Thursday, September 9, 2010
When will state lawmakers reach an agreement on how to cut California's $19 billion budget deficit? We talk to John Myers, from "The California Report," about the budget delays and the ongoing debate about the governor's furlough order. We'll also discuss the important races and ballot measures that will appear on the statewide ballot in November.
MAUREEN CAVANAUGH (Host): To some the budget stalemate in Sacramento is par for the course. California's budget negotiations are typically contentious and tend to go on well past their due date. This year's budget, when it is finally signed, will be one of, if not the, latest on record. But beyond the late budget stats, there's a lot of concern and some actual pain that accompanies this dysfunctional budgeting process. Furloughed employees, state agencies that don't know what services will be cut, and, of course, the hardship of people who depend on those services. Joining us with an update about both the ridiculous and the deadly serious aspects of the California budget negotiation is my guest, John Myers, Sacramento bureau chief for “The California Report.” And, John, good morning.
JOHN MYERS (Sacramento Bureau Chief, The California Report): Good morning.
CAVANAUGH: What is the latest news on the state budget?
MYERS: I was trying to figure out whether to start with ridiculous or dire. But…
MYERS: …you know, the reality is, is that we are still sitting here in Sacramento in this impasse. This is the 70th day, day 70 of the state’s fiscal year and there’s no budget in place. You said at the top exactly right, that this is going to be one of the latest—it’s now the second latest—budget in state history. The latest was in 2008, not that long ago. September 23rd is when Governor Schwarzenegger signed that one into law. I think there’s a reasonable chance this one will top that one because the negotiations are still, you know, very slow, I would say. You know, you do still have a fundamental difference about levels of spending, levels of taxation, and also the governor’s final budget that he’s trying to get some reforms to a couple things he wants. He wants changes in the pension system for state public employees and he wants changes in the budget process itself, and he has said that those changes have to happen if he’s going to sign any budget into law. So you’ve got that added onto what the state will spend and what it will take in in the fiscal year. Those are all very complicated issues.
CAVANAUGH: Now Governor Schwarzenegger will be in San Diego today to sign Chelsea’s Law but then he is – he’s heading out of the country?
MYERS: Right, right. He goes to Asia for a trade trip that lasts through most of next week, and that’s been a little contentious as to whether or not the governor should take off with budget negotiations still very much fluid. And the governor has said, look – First of all, the governor – I think the governor’s staff has said, look, he can still participate. We still do have things called phone, internet, whatever it would be. But the governor also has tried to make the case as he made it yesterday in an event, that, look, you know, these are, you know, attracting business to California from outside of the state, outside of the country, brings revenues to the state. That helps the state budget problem. I think that’s a, you know, a clever way of the governor, you know, trying to avoid the criticism about this but the reality is that the legislature still has to craft a budget here before they can send it to the government and the legislative leaders need to find consensus as well. So it’s not just the governor participating here, it’s the Democrats and Republicans in the state Assembly and state Senate, and so there’s a lot of work to be done but, you know, when the governor flies to Asia, you can be pretty much bet he’s not going to be signing a budget while he’s on the plane…
MYERS: …in which case we’re going very close to that historic record.
CAVANAUGH: Now the Democrats have unveiled a new tax overhaul plan that a legislative analyst, nonpartisan legislative analysts say would raise a billion for the state without raising taxes on any income group. How do they do that?
MYERS: Well, this has been bandied about for the last several weeks, Maureen. I mean, we call it a tax swap in state capitol parlance. And the challenge here is defining whether or not it raises taxes on any given group and here’s the reason they say it doesn’t, because the plan would raise income taxes, state income taxes, it would raise the vehicle license fee, the car tax, and it would lower state sales taxes. So the theory is two things, one, that when you put all of that in the mix, that the net effect to most Californians is going to be a tax decrease or about where they are now, in addition to which a lot of these taxes, state income taxes and the car tax are all deductible on your federal taxes, which they think will generate more money back into the pockets of Californians. The trick here though, I have to tell you, when you look at the data, and I was sitting looking at the charts before we came on, the trick really is assuming how much the average Californian spends on goods and services that are subject to the sales tax because that’s the calculation they’re making, that people will get those items for much less. Let’s say you go buy a big TV at a store. You’ll pay less sales tax under this plan and they think that, you know, when you calculate that in, that the raise in your state income taxes will actually end up being a wash or a, you know, more to your benefit. It’s complicated.
CAVANAUGH: I see.
MYERS: But this is where we are in trying to figure out anything that would be, quote, unquote, a tax increase because that’s a very politically volatile term to say you’re going to increase taxes versus you need more money for the state.
