CalWatchDog: Inflation Stalks CA Budgets

by CalWatchDog.com – 3/7/2011 – 7533 comments

By John Seiler

Like a rerun of “That 70s Show,” inflation is back. And it’s hitting both personal and government budgets in California.

The most obvious signal of renewed inflation is the rise in prices at the gasoline pump. In just the past month, from Feb. 2 to March 2, 2011, average gasoline prices in California have risen from $3.36 a gallon to $3.81, or 13 percent. Over the past six months, prices have risen from $2.89 to $3.81, or 32 percent — nearly a buck a gallon.

Food commodity prices also have risen the past year: corn by 69 percent, coffee 65 percent, wheat 47 percent and soybeans 44 percent. According to NBC News, “We can anticipate higher prices for staples, such as sugar, butter, oats and oranges, as well as foods that contain these items and the commodities previously identified.”

CNBC reported:

By any measure imaginable, food prices are climbing and climbing fast and it’s not only in developing countries where income can’t keep up with the rise in the cost of goods.

Here in the US, food is putting a big bite on household budgets. More than 12 percent of after-tax income is now being spent on fuel and food, with more than half that number on the latter.

CNBC recorded these average price rises for consumers at grocery stores; monthly figures first, annualized second:

•   Ground beef up 6.8 percent month over month, and 11.1 pct year over year.
•   Butter, up 3.2 percent monthly and a stunning 27 percent over the past year.
•   Coffee, up 6.5 percent and 16 percent.
•   Potatoes, up 3.6 percent and 7.1 percent.
•   Lettuce actually fell 5 percent monthly after a spike higher in December, but is up 5 percent over the past year.
•   Bread up 1 percent and 3 percent.
•   Chicken up 0.8 percent. and 4.3 percent .
•   Egg prices have been fairly steady.
•   Milk, down slightly month over month, but up 2 percent year over year.

Government budgets straining

With state and local budgets already struggling with deficits, this is the worst time possible for them also to deal with rising prices. Gov. Jerry Brown’s January budget proposal forecast, ”Inflation is likely to be low for some time. However, cost pressures will remain.” That’s already out of date.

“Any changes would be part and parcel of the May Revision” of the budget, H.D. Palmer told me; he’s Deputy Director for External Affairs at the California Department of Finance. “Obviously it’s a very fluid situation.” The May Revision is due in the second week of May.

Those who deal with local food and fuel budgets definitely are concerned. “It would be too soon for us to see anything at the state level,” Phyllis Bramson told me; she’s director of nutrition services at the California Department of Education. “It may be felt at the local level. They get a set amount [of money] from the federal level. If they get X-dollars per pupil, but food costs go up 5 to 6 percent, ultimately the U.S. Department of Agriculture will raise that reimbursement amount. But it always lags a year behind.”

Click here to continue reading this article on the CalWatchDog.org website.

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CalWatchdog is an independent, Sacramento-based news bureau providing original investigative reports and news stories covering California state government. Their mission is to uncover governmental waste and shine the light on the misuse of taxpayer dollars. CalWatchdog adheres to traditional journalistic standards and focuses on improving government transparency.

FORBES: America’s Most Miserable Cities, 2011

by Editorial Staff – 2/7/2011 – 13398 comments

Arnold Schwarzenegger was sworn in as the governor of California at the end of 2003 amid a wave of optimism that his independent thinking and fresh ideas would revive a state stumbling after the recall of Gov. Gray Davis.

The good vibes are a distant memory: The Governator exited office last month with the state facing a crippling checklist of problems including massive budget deficits, high unemployment, plunging home prices, rampant crime and sky-high taxes. Schwarzenegger's approval ratings hit 22% last year, a record low for any sitting California governor.

California's troubles helped it land eight of the 20 spots on our annual list of America's Most Miserable Cities, with Stockton ranking first for the second time in three years.
In Pictures: America's 20 Most Miserable CitiesIn Pictures: America's 20 Most Miserable Cities

Located in the state's Central Valley, Stockton has been ravaged by the housing bust. Median home prices in the city tripled between 1998 and 2005, when they peaked at $431,000. Now they are back to where they started, as the median price is forecast to be $142,000 this year, according to research firm Economy.com, a decline of 67% from 2005. Foreclosure filings affected 6.9% of homes last year in the Stockton area, the seventh-highest rate in the nation, according to online foreclosure marketplace RealtyTrac.

Stockton's violent crime and unemployment rates also rank among the 10 worst in the country, although violent crime was down 10% in the latest figures from the FBI. Jobless rates are expected to decline or stay flat in most U.S. metro areas in 2011, but in Stockton, unemployment is projected to rise to 18.1% in 2011 after averaging 17.2% in 2010, according to Economy.com.

