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Posts Tagged ‘Sinclair Paint Case’



Meyer on Krusty: Why Exactly Did He Want This Job?

Saturday, November 13th, 2010

When Dianne Feinstein called Jerry Brown last winter to confirm what everyone in the world already knew – that she wasn’t going to run for governor, so the Democratic nomination was all his – Krusty responded that he was kind of hoping she would run so he wouldn’t have to.   When we reported the conversation at the time, we said that Brown was half-joking; after Leg Analyst Mac Taylor’s announcement this week that California faces a $25 billion budget deficit, now we’re thinking he wasn’t kidding at all.

As Calbuzzer Tom Meyer, Tim Gunn’s favorite editorial cartoonist,shows this week, the task is made far more difficult by a whole batch of initiatives passed by the state’s self-canceling-minded voters – More services – Less taxes! – not only hardy perennials like Props 13 and 98 but also Props 21, 22 and 26, a new trio of budget straitjackets passed in last week’s election.

Calbuzz is particularly miffed about Prop. 26, which for the first time imposes a two-thirds vote requirement for a whole batch of fees on corporate polluters and the like, because it snuck through with almost no coverage and little notice. As long-time readers know, the measure effectively voids the state Supreme Court’s decision in the Sinclair Paint decision, a business-backed effort that we first blew the whistle on way back when corporate types were trying to weasel it through buried deep inside a “good government” reform package being fronted by California Backward Forward.

As the full implications of Prop. 26 begin to dawn in Sacramento, we confess we’re kicking ourselves now for not screaming to the heavens about it more during the campaign, beyond the excellent Jean Ross piece we ran on its hidden agenda. While we, of course, criticize ourselves severely for the oversight, a full investigation by our Division of Corporate Responsibility and It Didn’t Happen On Our Shift Unaccountability absolves us from responsiblity and concludes that now it’s Krusty’s problem, not ours.

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Mac’s World: Here are Calbuzz Washington Correspondent Mackenzie Weinger’s latest whip counts and doped-out updates on the California House delegation amid the fierce maneuvering that has followed the Republican skunking of the Democrats in the mid-terms:

Despite her stated intention to remain her party’s leader in the 112th Congress, soon-to-be former Speaker Nancy Pelosi faces mounting opposition within the Democratic caucus.

As of November 12, 18 Democrats — including one Californian, Rep. Jim Costa (who declared victory this week, although votes are still being counted in the 20th CD) have said they will oppose Pelosi in her quest to become House Minority Leader. In the contest to become House Minority Whip, Majority Leader Steny Hoyer (D-MD) is leading Majority Whip James Clyburn (D-SC) with 51 public backers to Clyburn’s 13.

(Update: The New York Times, quoting unnamed Democratic sources, is now reporting that the Hoyer-Clyburn fight has been resolved, and that the South Carolinian will accept a newly created #3 post in the caucus).

Among Clyburn’s backers is Rep. Xavier Becerra of L.A., a rising star in the party. He currently serves as vice chair of the Democratic Caucus and is angling to stay in that position, announcing his intentionto stay in leadership in a November 5 letter to fellow Democrats: “As your Vice Chair in the 111th Congress, I have devoted my energy and resources to pass our Democratic agenda…. In the coming days, I hope you will give me the opportunity to speak to you personally about my candidacy for Vice Chair.”

At the start of the week, there was discussion of possibly moving each leader below minority whip down a spot amid the Hoyer-Clyburn contest,; that would have left Becerra out of luck for his vice chairmanship. But the new Democratic Caucus election schedule for next Wednesday ends with the minority whip race, meaning leadership posts lower down the food chain should  be settled, protecting the currently unopposed Becerra.

The other Californians supporting Clyburn are Rep. Lynn Woolsey (D-CA), co-chair of the Congressional Progressive Caucus, as well as Reps. Barbara Lee and Grace Napolitano. Hoyer’s California backing comes from Reps. Joe Baca, Howard Berman, Lois Capps, Dennis Cardoza, Sam Farr, Bob Filner, John Garamendi, Jane Harman, Lucille Roybal-Allard, Linda Sanchez, Adam Schiff, Brad Sherman, Jackie Speier and Henry Waxman.

