Jean Ross is leaving the California Budget Project

A leading advocate for state fiscal policy that protects low- and middle-income Californians is moving on to a new post.

Jean Ross is leaving her position as executive director of the California Budget Project, a nonprofit that advocates on behalf of low- and middle-income Californians. She has held this post since the CBP was founded in 1995. She’ll be taking a position next month at the Ford Foundation as the U.S. Program Officer for Transparent, Effective, and Accountable Government.

“My 17 years with the CBP have been incredibly rewarding. From day one, my goal has been to build a lasting organizational capacity to engage in timely, credible, and accessible analysis of fiscal and economic policies and their impact on California that is much greater than any one individual,” she wrote today. “I leave my position confident in the ability of the CBP’s staff, with the strong support of the organization’s board, to continue to produce the insightful analyses that policymakers, advocates, members of the media, and thousands of other Californians have come to depend on.”

She said she hopes to apply her CBP experience in her new Ford Foundation job, at which she is supposed to “ensure that federal and state governments effectively address the needs of the American people, especially the most vulnerable; that the public sector has adequate resources and revenue to accomplish this; and that government decision-making is open and accessible and encourages broad participation by the general public.”

I’ve always been deeply impressed by Ross’s encyclopedic knowledge of California’s budgets; her ability to convey that often-esoteric knowledge in terms anyone can understand; and by the passion with which she advocated for those that the CBP exists to serve.


Let the budget wars begin. Again.

Advocates for the elderly, disabled, poor and others are howling about Gov. Arnold Schwarzenegger’s May Budget Revision, which among other things would eliminate CalWORKS, the state’s welfare-to-work program, as well as most child care for the poor; slash mental-health spending by 60 percent; and freeze funding for schools, but not raise any taxes.

But business groups are fine with it. From John Kabateck, executive director of the National Federation of Independent Business (NFIB)/California, on behalf of Californians Against Higher Taxes:

John Kabateck“We are thankful to Governor Schwarzenegger for making the tough decisions on this budget that will give California a fighting chance to pull out of this recession. By resisting calls for more tax increases, the Governor is leaving more money in the hands of those who create jobs and build businesses as well as the working families hit so hard by this downturn in the economy.

“This is the only way to reduce the state’s alarming unemployment rate and it is a healthy, robust economy that will provide the tax revenues to fund critical programs. We urge the Legislature to follow the Governor’s lead and help put California on the road to recovery.”

And from California Manufacturers & Technology Association President Jack Stewart:

Jack Stewart“Californians are out of work and worried about their long-term security while many manufacturers, especially small ones, are concerned about their long-term competitiveness. The Governor’s ‘no new tax increases’ announcement in his revised state budget proposal is a responsible step toward the state’s recovery.

“California’s budget focus must shift from extracting dollars from families and employers to putting people back to work in high wage jobs. Everyone wins when more Californians are working.”

Not so, contends California Budget Project Executive Director Jean Ross, whose nonpartisan nonprofit group advocates for fiscal reforms to benefit low and moderate income Californians:

Jean Ross“Largely because of the economic downturn, California once again faces a very difficult budget year. But the Governor’s May Revision is not the balanced, responsible approach called for at this critical time. It relies too heavily on proposed cuts, threatens the state’s economic recovery, and recklessly gambles with our future. It pulls the rug out from under families already struggling with double-digit unemployment rates and the worst economic crisis this country has seen since the Great Depression and would leave the state ill-prepared to compete in an ever more competitive global economy.

“The Governor’s proposals cut far past the muscle and into the bones of our state’s safety net – the health care, job placement, child care assistance, and other services Californians have turned to in greater numbers for help during the recent downturn. The Governor’s proposed cuts to public schools would further reduce the state’s commitment to education below that of the nation as a whole, a gap that is wider than at any point in the last 40 years.

“Instead, California needs a thoughtful and responsible budget, one that takes a balanced approach that includes more federal aid and prudent and carefully targeted cuts that preserve the core capacity of services. And in the same way that families unable to make ends meet work overtime or take an additional job to boost their incomes, California needs to bring in new revenues. Protecting our public services will ensure we can meet the needs of Californians now and pave the way for an economic recovery.”

