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Feds Not the Problem; They’re Part of the Solution

Tuesday, January 19th, 2010

Jean-Ross-smallBy Jean Ross
Special to Calbuzz

There’s not a lot of good news about the economy these days, either here in California nor in the nation at large. What little there is, economists largely attribute to the impact of the federal economic recovery bill – the American Recovery and Reinvestment Act of 2009 (ARRA) – enacted last February.

The nonpartisan Congressional Budget Office estimates that the infusion of federal funds boosted economic growth by 1.2 percent to 3.2 percent in the third quarter of 2009 and kept some 600,000 to 1.6 million more Americans from losing their jobs.

Here in California, the ARRA provided $8.5 billion in direct aid to the 2009-10 state budget – keeping teachers in classrooms, students in college, and families and seniors receiving needed health services. Absent these funds, lawmakers would have been forced to cut deeper or raise taxes more.

Californians will receive an estimated $13.6 billion in tax credits, $606 million in added unemployment insurance benefits and $860 million of food stamp benefits — money aimed at boosting consumer spending while helping families make ends meet. Infusion of these dollars was arguably one of the few bright spots in a year of dismal economic news.truelies

That’s why Gov. Schwarzenegger’s recent statement that Washington is “part of our budget problem” was puzzling. Lawmakers have made the argument that California hasn’t received its “fair share” of federal funds for at least two decades.  But this argument hasn’t worked yet and there’s no indication that Congress will look more kindly on this approach in 2010.

There is a better approach that makes for good economic policy and, we believe, offers much better odds of success.

The nascent economic recovery remains fragile, both here and in the nation as a whole. A number of prominent economists believe that state and local government budget cuts could drag the economy back into recession or prolong what is likely to be an anemic recovery. As we’ve argued before, California is “too big to fail.” The magnitude of our budget crisis, and the measures needed to address it, are sufficient on their own to act as a dead weight on the national economy.

The level of spending reductions needed to balance the state’s budget in the absence of continued aid is almost unfathomable. Even a balanced approach that includes additional tax revenues would require deep reductions that would cost jobs, threatening the state’s ability to compete in the global economy for decades to come and shredding a safety net for families and children that is already in tatters.

So what’s the answer? Congress should act immediately — not to provide special treatment for California, but rather to head off the possibility that state and local budget cuts across the nation will drag down an already weak economy.

BangIn terms of “bang for the buck,” federal aid to the states far surpasses additional tax cuts and is exceeded mainly by extending unemployment insurance benefits and increasing food stamp benefits, measures we’d urge Congress to consider, as well.

Federal dollars won’t provide a permanent solution to California’s structural budget shortfalls – the gaps that exist even in good economic times – but can mitigate the impact of that portion of the state’s fiscal woes attributable to the broader economic malaise.

Jean Ross is the executive director of the California Budget Project, a Sacramento-based nonpartisan policy research group. You can visit the CBP on the web at www.cbp.org and www.californiabudgetbites.org.

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Posted in California Budget, California Economy, California Politics | 2 Comments »

Excloo: Secret Agreement on T-Ridge Revealed

Monday, January 18th, 2010

platformnewA secret agreement between PXP oil company and a Santa Barbara environmental group sheds new light on aspects of the controversial Tranquillon Ridge offshore oil plan that are central to Governor Schwarzenegger’s latest bid to win approval for the project.

A hard copy (now available in pdf) of the previously undisclosed agreement provided to Calbuzz offers an inside look at the terms of the pact that gained the Houston-based PXP the key political support of the influential Environmental Defense Center, which has been prominent in the decades-long fight against offshore drilling in California.

The group’s endorsement of PXP’s application for a lease to slant drill into state waters, from an  existing platform under federal jurisdiction, more than three miles offshore, has bitterly divided California’s environmental community.

Financially at stake are billions of dollars in new revenue for PXP, plus as much as several billion more for the state treasury from royalties on the lease, which the governor insists are needed to address the state’s budget mess.

Despite Schwarzenegger’s aggressive push for the lease last year, the State Lands Commission rejected PXP’s lease application. After a raucous battle, the Assembly later defeated a bill to overturn that decision. Now, Schwarzenegger is pushing for the lands commission to rehear the lease deal, which is framed by the confidential PXP-EDC agreement.

As a political matter, the environmental issue boils down to this: the EDC and its allies argue that trade-offs made by PXP in the confidential agreement in exchange for environmental support ultimately will end some offshore oil drilling; environmental foes of the deal say it is absurd to attempt to end offshore drilling by allowing more of it, and say the deal inevitably will advance oil industry efforts to expand the practice.