"Stockton has issues that it needs to address, but an article like this is the equivalent of bayoneting the wounded," says Bob Deis, Stockton city manager. "I find it unfair, and it does everybody a disservice. The people of Stockton are warm. The sense of community is fantastic. You have to come here and talk to leaders. The data is the data, but there is a richer story here."

There are many ways to gauge misery. The most famous is the Misery Index developed by economist Arthur Okun, which adds unemployment and inflation rates together. Okun's index shows the U.S. is still is in the dumps despite the recent gains in the economy: It averaged 11.3 in 2010 (blame a 9.6% unemployment rate and not inflation), the highest annual rate since 1984.

Our list of America's Most Miserable Cities goes a step further: We consider a total of 10 factors, things that people gripe about around the water cooler every day. Most are serious issues, including unemployment, crime and taxes. A few we factor in are not as critical, but still elevate people's blood pressure, like the weather, commute times and how the local sports team is doing.

One of the biggest issues causing Americans angst the past four years is the value of their homes. To account for that we tweaked the methodology for this year's list and considered foreclosure rates and the change in home prices over the past three years. Click here for a more detailed rundown of our methodology.

Continue reading at Forbes.com...

SFGATE: Californians Must Risk Working Together or Perish

by Editorial Staff – 2/2/2011 – 205 comments

By Carl Guardino and Jim Cunneen

"I'll jump if you jump."

In the 1969 film "Butch Cassidy and the Sundance Kid," Paul Newman and Robert Redford had a choice: Face certain death on a mountain, or hurl themselves into the unknown dangers of a raging river below. They stuck together, jumped and lived.

With a $25 billion budget deficit, the Golden State faces similar choices today. Stay frozen in place and perish, or take a risk in working together and survive. We urge our governor and Legislature to leap together.

The budget deficit is only a symptom of California's problem, however. That is why the Silicon Valley Leadership Group's 335-member company CEOs recently submitted a proposal to the governor and legislative leaders on a long-term cure for making California a competitive place to do business, grow the economy, share prosperity and create private-sector jobs.

First, California needs a strategic plan; It's no coincidence that during the past decade Texas has added 1.25 million private-sector jobs; tiny Arizona has grown 265,000 new jobs; and California ... lost 53,000 jobs. Most competitor nations and states have developed a strategic plan for jobs and economic prosperity. By failing to plan, California has planned to fail.

Gov. Jerry Brown should appoint a Cabinet-level officer to help create and implement a strategic plan. He should create a Board of Business Advisers. His "jobs czar" should assemble key leaders from top industry clusters, study what other nations and states do well, emulate what is appropriate and counter what is not.

Second, don't sip bad medicine; drink it fast. Deep and painful cuts must be made, as the governor said in his State of the State address Monday night. The governor has proposed $12 billion worth. We don't like them, he doesn't like them, but it is the best offer on the table.

Third, don't raise taxes. Coupled with deep cuts, the governor has proposed extending - not raising - the current tax rates enacted in 2009. These are unfortunate, yet essential. He is right to insist upon voter approval in June.

Fourth, legislators should insist upon reforms.

California's pension liabilities are roughly $650 billion. It's unfair to taxpayers. It's unfair to public-sector workers. It's also unfair to every important social program, every needed infrastructure investment and every strategic investment in our economy. Every dollar spent fixing our broken pension system is $1 fewer for priorities essential to our state's 38 million citizens. Pension reform should not wait for budget and tax questions to be fully resolved; it should be addressed separately but concurrently.


Continue reading at SFGate...

State of the State: Brown cites unrest in Egypt to make his case for budget vote

by Editorial Staff – 2/1/2011 – 2694 comments

Citing the pro-democracy unrest in Egypt and Tunisia, Gov. Jerry Brown called it “unconscionable” that GOP legislators are vowing to block his attempt to ask voters to extend tax hikes to balance the budget.

“When democratic ideals and calls for the right to vote are stirring the imagination of young people in Egypt and Tunisia and other parts of the world, we in California can’t say now is the time to block a vote of the people,” Brown said in his first State of the State address in nearly 30 years.

He said the budget has tough choices but that the people “have a right to vote” on the package.

He challenged both parties to take the difficult votes necessary to balance the budget.

Continue reading at the Los Angeles Times...

CNBC: California Declares Fiscal Emergency

by Editorial Staff – 1/21/2011 – 584 comments

By Reuters

Jerry Brown, California’s governor, declared a state of fiscal emergency on Thursday for the government of the most populous US state to press lawmakers to tackle its $25.4 billion budget gap.

Democrat Brown’s declaration follows a similar one made last month by his predecessor Arnold Schwarzenegger, the former Republican governor.