CAVANAUGH: So even if that reform plan passes muster, that’s a billion dollars. There’s a $19 billion budget deficit, so where does the other $18 billion come from?
MYERS: Well, therein lies why we’re still sitting here on the 70th day of this. A couple of things I would say. First of all, the $19 billion number also includes a reserve, basically, you know, a cushion of cash for the state into the coming year. So really the deficit number is probably closer to about $17, a little bit more than that. But they’re all still trying to put a reserve in there so we definitely have to find that. Everybody says there’re going to be cuts. The governor and the Democrats pretty much agree on somewhere in the neighborhood of $3 to $4 billion in spending cuts. That’s going to include health and human services programs. That’s probably going to include less money than the schools actually want, though not as much of a cut as the governor was proposing. All the plans rely on a lot of money from the federal government, somewhere in the neighborhood of about $4 billion. That’s a bit of a dicey proposition as well as to whether or not we’re actually going to get that money. And then, you know, you get a few of these lovely only in Sacramento fun shifts. You transfer money to place A to place B, it makes the document look as though it’s more balanced. And so you come back, though, to somewhere in the neighborhood of $3 to $4 billion of disagreement and that’s where we get the issue about taxes or how deep the cuts would be. Let’s not forget that Governor Schwarzenegger and legislative Republicans both want to cut deeper, including things like eliminating the state’s Welfare to Work program, CalWORKS.
CAVANAUGH: That’s what I was going to ask you then. So the Republican strategy here to close this budget deficit is cuts. Cuts, cuts, cuts.
MYERS: Yeah, cuts along with some of these accounting transfers and things that the governor’s talked about, and, you know, we had a bit of a budget drama last week here at the capitol before the end of the legislative session where alternate plans were put up for a vote and, predictably, the Democratic plan failed to get enough votes from Republicans because, remember, you need a two-thirds vote to pass a budget.
MYERS: The Republican Schwarzenegger plan failed to get enough votes from Democrats, and here we are.
CAVANAUGH: Now let’s move on to the courts, John. I’m speaking, by the way, with John Myers, Sacramento bureau chief for “The California Report.” Because one of the things that the governor has been doing is forcing state workers to be on furloughs in order to save the state money. There was a hearing yesterday at the California Supreme Court. What was the purpose of that hearing?
MYERS: Well, you know, this dates back, obviously, to, as you alluded to, right, to the fact that the furloughs began, you know, a while ago, more than a year and a half ago. And now almost actually coming up on two years when you look at the calendar. And, really at the heart of this is the contention as to whether or not the governor actually has the power as the chief executive of the state to furlough state workers. Now everyone agrees that the governor does have power to lay off state workers but the question is whether that also means he can furlough them which is, effectively a cut in their pay. And the argument from labor unions and state employees associations is that only the legislature under the California system has the ability to modify the pay of state workers; the governor has the power to lay them off. It’s a bit of a, you know, separation of powers thing there. The governor says absolutely, he has the power to furlough because it’s inherent if he can lay them off as well. So this is a bit of a constitutional fight about what power the governor has. The state Supreme Court heard the case yesterday. These are all cases that stem from the original furloughs. Of course we’re under another furlough system now where state workers are off three days every month, and this is saving the state money. It’s about $3 billion dollars that has been cut so far out of the state payroll through these furloughs. We’re waiting to see how long it’ll take the court to rule. Most people think they’ll rule fairly soon. They have 90 days. Nobody thinks they’re going to go that long because we need to know, you know, does the governor have that power. And if he doesn’t, that’s more money that the state has to find to keep running the budget.
CAVANAUGH: Let’s look ahead, John, to the November election for our remaining time. What’s the latest news on the governor’s race? We see that Republican Meg Whitman is now holding a narrow lead over Democrat Jerry Brown in the latest polls.
MYERS: Yeah, you’re right, and you’ve got to wonder with all the stuff we were just talking about, about all the problems, why anybody wants the job. But that’s part of what we’ll be figuring out, of course, in this race. Yeah, there was a poll released yesterday by CNN that showed Meg Whitman at about 48% support, Jerry Brown at 46% support, that’s still very close. There’ve been a few other polls lately but the methodology of those polls sometimes gets criticized. Those are what are called robopolls where there’s not actually a real person asking the questions…
MYERS: …and so there’s some dispute about whether or not they’re valid. But 48 to 46, pretty much a split race at this point. I think what’s interesting out of the CNN poll is that Brown has not really made the case with all Democrats. About 10% of the Democrats in this survey were supporting Whitman. That’s something that Brown has to worry about, I think, a little bit. And then also Brown is favored in most of the cities across California, Whitman was winning in the suburbs and in rural California. That’s a pretty traditional split but, again, that’s a strength for Whitman. And one more, the independents in this state, which are very important, are split at this point, and I think whoever can make the case to those nonpartisan independent voters is probably going to be the next governor.