PXP and EDC representatives told Calbuzz they have recently amended their original agreement, reached in April 2008, in order to beat back major arguments used to defeat the deal twice before. A spokesman for PXP and an attorney for EDC both said the revised agreement would be made public if PXP gets a new hearing.

krop_lg

Linda Krop

Our own review of the original agreement, which was obtained from sources who requested anonymity because of concerns about retribution, meanwhile provides the first definitive look at a host of issues that, for nearly two years, have been the focus of political gossip, rumor, speculation, charges and counter-charges.

Today we’re publishing a post of unusual length and detail because we think the PXP matter, along with the AB32 climate change controversy, represent the most important environmental issues facing California.

Our research for this piece includes the previously secret document, a face-to-face about its terms with Linda Krop, chief counsel for the Environmental Defense Center, who negotiated it, and an email exchange with Scott Winters, PXP spokesman and vice president of corporate communications. Here is a look at key issues, with a major Weed Whacker Alert:

I-Secrecy: “Negotiated behind closed doors” secrecy

PXP and EDC have declined to make their agreement public, saying it contains proprietary information that could aid the company’s competitors. Their insistence on confidentiality was a major factor in the twin defeats of the deal last year.

If granted, the requested lease would be the first by the state since Union Oil’s disastrous 1969 Santa Barbara oil spill, and opponents of the deal successfully argued that it is outrageous even to consider such a change without a full public airing of its conditions.

“The fate of public lands cannot be decided in contracts negotiated behind closed doors,” Controller John Chiang, a lands commission member, said in explaining his vote against it last year.

Our review of the document showed there is no formal confidentiality clause to legally prevent its release to the public. Linda Krop, lead attorney for EDC, who negotiated the agreement, told us in an interview:

PXP asked if the agreement could be confidential because it explains how they do business with their partners and such, and they didn’t want the rest of the industry to see that. We said, ‘sure, that’s not a problem’…That was just the agreement going in (to negotiations).

PXP and EDC said they recently incorporated amendments to the agreement to address criticisms raised at the initial State Lands Commission hearing by strengthening written assurances that the promised benefits of the agreement will materialize.

PXP spokesman Winters said, “We recognize the concern the confidential nature of the agreement generated” and pledged that the revised agreement will be made public — if and when the lands commission schedules a new T-Ridge hearing.

Krop said she was surprised by the vociferousness of the criticism about the lack of transparency, claiming it is not unusual for environmental groups to keep private the legal agreements or settlements it makes with corporations applying for permits or leases before public agencies. Said Krop:

It caught us off guard. The reason we did not think that was an issue (was) because the project was going to be decided at public hearings before the county, the State Lands Commission and the Coastal Commission…Had we known it was going to be an issue, we would have talked about it up front, but it caught us by surprise…If we get a second chance, it will be a public agreement, and we will never have a private agreement again.

II-Money: Who gets what

EDC legally repmoneyresents in the matter two other Santa Barbara non-profits, Citizens Planning Association (CPA) and Get Oil Out! (GOO). Amid the bitter debate within California’s environmental community, one of the charges leveled by T-Ridge foes is the suggestion that the non-profit EDC benefits financially from the agreement, and from its public support of PXP.

On this point, Section 1.6 of the agreement (“Reimbursement of Expenses of Environmental Parties”) states that:

Upon all Parties’ execution of this Agreement, PXP shall pay $50,000, and upon the State Lands Commission’ approval and PXP’s written acceptance of all the leases necessary for the Tranquillon Ridge Project, PXP shall pay an additional $50,000, for a total of $100,000, to the Environmental Defense Center, as reasonable compensation for work performed by EDC on behalf of GOO! and CPA pertaining to the environmental and permitting review for the Tranquillon Ridge Project, and the negotiations leading up to and implementation of this Agreement.

The oil company also made other financial commitments, in addition to the terms about oil drilling, which are discussed below.

These include ceding for conservation nearly 4,000 acres of onshore lands in Santa Barbara County now used for production and processing of oil yielded by offshore operations. These land transactions, per the agreement, are to be managed primarily through the non-profit Trust for Public Land. The agreement does not state the value of the land.

The company further agreed to a pay a maximum of $298,507, at a rate of $20 per ton, to offset any new greenhouse gas commissions from the T-Ridge project, to the Santa Barbara County Air Pollution Control District. PXP also promised to pay the air quality district $1.5 million, over 14 years, to “administer a transit bus technology program” within the county to help reduce greenhouse emissions.