Democrats who control the legislature declined to act on Schwarzenegger’s declaration, saying they would instead wait to work on budget matters with Brown, who served two terms as California’s governor in the 1970s and 1980s.

Brown was sworn in to his third term early this month and has presented lawmakers with a plan to balance the state’s books with $12.5 billion in spending cuts and revenue from tax extensions that voters must first approve.

Brown has said he wants lawmakers to act on his plan by March.

His fiscal emergency declaration is meant to underscore that target, an official said.

Brown’s declaration, which is largely procedural, says it affirms Schwarzenegger’s December declaration, giving lawmakers 45 days to address the state’s fiscal troubles.

The 72-year-old governor also wants the legislature to back a ballot measure for a special election in June that would ask voters to extend tax increases expiring this year to help fill the state budget’s shortfall.

Continue reading on CNBC website...
 

Sacbee.com: No More Feather Bed for Termed Out Pols

by Editorial Staff – 1/11/2011 – 2393 comments

Sacbee.com Editorial

Just because you get elected to the Legislature shouldn't guarantee a job after your term is over. But far too often, our leaders at the Capitol seem to think it does.

The latest, most shameful example of politicians refusing to stop feeding at the public trough is the state's Unemployment Insurance Appeals Board. It's an embarrassment for both parties and both the legislative and executive branches.

As The Bee's Susan Ferriss pointed out on Sunday, after the latest round of appointments by outgoing Gov. Arnold Schwarzenegger and by legislative leaders, all six members of the board (there is one vacancy) are ex-legislators.

The irony is mind-boggling. Here's a board that hears appeals of unemployment claims, yet it has become a way for termed-out lawmakers to avoid having to find work like everyone else.

The hypocrisy is breathtaking, too. Consider former Senate Republican leader Dennis Hollingsworth of Murrieta, a self-described champion for taxpayers and crusader for smaller government. He evidently had little trouble saying yes when Schwarzenegger offered him a cushy place to land deep inside the state bureaucracy.

While board Chairwoman Bonnie Garcia says it's "no Club Med for past legislators" – that board members have to spend hours toiling at their computers, besides meeting once a month – they're handsomely paid for their labors. The annual salary of $128,109, plus health benefits and vacation, is more than the $95,291 that legislators get – and far more than the vast majority of Californians take home.

Instead of rewarding political friends, Schwarzenegger would have better served his state had he followed through with his California Performance Review, which recommended eliminating the unemployment appeals board and giving its duties to civil servants and administrative law judges.

In all, the review called for eliminating or consolidating 117 of 339 boards and commissions (and 1,153 of 3,365 appointments) within the executive branch. When the review was issued in 2004, the 17 highest-paying boards cost taxpayers more than $9 million a year just in salaries. The review also said that the plethora of unelected boards makes government less accountable.

Continue Reading at Sacbee.com...
 

Tycoon offers help to debt-laden California

by Administrator – 1/5/2011 – 2805 comments

By Matthew Garraha, Financial Times

When he was sworn in to replace Arnold Schwarzenegger as governor of California this week, Jerry Brown lamented the state’s failure to address its perennial fiscal crisis.

California has a budget deficit that has ballooned beyond $20bn and the worst credit rating of any state in America, and yet “our two political parties can’t come close to agreeing on the right path forward”, Mr Brown told his audience in Sacramento.

The state is in for a rough ride, with spending cuts and tax increases expected over Mr Brown’s term. But help may be at hand from the most unlikely of corners: Nicolas Berggruen, the so-called “homeless billionaire”, who has assembled a small group of business and political heavyweights – including Condoleezza Rice, former California governor Gray Davis and Google’s Eric Schmidt – to formulate proposals to reform the state’s tax and revenue base.

Mr Berggruen earned his nickname after selling his house and most of his own possessions – apart from his art collection and private jet – and controls a vast business empire that includes Karstadt, the German department store chain, and Prisa, the Spanish media group that publishes El País.

The German-US national has few business interests in California, although is often photographed mingling with film stars and hosts a lavish pre-Oscar party each year at the Chateau Marmont in West Hollywood. As he sips an espresso in his regular suite at The Peninsula hotel in Beverly Hills, he says he has an enduring love for the state and a fascination with political and fiscal reform. “California is a bellwether state. What happens there has an impact on the rest of the US and even the rest of the world.”

Nicolas Berggruen at a West Hollywood celebrity fundraiser: the businessman professes an enduring love for the state. He created the Think Long Committee for California with the aim of eventually putting its policy suggestions to voters in state elections. Qualifying for the California ballot is an expensive business, with around 450,000 signatures required for a proposal to be included, so Mr Berggruen has pledged $20m to fund the effort.

