Jerry Brown’s Bad Bet

The governor and legislative Democrats avoided truly drastic budget cuts by banking on the economy recovering in 2011.

When Governor Jerry Brown and legislative Democrats agreed in late June to an on-time budget, it appeared to be a rare occurrence. Sacramento had become notorious for budget battles that lasted well into late summer or early fall. The problem became so severe that state voters approved an overhaul last November for how budgets are passed in California. However, in recent weeks, it’s become increasingly clear that the governor’s budget wasn’t that unusual after all. Like many deals before it, this year’s pact was based on smoke and mirrors.

A cornerstone of the deal was that it depended heavily on California’s economy rebounding in 2011. And based on the first several months of the year, the prediction didn’t seem that outlandish. Through May, the state had collected $6.6 billion more in tax receipts than it had anticipated.

Brown’s prediction of $4 billion in extra tax revenues in the second half of 2011, in turn, allowed him and the Dems to avoid even deeper cuts to state services than they already had made. In particular, their bet spared K-12 education from the budget axe and avoided the complete shredding of the state’s social safety net. To be fair, Brown and the Dems were partly forced into making the bet when Republicans refused to go along with the governor’s plan to put tax-extension measures on the ballot.

But looking back, it seems clear that Brown and the Dems should have realized that the same Republican intransigence was playing out on the national level in the form of the debt-ceiling crisis. Staunch GOP opposition to closing tax loopholes for big corporations and the wealthy not only had forced Washington into political gridlock, but it had sent the stock market into a tizzy. For a time, it actually looked as if the US government, egged on by Tea Party fanatics, might default on its debts for the first time in history. At the same time, the economy appeared to be stalling, as consumer spending remained flat and unemployment stayed at historically high levels.

Then last Friday, Standard & Poor’s downgraded the nation’s credit rating for long-term debt. Although S&P deserved the sharp criticism it received from the Obama White House for erroneously overstating the nation’s debt problem by $2 trillion, the ratings company’s other rationale for the downgrade had a ring of truth to it: The US government, because of political wrangling in Washington, could no longer be completely trusted to pay its debts. S&P specifically pointed out the opposition to raising tax revenues, and even though it didn’t identify the Republican Party by name, it was clear that it was laying blame, at least partially, at the feet of the GOP.

Consequently, an economic recovery, whether nationwide or in California, now seems remote. Indeed, many economists are predicting that the chances of a double-dip recession have risen substantially, and now stand at about 35 to 40 percent, particularly in light of Washington’s misplaced focus on the debt rather than on jobs. Consequently, Brown and the Democrats’ prediction now looks foolish. Brown’s “revenue projections were silly before,” Chris Thornberg, founding principal at Beacon Economics, a Los Angeles consulting group, told the Contra Costa Times. “It was always unrealistic, and now it’s just that much less realistic.”

As a result, it now seems obvious that come January, the governor and state Democratic leaders will have to further devastate public education in California. Some analysts are predicting that the California school year, already much shorter than many other nations, will shrink further to just 168 days of instruction, down from 180 just a few years ago.

Two Oakland public charter schools, however, appear to have little to worry about, thanks to Brown. In fact, statewide budget cuts may have little impact on the governor’s arts and military schools here. Why? The Los Angeles Times reported that Brown has raised an astonishing $2.5 million for his schools in the first half of this year, soliciting donations from many special interests groups that have business with the state. Both Indian-gaming casinos and card clubs, for example, have pumped at least $290,000 into the schools in 2011 as they battle over the future of online gambling in California.

Brown, of course, claims that there is no quid pro quo — that he is not soliciting big bucks for his two pet charter schools in exchange for political favors. He said the same thing earlier this year about the sweetheart deal he hammered out with the state’s prison guards’ union after it spent $3 million last year getting him elected. Last week, the Sacramento Bee reported that the sweetheart deal was even sweeter than previously noted. One of its provisions, for example, allows hundreds of guards to party this weekend in Las Vegas on the taxpayers’ dime. The partying is expected to cost California about $400,000 and was included in the guards’ union contract under the euphemism “activist release time.”

Brown on Beer and Signatures

The governor, however, appears to have made at least one good move last week. He signed into law a bill that will make it easier for breweries to offer tastings to the public, the San Diego Union-Tribune reported. The new law exempts breweries that don’t serve food from strict health code requirements imposed on restaurants. Wineries have enjoyed a similar exemption since 1985.

Brown also signed a bill that makes it illegal for companies to sell beer infused with caffeine, the LA Times reported. The new law came in response to several high-profile incidents in which young drinkers were hospitalized after drinking caffeinated beer drinks.

And Brown vetoed a bill sponsored by East Bay legislator Ellen Corbett that would have made it illegal to pay ballot-measure-petition-signature gatherers by the signature, the Oakland Tribune and San Francisco Chronicle reported. Advocates of the bill argued that paying per signature induces signature gatherers to lie. But Brown said the bill, which would have required that signature gatherers be paid by the hour or day, would have driven up the cost of putting measures on the ballot.

Three-Dot Roundup

Oakland set a city record for National Night Out, as residents hosted about 560 block parties on the evening of August 2. … Oakland Police Chief Anthony Batts and Mayor Jean Quan announced that the city is immediately rehiring 24 of the cops laid off last summer, plus eight more later this year. … East Bay state Senator Mark DeSaulnier is demanding a probe into the legality of a plan by MTC to leave Oakland and use bridge tolls to buy an old post office building in San Francisco. … And has already pumped $3 million into a proposed ballot measure that would allow it not to collect sales taxes from its customers.

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