PXP’s potential royalty payments to the state are estimated at several billion dollars, according to Winters, who said the county of Santa Barbara could receive several hundred million in property tax revenue on oil produced from new T-Ridge operations.

In exchange for these commitments, among others, EDC and its clients made promises of public support for PXP’s efforts to obtain the lease and all necessary approvals, saying they would:

…in a timely manner communicate…support for the granting of all approvals required for the Tranquillon Ridge Project pursuant to the agreement. These communications shall be in writing (with copies contemporaneously delivered to PXP), and include oral testimony at public hearings of Santa Barbara County, the State Lands Commission, and California Coastal Commission…

In the event PXP requests the Environmental Parties to communicate their support…to any other governmental agencies with entitlement jurisdiction, EDC shall do so on behalf of (CPA and GOO!), in which event PXP shall pay EDC’s reasonable fees, together with reimbursement for any of EDC’s reasonable and actual out-of-pocket costs incurred.

Krop termed “ridiculous” the notion that this contractual arrangement could support the perception that EDC was due a $50,000 bonus payment once PXP secured approval from the lands commission. Noting that “every settlement has a reimbursement,” she stated that PXP has now paid the full $100,000 to EDC, which she said actually “shortchanged” the many hours she and her staff devoted to the project. Krop:

For environmentalists, it’s never been about the money, it really has been about ending current oil production and stopping future oil production…We did get paid the full $100,000…because we put twice that (amount of time) by the time we were done…The reason we advocated for this is because we want the end dates (for offshore oil drilling). We want the benefits of the agreement.

As for PXP’s profit, Winters claimed “the state stands to gain as much, or more in all price scenarios, than PXP.” He characterized speculative reports that the company stands to gain upwards of $20 billion from the deal “not even remotely realistic” but declined to say how much increased income the project could mean for PXP.

III-An End to Drilling: How, When, Whether

santa-barbara-view-from-riviera-resize

As a policy matter, the most important issue raised by the PXP agreement is whether or not the negotiated “end dates” — when the company promises to stop drilling both at Tranquillon Ridge and from three other platforms located in coastal waters under federal jurisdiction — can be legally enforced.

(A bit of complicated, but unfortunately relevant, waaay in-the-weeds history:

Coastal waters up to three miles from shore are formally known as “California State Tidelands.”

Since 1938, oil leases in them have been under the jurisdiction of the State Lands Commission. The three-member body includes the Lieutenant Governor, the state Controller and a representative of the governor’s Department of Finance.

Until the 1969 Santa Barbara oil spill, which galvanized the start of the global environmental movement, the state had granted 35 leases for tidelands. Since then it has granted none.

In 1994, former state legislator, and current state schools chief, Jack O’Connell of Santa Barbara, successfully passed the California Coastal Sanctuary Act, which allows new state leases only under a few conditions. Two of these include: a) areas where oil in state waters drains into federal waters and b) cases in which the lands commission determines it is “in the best interest of the state” to allow such a lease.

The U.S. government has authority over oil leases in Outer Continental Shelf waters beyond three miles from shore. Starting in 1981, there was a federal moratorium on new leases off the California coast, which expired in 2008.

Under an pre-existing federal lease, PXP now operates Platform Irene, just outside the three-mile limit. That operation sucks oil out of the sea at a point near an underwater geological formation known as Tranquillon Ridge, where oil drains from state into federal waters).

Because PXP’s state lease application apparently meets condition a), the key question for the lands commission, in deciding whether to grant a state lease at T-Ridge, is whether the project meets condition b), by being “in the best interest of the state.”

Schwarzenegger says it does, because the state needs the money; project opponents say it does not, because it would set a dangerous political and environmental precedent. The State Lands Commission backed the latter view last year, when it turned down the project, 2-to-1.

PXP first applied for a state lease in 2004; during the EIR process, EDC opposed that effort. At the suggestion of then-Lieutenant Governor John Garamendi, according to attorney Krop, the company came to EDC in 2007 seeking a compromise.

Within a few months, Krop said, they had offered to include in a possible deal three other platform operations now under federal lease, in an area known as the Pt. Arguello Project, south of T-Ridge (if you’re still with us, remember this name). The result of those negotiations was the confidential pact signed in April 2008, under which EDC now supports PXP’s application to the lands commission.

IV- What are “end dates”?

The no-longer confidential agreement calls for PXP, if granted the state lease, to end operations in both federal and state waters near Tranquillon Ridge by the end of 2022. The company also promises to shut down its onshore production facilities connected to those operations, ceding the land for public use. PXP also agrees to remove permanently, not just decommission, the infrastructure known as Platform Irene.

