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Posts Tagged ‘Bill Watkins’



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.

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.

Swap Meet: Keeley Blows Whistle on Parsky

Saturday, December 19th, 2009

keeleytestifyingYou may recall the much vaunted, blue ribbon, bi-partisan panel called the Commission on the 21st Century Economy, that Gov. Schwarzmuscle and the Legislature appointed to study California’s tax structure and propose ways to modernize and stabilize the system.

Under the leadership of Schwarzpal Gerald Parsky, the commission was supposed to be transparent, above-board and dedicated to truth, justice and the American way.

Sacramento shocker: That turned out to be a load of crap. Instead of delivering on any of its promises, the commission got itself entangled in a goofy proposal for a business net receipts tax – a quasi,  value-added levy meant to replace the sales tax.

Although an excellent cure for insomnia, the proposal was not only breathtakingly complex, but also had exactly zero political chance of ever being enacted. So we often wondered: where exactly did this idea originate?

The mystery was solved last Wednesday (while the Calbuzz Department of Tax Policy and Coupon Clipping was on a fact-finding mission to Puerto Vallarta), when Parsky and commission member Fred Keeley testified at the Senate Revenue and Taxation Committee.

Asked directly where the BNRT came from, Santa Cruz County Treasurer Keeley answered:

That decision was made by the chair, who apparently entered into a contract somehow with Ernst and Young to produce a fully-formed BNRT without any consultation with the commission and then present it and then suck all of the oxygen out of the room for any discussion.

As far as we can tell, no one on the commission was ever asked to approve the $185,400 paid to Ernst and Young to craft the proposal. It seems neither members of the commission nor the public even knew about Parsky’s secret and apparently unauthorized contract.

What a bloody waste of peoples’ time, energy and commitment. And, oh yeah, taxpayer’s money.

EmergDanger-Steep-Cliff-Sign-131129ency health warning: Those afflicted with Seasonal Affect Disorder are advised to avoid close readings of Dan Walters’ column through the holidays, in order to avoid risk of hurling themselves from the roofs of tall buildings.

In several recent scary columns, Walters has hammered away at the  dangers posed by the ever-increasing size of the fiscal nut California must meet for interest payments on its borrowing, noting that the annual cost for the vig on general obligation bonds alone now runs about $6 billion a year, or about the size of the current year deficit, conveniently enough.

On Friday, the Big Fella let fly with a real Old Testament-level jeremiad, which had Calbuzz reaching for the hemlock, until we gulped down another cup of spiked coffee:

So we’re squandering our limited debt capacity on nonessential things such as stem cell research and bullet trains while our existing infrastructure is crumbling, demand from an increasing population grows, politicians’ credibility is almost nil, and bankers deservedly treat us like a Third World country.

Ouch.

billwatkins

Teaming up with economist and sometime Calbuzzer Bill Watkins, Walters also triggered a mid-week Capitol kerfuffle when he reported on a new forecast by Watkins and his team at California Lutheran University that suggested scenarios whereby the state could default on its debt obligations.

That loud noise you heard next was the sound of Bill Lockyer’s head exploding. Within hours of Walters’ blog post, Treasurer Bill and outgoing Department of Finance chief Mike Genest both went nuts denying and denouncing  the very thought of a default.

Lockyer’s spokesman, Tom Dresslar, said in a statement that Watkins’ commentary “was nothing more than irresponsible fear-mongering with no basis in reality, only roots in ignorance.”

Dresslar noted that the state Constitution mandates that tax revenue go first to pay education expenses and second for debt repayment. All other expenses come after debt service.

“After paying lockyerfor education, the General Fund has tens of billions of dollars left to pay debt service,” Dresslar said. “Even at historically high levels, debt service does not come remotely close to needing all the funds left over after schools get paid.”

We’ll leave it to greater minds than ours to sort through the fiscal and constitutional issues embedded in the exchange, although we do admire the sang-froid and snark with which Watkins answered the caterwauling of California’s ranking financial gurus.

“There is also a constitutional requirement to have a balanced budget by every June 30,” he said.

Today’s sign the end of civilization is near: Anchorwoman gets the giggles as husband chops wife into teeny little pieces.

Why Arnold’s “Legacy” Claim is a Fraud

Monday, July 27th, 2009

arnoldcigarThe day before the Legislature passed the third patchwork version of California’s budget in 10 months, Gov. Schwarzenegger took to “Flashreport,” the state’s leading conservative web site, to claim “a huge win.”

“(T)he biggest winner to emerge from our negotiations is California,” the governor bragged, “our state’s legacy, its priorities, and its budget stability.”

Wrong, wrong, wrong!!

Schwarzenegger’s triumphalist braying was little more than a one-step-ahead-of-the-posse exercise in spin control, a pathetically transparent bid to establish a positive narrative for the budget disaster over which he’s presided, in hopes that voters and his suck-up pals in the national media will buy his story without bothering to check it out.

(NOTE TO NATIONAL POLITICAL WRITERS: Schwarzenegger did NOT solve or stabilize California’s budget. Despite his assertion to the contrary, his budget – passed in February and now revised twice – actually RAISED TAXES by $12.5 BILLION. With the latest revision, he threw off enough ballast to keep his hot air balloon afloat but in no particular direction.)

As Fred Keeley, the elected treasurer of Santa Cruz County, put it:

“The governor set the standard when he said, at the start of the process, that this needs to be a complete solution. And then he violated his own standard by signing a budget which doesn’t solve the problem this year or next year and in fact, according to the Legislative Analyst and the Department of Finance, is going to create a multi-billion-dollar deficit next year.”

