’s pension plan.” It relays an interesting last-minute appointment by Schwarzenegger: Cameron Percy to the California State Teachers’ Retirement System board of directors. What’s interesting is that Percy was one of the student authors of Stanford’s breakthrough study into California’s real pension liability, which they pegged at a deeply disturbing half-trillion dollars, so I explain why it’s suddenly the appointment to watch:
Percy’s nomination will give us a clear insight into Brown’s thoughts as he grapples with this dilemma. The appointment must be confirmed by the Dem-dominated Senate, but Percy may not even get that far, since Brown has the power to boot him and name his own appointee. How Brown acts on the appointment will tell California voters and public employee union bosses what they can expect from the new administration. It’s routine for incoming governors to replace the nominees of out-going governors, but there’s nothing at all routine about the Percy nomination.
Read the rest here. I really appreciate it when you click through. The more hits my op/eds get, the more it supports my efforts with Crazifornia.
A Clue to Brown’s Pension Strategy
Jan 29th
Shuffled in with Arnold Schwarzenegger’s last-minute appointments was one – a very good one – that almost slipped by largely unnoticed, until The Buzz blog at the Sacramento Bee outed it today:
Among other actions on his way out the door, then-Gov. Arnold Schwarzenegger appointed Cameron Percy to the California State Teachers’ Retirement System board in December.
Percy, 26, has a graduate degree from Stanford. While he was a student, he helped write “Going For Broke: Reforming California’s Public Employee Pension Systems.”
That’s the report that Schwarzenegger and Co. used as a source for the oft-cited and highly disputed calculation that California’s Big Three pension systems faced a collective $500 billion in unfunded liabilities.
If there’s one thing California’s public employee unions hate, it’s the Stanford report – so they are decidedly unhappy with Percy’s appointment. When Percy et. al. released their study (which you can download here), CalPERS immediately fired off a page chock full of stats that lacked one critical piece of information: Its own calculation of the unfunded liability. I’ve spent over 30 years in the communications business where we have a word for that sort of thing: stupid.
The unions’ pension unfunded liability calculation, it turns out, is about one-tenth that of Stanford’s: a measly, insignificant $55 billion. Why worry? That’s only $1,500 out of the pockets of every man, woman and child in the state and, heck, it’s not going to get any bigger, right?
The difference between the two numbers is that Stanford used a 4.14 percent “risk-free” discount rate, the rate private companies must use when calculating their pension liabilities. California’s public employee pensions use between 7.5 percent and 8 percent – a performance they’re not achieving, and most experts agree they have no hope of achieving on a sustained basis, and certainly not now.
With public support for Brown’s special election tax increase proposal barely breaking 50 percent in the early polling, he knows passing the tax increases may force him to bite the union hand that fed his election campaign, and submit a companion pension reform proposal with real teeth. So far, Brown, who left Oakland with its own $310 million in unfunded pension liabilities, has only talked about minor tweaks – just enough to not tick off the unions, but hardly enough to show voters he’s really serious about fixing California. Look for support of the tax increase measures to drop dramatically if Brown doesn’t take the unfunded pension liability more seriously.
Percy’s nomination will give us a clear insight into Brown’s thoughts as he grapples with this dilemma. The appointment must be confirmed by the Dem-dominated Senate, but Percy may not even get that far, since Brown has the power to boot him and name his own appointee. How Brown,and the Senate act on the appointment will tell California voters and public employee union bosses what they can expect from Brown. It’s routine for incoming governors to replace the nominees of out-going governors, but there’s nothing at all routine about this case.