Recall the aforementioned Pt. Arguello Project. PXP operates it through a majority partnership it has with other oil companies.

The EDC pact says PXP will ensure the end of drilling operations from three platforms — known as Harvest, Hermosa and Hidalgo — in that federal project area, within nine years of the company receiving the T-Ridge state lease. The PXP-EDC agreement also calls for turnover for public use of onshore lands where Pt. Arguello-related production facilities now operate.

Caveat: the agreement states that unnamed “third parties are responsible for the abandonment of the three Pt. Arguello platforms.” While PXP promises not to oppose any effort to remove the actual platforms, it does not promise or guarantee they would be removed.

Will it ever end?

The so-called “end dates” for drilling are described in the agreement, variously, as “irrevocable and non-modifiable,” and “pre-determined and absolute.”

As a legal and political matter, however, the key question in the T-Ridge debate is whether these dates would be enforceable. Both the lands commission staff and the attorney general’s office reported to commissioners last year that they were not, a crucial factor in the defeat of the lease application.

Opponents of the deal say there are simply too many future unknowns and unknowables -– market conditions, the price and availability of oil and who controls the state and federal governments, for example — to assure that the promised end dates would be honored.

One key factor here is that federal leases -– including those for platforms Harvest, Hermosa and Hidalgo — are under authority of the Department of Interior’s Minerals Management Service (MMS), which ensures that federal leases generate income for the U.S. government.

In explaining his opposition to a state lease for PXP, Controller Chiang wrote this in a post for the California Progress Report:

My concerns also include the enforceability of ending the Tranquillon Ridge oil drilling operations in 2022 and the Point Arguello operations in 2017. The support of environmentalists for this project would not exist without dates certain on which drilling would stop, but neither the proposed State Lands Commission lease nor the PXP agreement can provide certainty about these end dates.

The federal Minerals Management Service receives royalties from the oil production in federal waters and is compelled by law to encourage drilling until it is no longer economically viable.

The state cannot interfere with the contracts between PXP and MMS. Because the MMS will not agree to the proposed end dates, and because we are continuing to experience severe volatility in the energy market, there is likelihood that market forces in 2022 would dictate whether or not the federal government would continue seeking revenue from this project.

V. The ultimate leverage

leverageBut Krop told Calbuzz the Controller is “not correct” in his statements about the position of the federal government.

She said she met in Washington last fall with federal officials. At that time, MMS officials told her, she said, “we want to make this happen” She added that if and when state lands commissioners rehear PXP’s application, she will present evidence the federal issue should be “off the table.”

“When we met with MMS folks back in D.C. in September, they said, ‘that’s a viable option,’” Krop told us.

Winters said the the scenarios about difficulty enforcing end dates are not realistic, because the onshore facilities to support future drilling at the sites would be removed. He also said the new agreement would make California’ attorney general a party to the pact, to give specific authority over the deal to the state. He also told Calbuzz that in the amended agreement:

…a new provision has been added that requires PXP to forfeit 100% of any profits the project generates if it operates beyond 14 years for any reason.  In addition, the agreement includes a clause that requires PXP to waive its rights to apply for any extension at the end of the life of the project.

As for the other enforceability issues, Krop strenuously argued that the original agreement she negotiated was ironclad:

Under our agreement, those (onshore) facilities cannot be used for production of oil and gas after the end dates…

By everybody’s prediction there’s going to be hardly any oil and gas left in these fields. If (MMS) were to lease them, all the new platforms, pipelines, processing facilities would have to be built. It’s just not going to happen…

You’ve got a .0000001 percent chance, (of offshore drilling taking place on the sites after the end dates). Right now you have a 100 percent chance they’re going to keep producing. That’s what’s frustrating to me, is that people in Sacramento don’t get that…We’re not supporting a new project, we’re supporting a project that is going to shut down production.

In this exchange during the interview, however, Krop acknowledged that if unforeseen circumstances led to leasing arrangements and drilling past the end dates, enforcement of the EDC-PXP essentially would be left to her group, by filing a lawsuit:

Calbuzz: So what you’re saying is, the enforceability is ultimately the legal leverage that you would have as one of the parties to this agreement.
Krop: Right.
Calbuzz: In other words, if they violated this agreement, you would have to go to court to sue to enforce it.
Krop: Right. We would go to court, (Trust for Public Lands) would go to court…

As for the political argument by opponents that granting PXP a state lease would send a powerful political message that California’s long-held consensus opposing offshore drilling is crumbling, the EDC attorney claimed that any such perception “is based on people telling untruths.”