A sampling of further back-and-forth, after the jump…
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Tax-loophole rollback measure hits the streets

Backers of a proposed ballot measure that would plug up $1.7 billion worth of corporate tax loopholes written into the 2008 and 2009 budget deals have been cleared to start gathering petition signatures, Secretary of State Debra Bowen announced today.

The Attorney General’s official title and summary for the measure is as follows:

REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO CARRY BACK LOSSES, SHARE TAX CREDITS, AND USE A SALES-BASED INCOME CALCULATION TO LOWER TAXABLE INCOME. INITIATIVE STATUTE. Repeals recent legislation that would allow businesses to shift operating losses to prior tax years and that would extend the period permitted to shift operating losses to future tax years. Repeals recent legislation that would allow corporations to share tax credits with affiliated corporations. Repeals recent legislation that would allow multistate businesses to use a sales-based income calculation, rather than a combination property-, payroll- and sales-based income calculation. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Annual state revenue increase from business taxes of about $1.7 billion when fully phased in, beginning in 2011-12. (09-0058.)

For those who’ve forgotten, one of the corporate tax breaks enacted while all this budget slashing went on has let companies apply losses in bad years retroactively, so they can receive refunds on taxes paid in previous, better years. Another has let companies shift tax credits earned by one subsidiary to another subsidiary. And a third has let multistate companies pay state taxes based only on total California sales, rather than a prior formula that also included their workforces’ size and the amount of property they own.

The California Budget Project, which studies fiscal policies’ effect on the poor, blasted these breaks in a report last summer. As CBP Executive Director Jean Ross told my colleague Steve Harmon at the time, “The problem with dark-of-night deals is that you never get a chance to get a debate over value choices. These three tax breaks represent a reduction of one-third the income taxes paid by California corporations…. They really represent a stark contrast in values and what kind of future we want to see for Californians.”

The California Chamber of Commerce yesterday announced its opposition to this and four other proposed ballot measures on tax reform, saying they would “discourage investment here, killing more jobs and damaging recovery.”

Bowen’s news release lists San Leandro attorneys Robin Johansen and Karen Getman as the measure’s proponents, but they’re actually representing the Burlingame-based California Teachers Association. The proponents have until May 13, 2010 to gather valid signatures from at least 433,971 voters in order to put this on next November’s ballot. A similar measure put forth by the California Tax Reform Association went into circulation in September, with a February deadline.


Curb the ideology, fix the budget

I just got off a conference call with California Budget Project executive director Jean Ross, who said the governor’s budget-crisis proposal has some good points but won’t get the job done.

“If you look at the overwhelming body of economic research, it tells you that cutting spending is absolutely the worst thing you can do in a down economy. Why? Because public dollars that go out through state budgets, county budgets, school district budgets… immediately recycle through local economies,” whether by public workers’ paychecks or by payments to vendors and contractors, she said. “When we cut back spending it has a very direct impact on local economies.”

In contrast, she said, a carefully targeted tax hike for California’s richest residents – she’s talking about married couples making $321,000 or more per year and individuals making $160,500 or more per year – is less likely to impact the local economy, as these people are both more likely to have savings and more likely to spend money out of state. Such a tax hike also shifts some of the burden to the federal government, she noted, as these Californians will be able to deduct more from their federal tax returns.

That’s not the case with the governor’s proposed sales-tax hike, Ross continued – not only would it not provide a federal deduction, but it’s regressive, meaning it takes a higher percentage of household income from the poor than from the rich. Ross did say she likes Schwarzenegger’s plan to widen the sales tax to services such as car repairs, veterinary services and even golf greens fees, as it spreads the sales-tax burden more fairly throughout the economy.

And Ross said the governor is also on the right track by proposing an oil severance tax; California is the only jurisdiction in the world that produces oil but doesn’t tax it as it’s drilled from the ground, she said, and there’s ample evidence that the cost won’t be passed along to consumers because oil prices are set on a world market.

Now, the California Budget Project isn’t completely impartial – it’s nonpartisan and nonprofit, but its goal is “improving public policies affecting the economic and social well-being of low- and middle-income Californians.” Still, what Ross is saying seems to make some sense.

Let’s review. The nonpartisan Legislative Analyst’s Office says we’re looking at a $28 billion budget deficit by June 2010, including $11.2 billion in the current fiscal year.