CAVANAUGH: Well, the TV airwaves are building up with the commercials for both Jerry Brown and Meg Whitman but when are we going to see these two together square off in a gubernatorial debate?
MYERS: It looks like we have three debates. We have a debate scheduled on the campus of University of California Davis up here on September 26th. There was a debate agreed to just yesterday now in Fresno on October 2nd. And I think the last one is October 12th in Marin County, just outside of San Francisco. You notice there are no Southern California debates…
MYERS: …out of that. You folks down in San Diego and everyone else – and the Brown campaign is trying to make an issue of that, trying to challenge Whitman to have another debate, one in Southern California, which is where most of the voters are. But right now we have three debates and it’ll be fascinating to see what happens when the two of them get together.
CAVANAUGH: Now I know, John, that you are covering, this fall, two propositions that are sort of – they’re very interesting. Propositions 20 and 27, they both cover the often misunderstood topic of redistricting and they go about it in two very, very different ways. Tell us a little bit about Prop 20.
MYERS: Yeah, I gotta tell you, I really wonder what’s going to happen when the voters try to figure out what these are. Now, we – Some people may remember that two years ago the voters created a citizens commission to redraw the political maps for the legislature. That was redistricting, that was Proposition 11. Proposition 20 would say, well, let’s have the maps for congressional districts drawn by this independent citizens group because right now they’re drawn by lawmakers in Sacramento. So that would be a yes on Prop 20. Prop 27 was actually the brainchild of members of Congress who want to abolish the independent citizens commission altogether. And a lot of people say it’s one of those things that we call in politics sometimes a murder-suicide kind of initiative, which is that they don’t really care if that one passes, they just want Prop 20 to fail because they want lawmakers to draw congressional maps. They’re worried about the balance of power in Washington and their own political fortunes. So it’ll be interesting to see whether the voters can sift through this and figure out what’s going on or, in fact, if the voters just say, you know, this is too complicated, no on both of them. In which case, congressional maps will still be drawn by lawmakers in Sacramento. Legislative districts will still – will be drawn by the soon-to-be-formed citizens commission, which was passed two years ago.
CAVANAUGH: It sounds like something similar may be going on with Props 25 and 26. What are they all about?
MYERS: Well, it’s another complicated mess, and those are all about the budget, which we began our conversation with. Prop 25 would allow a budget to be approved by the legislature on a simple majority vote. It would keep a super majority vote for tax increases. That’s Prop 25. And a lot of people say that the longer this budget stalemate goes on in Sacramento, it gives power to Prop 25 supporters who say, look, it’s too hard to pass a budget. We’re one of only three states that has this threshold. Prop 26, which is kind of a flip of the coin, says let’s make it harder to raise not just taxes but fees on businesses. And that would require a super majority vote if Prop 26 passes. Currently, you can do that with only a majority vote in the legislature. They’re complicated but the bottom line is the voters have to figure out do they need to fix the budget system and if they need to fix it, do they want to fix it with these two, 25 and 26, a making it easier to pass a budget, harder to raise fees on businesses. And who knows, maybe the voters, again, just say this is all too complicated. Or maybe the voters are finally angry. I mean, again, this is the 70th day of a budget impasse. Lots of people are waiting to see what’s going to happen with state services. And I should mention, really quickly if I could…
MYERS: …we’re waiting today from the state comptroller to see about what the latest is on possible IOUs for state invoices and so we may find something about that at the end of the day. So it’s very complicated and it’s going to all be part of this election.
CAVANAUGH: Well, John, you’ve taken us through the serious. I want to end on the ridiculous, if I may. I hear you’ve already lost a little bit of money in betting on when this budget is going to come through.
MYERS: Yeah. Yes, there was an informal pool between capitol press corps folks, another reporter’s organizing it, and we only put in a couple of bucks. I was so optimistic. I said September 6th, and I’m now out of the pool and my two bucks goes to someone else. I tell you, though, this could go through the end of September and that’s really tough for a lot of folks but I’ll let you know which reporter wins the pool after that.
CAVANAUGH: Thank you, John.
MYERS: You’re welcome.
CAVANAUGH: I’ve been speaking with John Myers. He is Sacramento bureau chief for “The California Report.” If you would like to comment, please go online, KPBS.org/thesedays. Coming up, San Diego loses an art deco landmark. We’ll find out what happened as These Days continues right here on KPBS.