The politics is the truth. If everyone would stick to the facts, I’m saying, if everyone would quit twisting the truth, the perception would be the truth. The truth is, the drilling’s happening and we’re shutting it down.

VI. And Now, a Word from Your Sponsors

wagging-finger

We’ve done our best to present the facts of this as fairly as possible, but figuring out who’s right among environmentalists on this one requires an ability to foresee and forecast the future — about the oil market and shifts in government leadership, among other things — which we admit we lack.

Amid the passion and strained relationships within the environmental community,  it seems to us that some people on both sides of this complicated issue share the same policy goal — to protect California’s precious coastal environment. It’s sad to watch them attack each other’s motives.

That said, as innovative, perhaps visionary, as the EDC proposal may be as an environmental policy matter, the group’s appreciation for hardball politics in Sacramento and Washington seems to us at times naive. Moreover, four decades of principled opposition to new offshore oil drilling is precedent we’d be loathe to see California forfeit on a risky bet that oil companies would willingly stop drilling for oil.

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Posted in Arnold Schwarzenegger, California Economy, California Politics, Environment | 20 Comments »

Little Pulitzers: Myers, York, Collins, Skelton . . .

Saturday, January 16th, 2010

john-myers-158x225Hiding in Plain Sight: This week’s I.F. Stone all-I-did-was-read-the-documents award goes to the steady John Myers over at Capital Notes, for his report that Gerry Parsky’s famous Business Net Receipts Tax would result in a $10 billion decrease in state revenues. We probably missed other takes on this, but Myers for sure got the full import of the Assembly Rev and Tax hearing Wednesday, when he noted that the Leg Analyst’s take on the fiscal impact of the pet project of Arnold’s guy “may be the final nail in the coffin” for the Parsky hustle.

The report uses 2007 tax data in finding that the commission plan would lower personal income taxes by $13 billion and completely wipe out $28 billion in sales taxes and $8.7 billion in corporate taxes. The BNRT, says the LAO report, would bring in $39.2 billion… thus, a loss of $10. 2 billion.

High time someone put this dog with fleas out of its misery.

Hiding in Plain Sight II: Sameway kudos to Anthony York at Capitol Weekly and to Beekeeper Dan Walters, who both wrote in plain English what everbody in the world already knows – that the well-pleased-with-himself  “Collectanator’s” brilliant strategy of shaking his fist at Washington has absolutely no chance of shaking the feds down for the imaginary billions of dollars he phonied up to skate through his budget presentation last week.

How many more times will the bookers on “Meet the Press” fall for this guy’s act before they catch on to what a total blowhard he is?

chestertonEnough already: Tom Campbell’s endless farewell-to-the-governor’s race tour, which feels like it dragged on since he last ran for Senate, put us in mind of G.K. Chesterton, author of our all-time favorite quote about journalism:

Journalism largely consists of saying ‘Lord Jones is Dead’ to people who never knew that Lord Jones was alive.

And speaking of whatever happened to what’s his name, we greatly enjoyed Capitol Weekly’s where-are-they-now feature on former Insurance Commissioner and GOP Golden Boy Chuck Quackenbush, hounded out of office by scandal just one step ahead of the posse and, it appears, was scared straight by the experience:

After his resignation, Quackenbush left California – he had lived in Rio Linda north of Sacramento – and moved to Hawaii. He also lived briefly in Ohio. In 2005, he moved to Lee County, Florida, which includes Fort Myers and Bonita Springs, and became a sheriff’s deputy –quackenbush first as a reserve deputy, then as a full-time law enforcement officer. Quackenbush also planned to become a helicopter pilot for the Lee County Sheriff’s Department.

The 55-year-old Quackenbush had largely avoided the public eye until 2008, when he shot and critically wounded a suspect in a domestic disturbance who allegedly was resisting arrest. Quackenbush was cleared of any wrongdoing.

At least he was in Florida.

All right-thinking people agree with us: Rant of the week honors to NYT’s Gail Collins, who let loose on the spectacle of a gaggle of comb-over U.S. Senators representing states with more pumas than people setting policy for the U.S., regardless of that whole pesky election thing, a Calbuzz pet peeve made manifest by the terminally annoying Kent Conrad.

People, think about what we went through to elect a new president — a year and a half of campaigning, three dozen debates, $1.6 billion in donations. Then the voters sent a clear, unmistakable message. Which can be totally ignored because of a parliamentary rule that allows the representatives of slightly more than 10 percent of the population to call the shots.

