Thursday, January 12, 2012

The Working Class, The Chamber of Commerce, & Governor Moonbeam's 2012-13 Proposed State Budget

On "The Daily Show with Jon Stewart" this week Fox News libertarian political gadfly Andrew Napolitano rattled off a comment something like:
"I don't believe there are two parties in this country... We have one big-government party. It has a Democratic wing that likes war and taxes and individual welfare, and a Republican wing that likes war and deficits and corporate welfare."
Today at its luncheon forum, Governor Jerry "Moonbeam" Brown's Finance Director Ana Matosantos will be chatting with members of the California Chamber of Commerce.

According to The Sacramento Bee:
Gov. Jerry Brown's political adviser, Steve Glazer, has been tapped to advise the California Chamber of Commerce's heavy-hitting political action committee in legislative races next year.

The chamber's JobsPAC, whose donors include insurance, oil, tobacco and pharmaceutical companies, spent more than $9 million statewide last year, including opposing the elections of Lt. Gov. Gavin Newsom, Attorney General Kamala Harris and Insurance Commissioner Dave Jones, all Democrats. The chamber itself attacked Brown during the campaign, though it became largely supportive of the Democratic governor this year.

...Glazer will remain Brown's unpaid political adviser in the new year.
The California Chamber of Commerce is apparently becoming a regular member of the Moonbeam fan club. The Chamber has endorsed the Governor's tax increase initiative, the only proposal submitted to the Attorney General's Office that substantially raises the taxes paid by the poorest workers among us as well as the richest among us, while favoring most those with taxable incomes in the $100,000 - $200,000 range.

Apparently Brown has successfully won the hearts of the Republican wing of the California branch of Napolitano's One Big-Government Party. And since Governor Brown, 73, is part of the the Democratic wing's ruling gerontocracy along Senator Diane Feinstein, 78, Senator Barbara Boxer, 71, and Party Chairman John Burton, 79, he apparently is capable of either "working with" or "effectively misleading" both wings.

Due to a "oops" mismanagement problem, Brown's proposed 2012-13 State Budget was presented a few days early this year. It didn't take long before the State Legislative Analyst Mac Taylor, in his polite and respectful style, to express concern about revenue estimates being too high, about severe cuts in programs that support families with working parents, and about the problem of having school systems setting budgets in July based on a possible voter approval of a tax increase initiative in November.

To use The Sacramento Bee's explanation of the cuts to family support:
The governor's proposal drops aid to parents who fail to find jobs after 24 months, rather than the current 48 months. It also would restrict child care access to those making the equivalent of about $11,400 for a family of three, down from $12,970.
The Great California Slump appears to have permanently reduced employment by a million jobs. Literally tens-of-thousands of unemployed workers are seeing their unemployment benefits end. The Democratic Governor's solution for the budget deficit is a sales tax increase, along with an income tax increase on the richer folks, which combined still leave a major deficit requiring these cuts.

When you find a key elected leader of the California Democratic Party receiving support from the Chamber of Commerce, you begin to understand why Andrew Napolitano's comment "feels" like it could be accurate.

The problem we have in California is a failure to deal with reality. The press tends to describe Brown as someone who tells it like it is. I call him Moonbeam who is someone who spins the truth to get himself elected.

The fact is he says he has proposed a General Fund expenditure budget for 2012-13 of $92.6 billion but that includes assumptions about expenditures that should not be made. And that's after shuffling off significant work to local governments, along with $2.5± billion in sales tax revenue. Without that sales tax revenue, he has $88.0 billion to work with. In my opinion, he's short at least $6 billion without any tax increases. The problem is that in the current fiscal year he's short at least $6 billion. So he proposes an initiative to raise taxes, which tax increase expires in 2017.

The State owes a bunch of money not covered by that initiative. For instance, its Unemployment Insurance Fund owes $10 billion an counting to the federal government for loans covering basic unemployment benefits since 2009 (the federal government covers all benefit after 26 weeks) These basic benefits Chamber of Commerce members should have covered in payments made prior to 2009. But they consistently opposed increasing the payments.

Brown has included in the budget a surcharge on employers of a little over $3 a month per employee to make interest payments on the loans. That may not pass because of Chamber opposition.

In 2011 we borrowed from the state’s Unemployment Compensation Disability Fund to cover the interest in order to avoid taking it from the General Fund. But we have to deal with this problem or by 2016 the Disability Fund, funded by employee withholding, will be bankrupt.

Brown made no headlines worrying about this. And it isn't the only problem lurking in the background.

A year ago I wrote about Brown's first budget proposal since he was elected:
Foolishly I thought Brown was going to offer a severely reduced balanced budget to the Legislature with a possible solution.... I thought he was going to create a serious discussion about the future of California government rather than attempt to put it off for five years.

In five years, the opportunities to keep California "golden" will be even more severely constrained. This is some legacy the son of Pat Brown is going to leave us.

Of course, with these proposals he simply just restarted the same old political arguments....
Nothing is really changed since last January. Jerry "Moonbeam" Brown is offering no leadership. He's no different than he was in his first two terms as Governor 30 years ago.

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