Across the aisle as members of the new majority party, several California Republicans appear set to become major power brokers in the 112th Congress. Rep. Kevin McCarthy (R-CA) is currently unopposed for House Majority Whip.

Among House committees, a batch of state GOPers are in line or vying for important chair positions: Rep. Dan Lungren, House Administration, Rep. Buck McKeon, Armed Services, Rep. Jerry Lewis, Appropriations, Rep. Darrell Issa, Oversight and Government Reform; Rep. David Dreier, Rules and Rep. Ed Royce, Financial Services.

Lewis, who served as the Appropriations chair in the 109th Congress, faces a challenge from Rep. Hal Rogers of Kentucky, another veteran on the panel. And Royce is vying against Rep. Spencer Bachus (R-AL), the current ranking minority member, for the top spot on the Financial Services committee.

With the GOP’s gains, of course, a number of California Democrats have lost powerful committee chairmanships: Rep. George Miller, Education and Labor; Rep. Henry Waxman,  Energy and Commerce;, Rep. Howard Berman, Foreign Affairs: Rep. Bob Filner, Veterans’ Affairs and Rep. Zoe Lofgren, Standards of Official Conduct.

In other California congressional news, Dreier, McKeon and Rep. John Campbell are now in DC as part of the GOP majority transition team. And, along with Costa, who claimed victory over Republican Andy Vidak, Democrat Jerry McNerney in the 11th district also crowned himself a winner, in his close race against Republican David Harmer. Neither Vidak nor Harmer have conceded.

ABC – Always Believe Calbuzz: There were many doubters among the Calbuzz cognoscenti – some of them on our own staff! – who whispered darkly that in the midst of the worst recession in decades, we were totally nuts to keep yammering on about the importance of Prop. 23, which sought to suspend California’s landmark climate change legislation. This just in: the “No” on Prop. 23 campaign wracked up more votes – 5,416,385 at press time – than any candidate or other initiative, yay or nay, on the statewide ballot.

In other toldja’ news, the record will show that the Calbuzz Sports Desk focused its reporting from spring training on the Giants vs. Rangers, the match-up that made it into the World Series. Sometimes we amaze even ourselves.

Why Prop 26 is the Polluters Protection Act of 2010

Monday, October 4th, 2010

By Jean Ross
Special to Calbuzz

One of the least publicized measures appearing on the Nov. 2 ballot is one of the most mind-numbing but nevertheless one of the most important issues voters will decide.

Proposition 26 makes two major changes to the state’s constitution. First, it ­redefines some types of “fees” as “taxes,” thereby requiring two-thirds, rather than a majority, vote of the Legislature to increase or enact a fee at the state level. And it requires a vote of the people, rather than an action of a governing body, at the local level.

The debate over what’s a tax and what’s a fee is one of those “only in California” issues that dates back to Proposition 13 and its limitations on the Legislature’s ability to raise a tax and its subsequent requirement that local governments seek voter approval in order to impose or raise a tax.

Opponents of Proposition 26 have christened it the “Polluter Protection Act,” since the fees at issue are primarily those that regulate, mitigate and otherwise respond to environmental, health, and other social impacts of products and services. In other words, businesses seeking to avoid financial responsibility for the “externalities” of the products that they sell. Proposition 26 would not, in contrast, apply to fees paid by “ordinary Californians” such as community college and state park entry fees.

Proposition 26 is aimed at overturning a unanimous 1997 California Supreme Court decision in  Sinclair Paint Company v. Board of Equalization. The Sinclair decision upheld the constitutionality of a fee imposed on paint producers to defray the cost of services for children at risk of poisoning from lead-based paint.

The court found that such fees were regulatory fees – not taxes — and could be imposed by a majority vote. Sinclair built on the logic of a prior appellate court ruling that ruled that, “A reasonable way to achieve Proposition 13’s goal of tax relief is to shift the costs of controlling stationary sources of pollution from the tax-paying public to the pollution-causing industries themselves.”