Why isn’t 90 percent of the country marching on the Capitol with teapots and funny hats, waving signs about the filibuster?

Sign us up.

You can’tnone_skelton_ be serious: Investigative punditry award yet again goes to the ever-reliable George Skelton, whose tone of pure bafflement about the views of Prop. 8 backers, regarding the shaky institution of marriage, was delightful:

The idea that marriages are first and foremost about baby-making-and-rearing was expressed by (pro-Prop 8 lawyer Charles) Cooper in October in an unsuccessful attempt to dismiss the suit filed by two same-sex couples against Prop. 8.

‘We say that the central and defining purpose of marriage is to channel naturally procreative sexual activity between men and women into stable, enduring unions for the sake of begetting, nurturing and raising the next generation,’ Cooper told U.S. Chief District Judge Vaughn R. Walker in San Francisco.

‘Well,’ the judge replied, ‘ the last marriage that I performed, Mr. Cooper, involved a groom who was 95 and the bride was 83. I did not demand that they prove that they intended to engage in procreative activity. Now, was I missing something?’

‘No, your honor.’

Uhh, so what are we doing in court, exactly?

jerryhandsMust-listen of the week: Mega-kudos to KGO radio’s Ed Baxter and Jennifer Jones for scoring a splendid sandbagging interview with Jerry Brown, in which Crusty let loose with all manner of truth-telling.

Brown, who was on the phone to talk about Prop. 8, went on a real tear when the morning news anchors slipped in some “as long as we have you” questions about the campaign for governor, opposition search and his planting of a negative story about S.F. Mayor Gavin Newsom.

“Some people pretend they don’t do that. But they hire their henchmen….and they whisper, whisper into the ear of the various reporters. And you find out that most of these reporters’ stories derive from the opposition campaign. That’s kind of the dirty little secret of the news media,” he told KGO.

“Most of the political news is dug up by the oppositon research teams and then handed over to the media, and then put out as though the journalist found it and it’s news. When it’s really just part of the ongoing war between the candidates,” he said. “If you’re not prepared for it, you gotta get out of it.”jennifer-love-hewitt-3

That’s what makes Brown so much fun as a candidate. Like he did in his irreverent interview with CNBC back in October – he’s unafraid to get caught up by conventional political and media bullshit. You can hear the whole thing at Thursday’s 8-9 am hour on KGO.

Today’s sign the end of civilization is near: Is that a disco ball in your pocket or are you just happy to see me?

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Posted in California Economy, California Politics, Jerry Brown, Parsky Commission, Tom Campbell | 1 Comment »

Political Potpourri: Parks, Pistols, Puppies & Pot

Tuesday, January 12th, 2010

lampoon_national_killdogPuppy vs. pistol: The famous January 1973 cover of National Lampoon magazine featured a disembodied hand holding a revolver to the head of a nervous looking black-and-white mutt with the headline: “If You Don’t Buy This Magazine, We’ll Kill This Dog.”

The bad-taste-costs-no-more image came to mind in reflecting on Gov. Schwarzmuscle’s blackmail proposal to tie $140 million worth of funding for the California State Parks system to passage of his pet project authorizing a lease for drilling in state waters off the coast of Santa Barbara.

The $140 million is the General Fund portion of the state parks budget, about one-third of the $431 million total, with the rest financed by sources like state parks fees and highway vehicle funds, according to the Department of Finance. Not surprisingly, Arnold’s take-it-or-eat it plan, his third bid to gain approval for the twice-defeated Tranquillon Ridge project on behalf of the Houston-based PXP oil company, was sharply dissed by  many environmental groups among the 100 that oppose the offshore deal, which include everyone from the American Cetacean Society to Yosemite Area Audubon.

“Pegging the fiscal future of the state park system to offshore oil drilling sets up an unacceptable tradeoff between coastal protection and park preservation,” said a to-the-point statement from the California State Parks Foundation. Sez Elizabeth Goldstein, president of the group:

Tying the funding needs of our state parks to proceeds from the Tranquillon Ridge deal is once again playing politics with our state park system. The threat of park closures over the last two years has shown that long-term, stable funding is needed for our state park system, not these desperate yearly budget attempts to give political cover, instead of true solutions. Californians are frustrated with their state park system being held hostage in the budget process…

In last week’s report on Conan’s new bid to win an official blessing for T-Ridge, Calbuzz said it wouldn’t be “changing many minds.” Now that it’s been out there a couple days, it feels more like his shoot-the-dog play will actually prove counter-productive, by making his push for a special deal for PXP more transparent than ever.