Keeley knows wherearnoldbuckof he speaks. He served on the Assembly Budget Committee for six years, was asked by former Gov. Gray Davis to be Finance Director and is a Senate appointee to the Governor’s 21st Century Commission on the Economy.

In truth, Arnold’s entire tenure has been one continuous failure of leadership. This is just the latest chapter.

From his first days in office (when he sowed the seeds of today’s never-ending fiscal crisis by his irresponsible cut in the vehicle license fee) to his ill-considered $15 billion borrowing bond (which helped make interest payments the fastest growing item in the budget) and his current shameful spending plan (which gives the University of California a major push into mediocrity while continuing the slow death of K-12 education and punishing the aged, blind and disabled), he has been little more than a narcissistic, tone-deaf poseur, surrounded by sycophants and devoid of principle or conviction.

At a time when the state’s economy is hemorrhaging, its schools failing and roads crumbling, Schwarzenegger has been utterly ineffective in explaining to Californians the reasons behind the problems we face, and even less so in proposing innovative solutions to any of them. His little touchdown dance about the current budget belies the painful truth that this is nothing but a stop-gap maneuver designed to escape the embarrassment of issuing IOUs and con the credit markets into a few months of cash to ease the state’s borrowing jones.

Schwarzenegger’s soaring claims about the wonders worked by his budget fail on three grounds:

1. It’s a short term fix. Amid all the high-fives and chest bumps in the governor’s circle, it’s important to recall that the latest budget plan comes just five months after the last one, which came only five months before the previous. In other words, California has had three budgets in less than a year and, given current revenue trends, it’s all but certain that Arnold and the gang will be back in the fall for yet another round of all-nighters. Filled with gimmicks, borrowing and Grand Theft from schools and local government, the “huge win” for California being trumpeted by Schwarzenegger is nothing but more of the same old same old.

2. It does nothing to address the state’s dysfunction. As Calbuzz has reported the ongoing budget mess is a symptom of a far more fundamental disorder – a state of permanent ideological gridlock shaped by term limits, gerrymandering and three decades worth of wrong-headed initiatives. The latest “drama” over the budget is just another re-run of Groundhog Day, and it will keep re-playing and replaying until the pols in the Capitol acknowledge and accept the need for fundamental reforms, and find the cojones and the political skill to sell them to their constituents across the state.

3. It will probably make things worse. While it is true that the state for years has had a structural deficit, caused by the governor and the Legislature’s effort to defy the laws of arithmetic, it is also true that the huge magnitude of the current deficit is overwhelmingly caused by the current recession, which slashed state revenues by nearly one-third in one year, reducing tax collections to the level of a decade ago. The bursting of the real estate bubble, and the structural decline of the economy that has followed it has put the entire state economy into treacherous territory that may yet turn into a full-blown depression.

Under these conditions, there’s a strong argument to be made that wholesale cuts that the budget delivers will make the recession more punishing: as layoffs of public employee push the unemployment rate higher, furloughed state workers spend less, as all the programs set up to help with those who fall on hard economic times are cut back at the very moment they’re needed most.

As Calbuzz reported about the latest forecast by California economist Bill Watkins: “California’s budget issues are likely to be made worse by continuing economic decline. Perversely, the budget then negatively feeds back into the economy. The problem is not likely to see relief, at least in terms of increased revenues, before late 2011.”

5 Questions: What Budget Mess Means for California’s Private Sector

Saturday, March 28th, 2009

Bill Watkins, PhD, is an economist who served at the Board of Governors of the Federal Reserve System before becoming executive director of the Economic Forecast Project at the University of California Santa Barbara in 2000. He and his team recently accepted an offer from California Lutheran University in Thousand Oaks to expand CLU’s economic forecast program and launch a graduate program in economic analysis and forecasting. We caught up with him during his transition to ask him about the real-world impacts of the state’s budget meltdown.

Calbuzz: As a practical matter, what difference does the budget mess in Sacramento make to private sector businesses in California?

Bill Watkins: Unfortunately, the budget is pro-cyclical and reinforces the economic decline. That is, as the economy declines, government spending is declining and taxes are increasing. This is the exact opposite of an economic development program. The other issue is that until there is a permanent solution to the budget, businesses’ future tax environment is uncertain. Since businesses avoid uncertainty that is just another reason businesses may not invest in California.

CB: What is the fallout from cuts in education on the private sector?

BW: California’s schools, including higher education institutions, will shrink, decline in quality, or do both. The decline in education will negatively feedback to economic activity.

CB: What about the tax increases in the budget deal?

BW: Tax increases always increase cost and decrease the volume. The retail tax is particularly questionable given the multi-year decline in retail sales, the ease of purchasing out of state, and the ascendancy of the internet.

CB: The governor and legislative leaders cast the February budget agreement as a momentous step in turning around state government’s long-running financial woes. What’s your view?

BW: After years of financial mismanagement, California’s government is finally being forced to confront its structural deficit. The plan completed in February was inadequate. While some hard decisions were made, the Governor and Legislature still resorted to bailout funds, borrowing and rosy projections. It was recently announced that we have another $8 billion problem, and the ink hadn’t dried on the most recent budget.

CB: Bottom line?

BW: Most economists would agree that cutting state spending and increasing taxes in a deep recession is not a prescription for stimulating economic growth. Quite the contrary, it is a prescription to slow growth. California is compounding the problem. Tax increases and spending cuts were unavoidable after years of profligate fiscal policy. Imposing new regulations that make California increasingly uncompetitive with other states is not necessary. However, California is proceeding to implement increasingly onerous regulations on business. The result will be a very weak economy for years, perhaps decades.