This year’s long-delayed budget – already blasted by many as woefully inadequate, and already so badly in deficit – projects $103.3 billion in general fund spending, of which more than half goes to K-12 ($41.6 billion) and higher ($12.1 billion) education; the next-biggest sector is health and human services ($31.1 billion), and after that, prisons and corrections ($10.3 billion).

The high-bracket income tax increase Ross advocates, proposed earlier this year by Legislative Democrats, would pump $5.6 billion per year into California’s coffers; that’s more in one fell swoop than the $4.7 billion that would be raised by all of Schwarzenegger’s proposed hikes.

Legislative Republicans still say any tax increases at all are unacceptable, and under California’s requirement that all budget and tax bills win two-thirds majorities in the Assembly and in the Senate – a requirement to which only we, Arkansas and Rhode Island subject ourselves – they can stop such bills dead.

Whether that’s legislative malpractice is for you to decide. But hear this: Anyone telling you that California can resist all tax increases, rely only on spending cuts and still maintain anything close to its current quality of life in the next few years is lying to you.

The question comes down to this – what are Californians willing to give up? Decent schools? The hope of a college education for those who want it? Healthy children and senior citizens? Constitutionally adequate prisons for the world’s seventh-largest inmate population? Roads and bridges that aren’t crumbling? What else?

Or do we return high-bracket income tax levels to where they were in the early ‘90s under Republican Pete Wilson? Or restore the vehicle license fee that Schwarzenegger rolled back as soon as he was sworn in, fixing its previously regressive nature by tying it more closely to the vehicle’s value? Or – dare I say it? – revisit the idea of a split-roll property tax, leaving Proposition 13’s protections in place for homeowners but reassessing commercial property more often? I know that one’s a long-shot, especially in a down economy, but desperate times call for desperate measures – nothing should be beyond discussion, and no lawmaker’s head should remain buried in the sand of ideology.


Go get your politics on

Plenty of political happenings throughout the Bay Area in the next week:

    Bay Area soul line dancers will be shakin’ it for Barack Obama at noon Saturday, Aug. 9, near the Lake Merritt columns at 550 El Embarcadero in Oakland. It’s not a fundraiser but rather a “community-building activity,” organizers say; they’ll distribute flyers and other material.
    Rep. Jerry McNerney, D-Pleasanton, will hold his next “Congress at Your Corner” constituent meet-and-greet from noon to 1 p.m. Saturday, Aug. 9, at the Lowe’s hardware and home supply store at 3750 Dublin Blvd. in Dublin. Then, he’ll be joined by House Veterans Affairs Committee Chairman Bob Filner, D-San Diego, for a veterans’ town-hall meeting at 10 a.m. Monday, Aug. 11, at the Karl Ross American Legion Post, 2020 Plymouth Road in Stockton; they’ll be talking about a cover-up of the number of veterans committing suicide, failure to inform veterans of suicidal and psychotic side effects of a drug tested on servicemembers; and the government’s purposeful misdiagnosis of post-traumatic stress disorder as a lesser “adjustment disorder.”
    House Education and Labor Committee Chairman George Miller, D-Martinez, has a series of town-hall meetings scheduled for next week: 7:30 to 8:30 p.m. Monday, Aug. 11 in Vallejo’s City Council chambers, 555 Santa Clara St.; 6:30 to 7:30 p.m. Tuesday, Aug. 12 in the Plaza Two Building, 3260 Blume Dr. in Richmond; and 7 to 8 p.m. Wednesday, Aug. 13 in Endeavor Hall, 6008 Center St. in Clayton.
    Assembly Majority Leader Alberto Torrico, D-Newark, will hold a Town Hall meeting on the status of state budget negotiations and its potential impacts on local health care and social services from 7 to 8:30 p.m. Tuesday, Aug. 12, in the Fukaya Room at the Fremont Main Library, 2400 Stevenson Blvd. Joining the lawmaker will be experts from the California Budget Project, the Alameda County Social Services Agency, Health Access California and the Alameda Health Consortium.
    Next Thursday, Aug. 14 is presumptive Republican presidential nominee John McCain’s first national house-party date, with events scheduled for 7 p.m. in Hayward, Redwood City, San Francisco, Vallejo, Oakley, Stockton, San Jose and elsewhere – see the rundown here.