Conversely, if the state can’t impose the fees on “pollution-causing industries” to recoup the cost of environmental monitoring and remediation, those costs will be shifted to taxpayers as a whole. Or, in an era where budget crises have become the status quo, programs that enforce environmental, food safety and other laws will be scaled back, if not eliminated. Which may be the true goal of the backers of Proposition 26.

If all of this wasn’t enough, Proposition 26 would also impose a two-thirds vote requirement for approval of “Any change in state statute which results in any taxpayer paying a higher tax.”

This is a subtle but important change from the state’s existing two-thirds requirement for any “changes in state taxes enacted for the purpose of increasing revenues.” It means that a bill that closed an obscure and ineffective corporate tax loophole, while lowering taxes for, say, all personal income taxpayers, would require a two-thirds vote.

More troubling, the language is sufficiently vague as to potentially allow a handful of lawmakers to block any bill, not just a tax bill that required anyone to pay a higher tax. How might this work? Think about future increases in the state’s minimum wage that increased the tax bill for low-wage workers or, at the higher end of the income distribution, an increase in Medi-Cal payments to physicians that also translate into higher incomes and income tax liability. Or seismic safety laws that require the purchase of sales-taxable building materials. You get the picture.

Because the “any taxpayer who pays a higher tax” provision is retroactive to January 1, 2010, Proposition 26 would also blow a $1 billion bigger hole in this and future years’ budgets by repealing a carefully crafted, revenue neutral “fuel tax swap” approved by the legislature earlier this year that was designed to give the state greater flexibility to use existing tax dollars to help close the budget gap absent subsequent two-thirds approval by the legislature.

The bottom line: Proposition 26 would take away one of the few remaining budget-balancing  tools from state and local governments, allow polluters and their allies to shift the cost of monitoring and remediating environmental and other hazards to the general public, make it even tougher to get rid of special interest tax breaks, and open the door to even more supermajority gridlock.

Voters got it right in 2000 when they defeated a similar measure 48-52%. Californians should tell the backers of Proposition 26 that the second time around isn’t a charm.

Jean Ross is the executive director of the California Budget Project

California Reform Movement 2010: R.I.P.

Wednesday, February 24th, 2010

Calbuzz is way overdue for a rant about the rich irony of the once-promising reform campaign to convene a state constitutional convention ignobly sinking because of…a lack of money.

Really?

The last time we checked, the membership of the Bay Area Council, the corporate coalition whose staff leadership got the ConCon effort started in the first place, included: Amgen, AT&T, BofA, Blue Shield, Chevron, Comcast, Del Monte, Franklin Templeton Investments, Genentech, Goldman-Sachs, Hewlett-Packard, Kaiser Foundation Health Plan, Levi-Strauss, Oracle, Pacific Gas & Electric, Shell Oil, T-Mobile, Verizon Wireless and Wells Fargo, along with more than 200 other of the most successful companies with operations or outposts in the Bay Area.

And so: The effort to qualify for the ballot the group’s signature issue foundered because it couldn’t raise more than a measly $3 million for the campaign? Come on. These guys make Gordon Gekko look like Mother Teresa.

The plain fact is that if the high-end companies that populate the council wanted the convention to go, it would have gone. Instead they slammed shut their wallets, the clearest evidence there could be that they don’t want major reform, because they already know how to navigate the twisted, dysfunctional, Byzantine, gridlocked system just the way it is; unlike average citizens, they can penetrate it with mega-bucks campaign contributions and initiative campaigns.

Exhibit A: PG&E. The Pacific Greed and Extortion Co. will spend up to $35 million on its special interest Prop. 16 on the June ballot. The measure would block cities and counties from going into the public power business without a two-thirds local vote. As Chronicler David Baker reported :

So far, PG&E has supplied all of the proposition campaign’s funding, totaling $6.5 million. On Friday, PG&E took the unusual step of telling its investors that funding for the campaign would affect the company’s 2010 profits, lowering them by 6 to 9 cents per share. PG&E Corp. provided the information while reporting its 2009 profit ($1.22 billion, down from $1.34 billion in 2008) and giving its forecast for 2010.

PG&E describes the ballot initiative as a matter of fairness.

Fairness, indeed.

Our sources inside the Bay Area Council and its “Repair California” political wing note that member companies are also holding back their cash in preparation, as one put it, “for a nuclear arms race in November.”