PS: Since the Sinclair Paint decision is Calbuzz bread and butter, we’d be remiss in failing to note that the Legislature could just accept Schwarzmuscle’s$140 million cut and raise park fees by the same amount — by majority vote. Take THAT Cal Forward!

yes-we-cannabis

Pot of Gold: With a new initiative to legalize marijuana heading for the ballot, count gimlet-eyed economist Bill Watkins among those who feel it would be a big boon to the state – both in revenue and big-time cuts in costs.

“Prohibition never works,” Watkins, executive director of the Center for Economic Research and Forecasting in Thousand Oaks, said in an email.

Led by Oakland’s Oaksterdam University, initiative backers have already gathered about 700,000 signatures, at a cost of a reported $1 million, and say they expect to have a professionally-run, $10 million campaign for a measure on the November ballot. The initiative measure, according to an all-you-need-to-know piece by the indefatigable Timm Herdt,

…is not a pot-lover’s pipe dream, but rather a political document designed to win votes: It sets the legal age at 21, enhances criminal penalties for sales to minors, prohibits the use of marijuana in public places and in the presence of children, gives every city the right to decide whether to allow marijuana sales, and emphasizes the ability of local and state governments to regulate and tax all sales.

Watkins and his posse at Cal Lutheran University, in their most recent forecast, offered a few thoughts on the subject from an economic theory perspective, in a little essay headlined “Marijuana, a Little Tongue-in-Cheek”:

The costs of prohibition are well known. They include law enforcement, corruption, increased crime, more prisons, lost taxes and the like…

What we need to do is completely legalize and regulate the production and sale of marijuana. Based on newspaper reports of drug raids, the stuff grows like a weed in California. Legalizing it and regulating exactly the way we regulate tobacco and alcohol production and sale would reduce its availability to kids, decrease crime, reduce prison and law-enforcement costs, increase agricultural production and profits, and generate large revenues for the state.

Imagine fields of cannabis in our Central Valley. It’s easy if you try.

Calbuzz sez Amen. That’s change we can believe in.

Toldja: Cooley heads towards AG run.

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Posted in Arnold Schwarzenegger, California Economy, California Politics | 5 Comments »

Arnold’s Alliterative Aspirational Adieu Address

Thursday, January 7th, 2010

stateofstate2The best commentary on Governor Schwarzmuscle’s State of the State Address came in the form of Capitol Alert’s word cloud.

Thanks to them, we know that Arnold used at least 31 words beginning with “P,” more than any other letter. For those who missed the SOS – and why wouldn’t you? – here’s the Calbuzz  15-word recap:

Pigs & pony
Persevere & prosper.
Painful priorities,
Prudent policies,
Privatized prisons,
Pension problem.
Patriotism!

The pig & pony show: Except for his opening, an endless and near-incomprehensible tortured metaphor comparing the Legislature to his household pets, the governor’s final SOS was pretty much the same as every other such address ever delivered (OCD memo:  pig and pony intro accounted for 269 of speech’s 2,947 words, or 9.1 percent). Aspirational in tone and theme, it included three mandatory elements: elevated rhetoric about the California Dream, a big heap of self-congratulation and a laundry list of legislative proposals.

The devil, to coin a phrase, is in the details, of course, so the real opening bell of this election-year session won’t come until Friday, when Arnold’s Department of Finance minions release their $20 billion deficit budget, and he runs like hell out of town.

“Every year, in spite of whatever challenges are before us,” he said in the meantime, “I stand up here and tell you how much I believe in California’s future.”

Exactly. In fact, he could have given the same speech back in 2004. Oh wait, he did.

Schwarzenegger 2010Let’s do lunch: The gov made sure to give lawmakers a little love, applauding their approval of education reform (of the small caliber variety), and of water legislation that calls for $11 billion in new bond spending (boosting the state’s annual interest payment obligation, the fastest growing item in the budget). Having invited them all to lunch at the Sutter Club, he tried not to spoil their appetites by dwelling on the unpleasant fact that they’ll once again be taking the deficit out of the hides of California’s least fortunate citizens.

“Which child do we cut? The poor one? The sick one? The uneducated one? The one with special needs?”

How about all of the above, governor?

Now there’s a thought: As for what he wants to accomplish this year, The Terminator’s best ideas were to “protect education,” whatever that means, and to put a higher priority on the UC/CSU/Community College systems than on prisons:

Thirty years ago 10 percent of the general fund went to higher education and 3 percent went to prisons. Today almost 11 percent goes to prisons and 7.5 percent goes to higher education. Spending 45 percent more on prisons than universities is no way to proceed into the future. What does it say about a state that focuses more on prison uniforms than caps and gowns? It simply is not healthy.