Schwarzenegger becomes a budget ‘stunt’ man

Gov. Arnold Schwarzenegger said today he’s going to cross his arms, stomp his foot, hold his breath and turn blue until the Legislature sends him a budget he likes.

Well, not exactly, but close:

“At this point, nothing in this building is more important than a responsible budget and to fix our broken budget system and to create an economic stimulus package, so until the Legislature passes a budget that I can sign, I will not sign any bills that reach my desk,” he said. “That means that some good bills will fail, yes, but we do not have the luxury of stretching this process any longer. The only thing that the Legislature should be focusing on is reaching a budget compromise immediately.”

For context, California’s budget hasn’t been signed by the June 15 constitutional deadline since 1986; a quick search shows me the past 10 budgets were signed on these dates:

  • 2007: Aug. 24
  • 2006: June 30
  • 2005: July 11
  • 2004: July 31
  • 2003: Aug. 2
  • 2002: Sept. 5
  • 2001: July 25
  • 2000: June 30
  • 1999: June 29
  • 1998: Aug. 21
  • So this late date isn’t new, although we are facing a much bigger deficit than usual. But state Controller John Chiang earlier today said that’s not as much of a worry as the governor would have us believe:

    “On Monday, I testified to the Senate Governmental Organization Committee that June revenues provided us with more than $4.2 billion in reserves at the end of September, which is well above the $2.5 billion my office considers a prudent cash cushion. Although I will release the actual cash flow figures in my monthly report later this week, the preliminary numbers from July show that our cash position has further improved, providing added assurance that the State will have the resources to meet its payment obligations for all of September and into October.

    “The Governor based his executive order to cut employees’ salaries to the federal minimum wage on a faulty premise that it would conserve the cash needed to pay our bills next month. Two consecutive months of improved revenues and decreased spending have rendered his executive order to be nothing more than a solution to a problem that does not exist in the immediate future.

    “I have been working with commercial and investment bankers for the past several months to ensure the State can borrow to meet all of our payment obligations, and this news delays our need to borrow by several weeks. In light of our cash flow improvements, I respectfully urge the Governor to reconsider his executive order. To not do so would needlessly subject hundreds of thousands of hard-working public servants to financial harm and add more strain to our already fragile economy.

    “Although the last two months of revenue performance are welcome news, it will not alleviate the need for California to engage in expensive and risky Wall Street borrowing later this year. The only way to avoid this borrowing is with a budget that contains sound revenue and expenditure solutions that are free from get-out-of-town gimmicks.”

    A get-out-of-town gimmick is exactly what this blanket-veto threat seems to be, hot on the heels of his possibly-toothless order to cut state workers’ pay to the federal minimum wage. He’s sounding increasingly petulant as legislative leaders on both sides of the aisle fail to cave to the pressure he tries to exert. It’s a stunt I think people are likely to see worthy of one of his action films, but not of a governor.

    Even his movement off his no-tax-hikes rhetoric — although at least denoting some movement — seems misguided. His proposal to raise the state sales tax by a penny on the dollar for three years would bring in about $5 billion a year, which isn’t even close to the $6.1 billion the state would have in its coffers this year had Schwarzenegger not repealed the Vehicle License Fee back in 2003. And the sales tax is more regressive than the VLF, meaning it has a more disproportionate impact on the poor: The California Budget Project says the state’s poorest 20 percent spent 8.4 percent of their pay on sales tax last year, while the richest 20 percent spent no more than 3.3 percent. And that’s to say nothing of the havoc the governor’s proposal might play with constitutionally mandated Proposition 98 education funding when the sales-tax hike sunsets after three years.

    First he tried to hold state workers hostage, now he’s putting a gun to the head of the very business of government, seeking a budget deal as ransom. If I had to guess, I’d think he’s uncomfortable with giving people any more time to realize how absurd it is that California is one of only three states (Arkansas and Rhode Island are the others) requiring the Legislature’s supermajority support (two-thirds of each chamber voting yes) to pass its budget or tax increases, rather than a simple majority.

    The governor clearly wants the budget done fast. The question is, does he want it done right?