Continue reading on the Financial Times website...

LA MESA PATCH: There Oughta Be a Law…

by Administrator – 1/1/2011 – 91 comments

By Hoa Quach for the La Mesa Patch

Californians will welcome 725 new laws on Jan. 1. Here's a glance at some of the laws taking effect when you ring in the new year:

• AB 119: Prevents insurance companies from charging different rates for men and women for identical coverage.
• SB 782: Prevents landlords from evicting tenants who are victims of domestic or sexual abuse or stalking.
• AB 1844: Informally known as Chelsea's Law and authored by local Assemblyman Nathan Fletcher—will increase penalties, parole provisions and oversight of sex offenders, including a "one-strike, life-without-parole penalty" for some. 
• AB 1871: Allows people to lease out their cars when they are not being used—alleviating the need to purchase additional insurance.
• AB 537: Will make food stamps an acceptable form of payment at farmers markets through an EBT process.
• SB 1411: Makes it a misdemeanor to maliciously impersonate someone via a social media outlet or through e-mails.
• SB 1317: Allows the state to slap parents with a $2,000 fine if their K-8 child misses more than 10 percent of the school year without a valid excuse. It also allows the state to punish parents with up to a year in prison for the misdemeanor.
• AB 715: Makes a change to the California Green Building Standards code. The change will require new California buildings to be energy efficient.
• SB 1449: Makes the possession of up to one ounce of marijuana an infraction with a penalty of a $100 fine.
• AB 12: Allows foster youth to acquire state services until the age of 21.
• SB 1399: Allows California to medically parole state prison inmates with physical incapacitating conditions and ultimately shifts some of the cost of care to the federal government.
• AB 97: Bans the use of trans-fats in food facilities.

Click here to visit the La Mesa Patch website...

Governor-elect Brown Tips Hand on Taxes

by Administrator – 12/12/2010 – 331 comments

By Steven Greenhut

At Jerry Brown’s briefing Wednesday to discuss the dismal condition of the state budget, now plagued by a $25 billion deficit, the incoming governor said, “Everything should be on the table, and everyone should be at the table to talk about it.”

Whenever a California Democrat tells you that everything is on the table when it comes to budget matters, you know the main course will be your earnings. All those people invited to the table are the interest groups and public sector unions who will fight over the additional dollars from the tax increases being sought.

Brown’s briefing was billed as a reality check, a chance for state officials and the public to face the ugly truth about the budget. The goal wasn’t to discuss solutions – although legislators in the audience offered their “solutions” during the question-and-answer session – but to “set a common factual basis” from which we can determine the “full range of solutions,” Brown said.

We should all agree on the right numbers, but we shouldn’t be naïve about the goals here.

Brown did not in any way push for tax hikes, but the whole presentation was designed to lead the public to believe that every other budget choice is no longer available. The briefing explained that the budget problems are enormous, that services already have been cut to the bone, that the state cannot afford more borrowing and that the usual budget-balancing gimmicks won’t work this year. The presentation was filled with truths, but the likely conclusion is highly objectionable. And it left out other significant truths that would lead to other conclusions, such as data showing that Californians are taxed and regulated cumulatively at among the highest levels in the nation.

The panel included Democrats Brown, Senate President Pro Tem Darrell Steinberg, Assembly Speaker John Perez, Treasurer Bill Lockyer and Controller John Chiang. The sole Republican was Assembly Minority Leader Connie Conway. The two nonpartisan budget officials were Legislative Analyst Mac Taylor and Ana Matosantos, the finance director for outgoing Gov. Arnold Schwarzenegger who is being retained by Brown.

Only Conway challenged the direction the panel was headed, noting that the best way to increase revenue is to get the economy moving and to get more workers on the payroll and, thus, the tax rolls. Steinberg and Perez kept asking questions, which were mini-speeches, pointing to the plight of government workers, the need for more services and the importance of – let’s say it together now! – keeping all solutions on the table. Perez even mentioned specific tax increases he would support.

Ironically, Perez compared the briefing to the Assembly Democrats’ series of town-hall meetings last May. They also were supposed to elicit public debate about the budget but were really a transparent ploy to lobby for a rule that would allow state budgets to pass by a simple majority rather than a supermajority. That rule (Proposition 25) was approved by voters in November. It will make it easier for Democrats to pass the budget and to push for tax increases.

Click here to continue reading this article on the CalWatchDog.org website.

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CalWatchdog is an independent, Sacramento-based news bureau providing original investigative reports and news stories covering California state government. Their mission is to uncover governmental waste and shine the light on the misuse of taxpayer dollars. CalWatchdog adheres to traditional journalistic standards and focuses on improving government transparency.