They’re worried about at least two measures to split the property tax roll to allow higher taxes on business properties, an oil extraction tax, limitations on insurance rates, repeal of Proposition 13′s two-thirds requirement for local tax increases and the potential to overturn AB 32′s climate change provisions. And that’s just for starters.

California Backward: So pathetic are current prospects that Repair California is seriously considering throwing in with the California Forward folks and creating some kind of alliance or united front for reform, even if they have to drop their proposal to actually call a constitutional convention and just push the measure that would authorize voters to call a convention.

California Forward, that other paragon of reform circa 2009, is meanwhile dying a somewhat slower death. The incrementalist sponsors of this once-ballyhooed goo-goo group  are also having trouble, um, raising money – to campaign for two proposed initiatives.

Excuse us if the Calbuzz Paranoid Caucus entertains the notion that what you like to call your  Corporate Interests lost interest in this sucker the minute we blew the whistle on Cal Forward’s backroom attempt to dump the Sinclair Paint exemption, which would allow a majority of the Legislature to raise revenue by imposing mitigation fees on business.

Much of what’s left in one of the Cal Forward measures is spinach-and-broccoli good government stuff like performance-based budgeting, while the other tracks a similar initiative sponsored by the League of California Cities. The one element well worth saving in the Cal Forward soup is authorizing communities to raise the local tax by 1 cent with a majority of the people — which is NOT in the League’s “Keep Your Mitts Off Our Budgets” measure.

Some of the Cal Forward folks — most of whom have been totally feckless at raising money — think they can still get a) a billionaire angel to be named later to fund their ballot measures or b) a two-thirds vote in the Legislature to put something like their measure on the November ballot that would allow approval of a state budget by a majority vote, instead of the two-thirds required now. FFC. Good luck with that, guys.

Meanwhile, the bottom line on the collapse of the goo-goos was articulated nicely by the L.A. Times edit page:

This election year will bring many promises about bold leadership and new ideas, but there comes a point in most democratic societies at which the machinery gums up and some of the most cherished hallmarks of liberty — campaigning, voting, serving in office — descend into mere ritual. That’s when it’s time to rebuild the machinery.

Or not.

Cal Forward Softens Attack on Legislative Fees

Monday, December 14th, 2009

tornadoCalbuzz triggered a rhubarb  when we noted that deep inside one of California Forward’s budget reform proposals was language – intentionally inserted, we concluded — that would wipe out the Legislature’s ability, granted in 1997’s Sinclair Paint vs. Board of Equalization to raise fees by majority vote.

Granted, this analysis of Cal Forward’s assault on the Sinclair Paint case is some serious weed whacking – far outside our Calbuzz Official Comfort Zone of Political Palaver and Cheap Shots. Since no one else in the, uh, actual press corps appeared ready to take up this significant issue, we figured, ah, what the hell.

Apparently in response to our squawking about the matter, some of Cal Forward’s liberals now have pushed the group to redraft some of the language in the measure. Their proposal still cuts into the Legislature’s ability to raise fees by majority vote — which will still infuriate  progressives — but only when fee revenues would “replace funding for specific programs, services or activities previously funded by a tax that is repealed or reduced in the same or the prior fiscal year.”

Here’s what balgenorthCal Forward’s Bob Balgenorth, President of the State Building and Construction Trades Council of California, wrote to us about their latest effort:

Now there’s even less to fight about.

For months, Calbuzz has cast its ever-skeptical eye on California Forward’s reform proposals – devoting most of its attention to the controversial issue of fees, and the number of votes required to impose them.

Much of what’s proposed in the Best Practices Budget Accountability isn’t contentious. After so many years of turmoil, it’s only common sense to take lessons learned from other states and use them to help California get its budget back on track. But even in the best of times, fees are tricky political turf.

The state’s ongoing budget crisis has only made matters worse. Business interests – the group most often expected to pay – see fees as a tax by another name. Consumers, labor and environmentalists, on the other hand, want fee collections to match the cost of regulation, mitigation and the services government provides.