No duh.

Two problems with Arnold’s big, blinding insight: 1) His notion for a constitutional amendment to require this policy keeps California locked in the same old ballot box budgeting box that helped get the state in the mess it’s in; 2) why didn’t he think of this earlier?

Most of his other big ideas were based variously on lies, damn lies and statistics:

“The worst is over for the California economy.” Really?

Even if you accept the argument that the recession is technically over, the lack of real economic growth in the form of new jobs, or a decline in the state’s 12.3 percent rate of unemployment, makes the case an empty, statistical claim, as everything from retail sales to real estate is forecast to sag at least until the fourth quarter in California.

“We cannot have a robust recovery while banks are not lending,” said Bill Watkins, our favorite, hard-headed economist. “So, fixing our banks should be our first priority. Unless we do that, we’re just going to muddle along.”

The feds will pay for it. Really?

Schwarzenegger is right to bitch that the state doesn’t get our fair share of federal tax money:

When President Clinton was in office, California got back 94 cents on the dollar from the federal government. Today we get only 78 cents back…This should be more fair and equitable.

Then again, if life was fair, Calbuzz would have big biceps and six-pack abs, too.

Even if the Obama Administration decides to back a too-big-to-fail  sweetheart deal for California, the odds of Congress falling in line in an election year, particularly given growing public concern about the deficit, plus the Anybody But California attitude on Capitol Hill, are slim. Arnold surely didn’t help his case with the White House by launching a surprise attack Wednesday on Democratic health care plans as “a trough of bribes, deals and loopholes.”

The Parsky plan will save us all. Really?conan

The one true outrage in Schwarzenegger’s speech was his demand that the Legislature pass the Parsky Commission proposal for tax reform — some nasty, secretive hide-the-pig-and-pony flapdoodle to which Calbuzz devoted a fair amount of attention.

I sent you the Tax Reform Commission’s plan in late September, but it seems to have disappeared somewhere under this dome. Where is it? Maybe the pig and the pony have taken it.

Or maybe it’s a dog-ass, half-baked, secretly-concocted, serve-the-rich scheme that’s been rightly denounced from every point on the political spectrum, Conan.

Views from the grandstand: Having utterly failed to end deficits or ease gridlock, the two big promises that swept him into office, Arnold is fast running out of time to try to repair his battered image, and it’s not going to help that every candidate for governor will rightfully campaign this year by pointing to him as a fine example of what not to do.

As political scientist Sherry Bebitch Jeffe put it, in a masterpiece of tongue-biting, understated, academic self-restraint:

The best word is ‘disappointing,’ and that’s being very kind. As governor, he’s accomplished little of what he said he wanted to do.

Not so diplomatic was California League of Conservation Voters CEO Warner Chabot., whose comments suggest that environmental issues, including Arnold’s own AB32 plan to reduce greenhouse gas emissions, could prove signficant in the 2010 campaign.

The governor has proposed an outrageous plan to gut California’s landmark environmental protection law with the false hope of job creation. Under his plan, dozens of communities throughout California will lose their constitutional right to question the health and environmental impact of major development projects in their backyard. The notion that we can stimulate our economy by making it easier to pollute the air that we breathe and the water that we drink is just plain false.

Senior Senator Dianne Feinstein joined in, bitch-slapping Schwarzenegger for blaming the feds for California’s problems:

It sounds like the Governor is looking for someone else to blame for California’s budget. California’s budget crisis was created in Sacramento, not Washington. These problems are not going away until there is wholesale reform of the state’s budget process.

Even the enigmatic, not-yet-announced Democratic candidate for governor,  Attorney General Jerry Brown, took a sideways whack at Arnold’s idea to save money by privatizing prisons.

I view with suspicion efforts to take a traditional public sector responsibility, whether it’s in schools or in prisons or maybe even in community health, and turn it over to a profit-making appropriation, particularly when it involves the coercive power of the state.

As a political matter, Schwarzmuscle on Wednesday was speaking, in his Landon Parvin-penned, final State of the State address, to an audience outside the Capitol, not in it.

But with three of four Californians turning thumbs down on his performance, it’s pretty clear they’ve already stopped listening.

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Posted in Arnold Schwarzenegger, California Deficit, California Economy, California Politics, Dianne Feinstein, Environment, Jerry Brown, Parsky Commission | 1 Comment »

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