None of that stopped California Forward from including the fees issue in its deliberations about the common-sense reforms we believe the state urgently needs. After all, if a non-partisan organization like ours couldn’t make the tough calls, who would?

After much debate and discussion, we chose a course that reflects both sound principles and political reality: regulatory fees and those used to mitigate the impacts of projects or charged for services like state park entry will still need a majority vote in the Legislature, but fees imposed to take the place of taxes will now require a 2/3 vote just like the taxes they replaced.

End of controversy? Not hardly. Calbuzz read our proposal differently – and a few others did as well.

We listened.  As a result, this week the California Forward Action Fund amended our budget reform proposal to further clarify the issue while keeping the original balance. You can read our revised proposal here. [It’s a pdf]

Like any change made at this point in the process, the amendment took time and money. But we believe it was worth the effort and expense, if for no other reason than to demonstrate our commitment to pursue these reforms as openly and transparently as possible.

Californians are hungry for the reforms we’ve incorporated into the initiatives we’ll soon be circulating for the November 2010 ballot. But they’re just as eager for leaders who keep their word, even in the face of criticism and controversy. At California Forward, we’re committed to both.

Now, you may ask yourself, “WTF is this all about?” And who could blame you? But, if you care about the Legislature’s authority to raise revenues – a subject we at Calbuzz deeply, emotionally and psychologically, if not religiously, think is pretty damned important, then it matters.sinclairpaint

Back in 1997, when the California Supremes decided the Sinclair Paint case, one of the guys who argued on behalf of the Western States Petroleum Association, Western Independent Refiners Association, California Manufacturers Association, California Chamber of Commerce and California Taxpayers’ Association — what you might loosely call your business interests – was Richard E. Nielsen, of counsel at Pillsbury Winthrop Shaw Pittman in San Francisco. He was a former Deputy Attorney General with the Tax Division of the California DOJ and a former tax auditor with the California State Board of Equalization.

nielsen“The Supreme Court stated that all regulatory fees are necessarily aimed at raising revenue to defray the cost of the regulatory program in question, but that fact does not automatically render those fees taxes,” Nielsen wrote.

“Over $45 million in fees have been collected under the Act,” Nielsen concluded. “The potential impact of Sinclair is tremendous since it is completely dependent upon the Legislature’s propensity to camouflage taxes as fees. Virtually every industry can be found to place some type of burden on society and now the Court has only limited the Legislature’s ability to impose fees on those industries within the bounds of its inventiveness.”

This is what anti-tax forces were worried about. Until Calbuzz noted what was going on, Cal Forward was so eager to appease business interests they were prepared to require a two-thirds vote on any fee that would replace “revenue that in the same or the prior fiscal year was generated by a tax” – or, as we saw it, any fee that replaced tax revenues of any sort. When they realized what they’d done, Cal Forward altered this language. Their new proposal would limit which fees that require a two-thirds vote.

Here’s a scenario that explains why the news Cal Forward language is different from the old.

Let’s say the general fund budget for state parks is $130 million and the governor says there’s going to be a 10% cutback across the board, which would mean a cut to the parks budget of $13 million.

But let’s say an enterprising legislator comes up with the idea of a $1 per auto pollution clean-up fee tacked onto all state park entry fees, with the new revenue – which just happens to be $13 million — dedicated to park maintenance and clean-up.

The Sinclair Paint decision makes it perfectly possible for the Legislature to do this with a majority vote.

But under the previous California Forward proposal, that fee increase would have required a two-thirds vote of the Legislature. That’s because the previous proposal said a two-thirds vote was needed for “any bill that imposes a fee that replaces revenue that in the same or the prior fiscal year was generated by a tax.” And since general funds that pay for parks are generated by taxes, the provision would have applied.

The new proposal, however, only requires a two-thirds vote “if the fee is imposed in order to replace funding for specific programs, services or activities previously funded by a tax that is repealed or reduced in the same or the prior fiscal year.”

Instead of being tied to “revenue…generated by a tax” the two-thirds requirement now would be tied to “funding…funded by a tax that is repealed or reduced.” So the new parks pollution clean-up fee – as permitted by Sinclair — could be passed by a majority vote.

You’re getting sleepy…your eyes are getting heavy….