California Budget

Why Muni won’t earn a dime off the tech buses

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Every day mammoth private buses squeeze into San Francisco public bus stops, and every day they contribute to the delay of countless Muni buses. Riders walk around the Google, Apple and Genentech luxury rides and into the street to board their grimy, underfunded public transit system. 

Now finally, the mayor has announced the near-approaching implementation of a pilot program to permit and regulate the tech industry’s private coaches. If approved by a vote from the SFMTA Board of Directors on Jan. 21, the pilot will begin. The only catch is, though they’ll charge those companies for the cost of implementing the program, the San Francisco Municipal Transportation Agency won’t make any money off of the tech shuttles.

The chronically underfunded Muni won’t get a lift from Google. Yesterday (Mon/6) we finally got an explanation as to why.

On the 8th floor of the SFMTA offices, the transit agency’s director Ed Reiskin told reporters that his hands were tied by California Proposition 218, which limits what new revenue municipalities can raise without voter approval.

“Only the voters of San Francisco can enact a tax that generates excess revenue,” he said. 

“This isn’t new,” Reiskin said, but he’s only half right. Though Prop. 218 was passed in 1996, this is the first time anyone at the MTA has touted it as a reason not to profit off of the tech shuttles.

We even asked Mayor Ed Lee this question just a month ago, and got a two-minute response that did not once include Prop. 218

Part of this might have to do with the nebulous quality of Prop. 218. An implementation guide from the California Budget Analyst office puts it this way: “Proposition 218’s requirements span a large spectrum, including local initiatives, water standby charges, legal standards of proof, election procedures, and the calculation and use of sewer assessment revenues. Although the measure is quite detailed in many respects, some important provisions are not completely clear.”

The waters of Proposition 218 are murky: is the government charging for the use of Muni stops a fee or a tax? In that grey area lies the answer on whether the city truly can’t charge tech buses to help fix Muni, or if this is just political cover for a government who doesn’t want to piss off tech.

Tellingly, that’s pretty much what Reiskin said.

“There’s a lot of benefit these services (buses) are bringing to San Francisco,” Reiskin told us after the press conference. “We wanted to resolve the conflicts without killing the benefit.”

“I imagine if we sat down with them and said ‘we wanna start taxing you guys’ they’d say ‘screw it, we don’t want to do the shuttles.’”

The 18-month pilot will recoup an estimated $1.5 million, the estimated cost of the project, according to the SFMTA. The project would give approval for use of 200 Muni stops by private shutle providers, out of 2,500 Muni stops in the system. We’ve reached out to California’s budget analyst office to dig into Proposition 218. 

 

What jobs?

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For all its shiny gadgets and gleaming new luxury condo towers, San Francisco nevertheless houses a huge demographic that lives at or below poverty.

Officially, it affects about 12 percent of the city’s population, according to the most recent US Census data. Experts from the Stanford Center on Poverty and Inequality calculated an adjusted poverty figure to capture a more accurate portrait of economic disadvantage. According to that alternative yardstick, which factors in location-based costs such as the price of housing, a full 23.4 percent of San Franciscans live in poverty.

City agencies have documented ethnic identities, languages, neighborhoods of residence, and other data concerning poor people who seek assistance through city-administered services. But even though millions of dollars have flowed through city coffers to boost prospects for those who lack steady work, there’s scant documentation showing what this has actually achieved.

Despite budgeted expenditures totaling nearly $70 million for workforce development in 2013-14, not a single San Francisco city official can say how many individuals managed to rise above poverty as a result.

 

FIVE YEARS, NO IMPROVEMENT

At the behest of Board of Supervisors President David Chiu, the city’s Budget & Legislative Analyst recently analyzed the city’s myriad workforce development programs. It found that there is no standard measure to track the results of the programs, which are administered across 14 city departments.

The analysts recommended convening a committee to get a handle on it, “so there would be somebody accountable for compiling that information,” noted Severin Campbell, a principal at city budget analyst Harvey Rose Associates.

The analysis was a follow-up to a similar audit performed in 2007. The previous study concluded that the system to help struggling people obtain job skills and get hired “was fragmented, with inconsistent planning and coordination of resources and inadequate monitoring of programs to ensure that the programs’ goals and outcomes were achieved.”

Analysts who examined the workforce development system in 2007 discovered a lack of evidence that “individuals receiving services were eventually placed into jobs leading to economic self-sufficiency.”

To cure this dysfunction, the Board of Supervisors formulated a plan. In November 2007, it created Administrative Code Section 30, a new policy centralizing oversight of all workforce development initiatives under the Office of Economic and Workforce Development, overseen by the Mayor’s Office.

In 2007, OEWD’s annual budget for its workforce division was $547,841. By 2012-13, that amount had swelled to $19.3 million. The federal government contributes a lot, but citywide, about 65 percent of workforce development spending comes from local funds.

“Since 2007, the city has worked hard to incorporate the recommendations that came from the audit,” OEWD spokesperson Gloria Chan told the Bay Guardian earlier this year. She said the workforce division of OEWD “has made significant strides and progress to improve the city’s workforce system.”

But the latest Budget & Legislative Analyst report tells a different story. “The city continues to lack citywide policy and oversight of its workforce development system,” it notes. “Many of the key provisions of Administrative Code Section 30 have not been implemented.”

Five years have passed, and little seems to have changed. “We didn’t find a broken system,” Campbell said, “but it wasn’t what the city had envisioned.”

The report noted that the shortcomings could be partially attributed to constraints on funding provided by outside entities like the federal government, making collaboration among departments difficult.

Nevertheless, the lack of a cohesive citywide workforce development strategy coincided with one of the worst economic downturns in US history. While certain sectors have experienced recovery by now, many low-income San Franciscans are still grappling with losses sustained during the Great Recession.

A recent survey of panhandlers, commissioned by Union Square business owners, found that the majority were homeless individuals who said they didn’t have jobs, and thus couldn’t afford rent. Some apparently interpreted these findings as a revelation; the survey results were recently spotlighted on the front page of the San Francisco Chronicle.

 

LOOKING FORWARD TO WHAT?

Tiffany Green is one of the 10,883 clients served by San Francisco’s workforce development system in 2012-13. She’d previously worked at the security desk of a Tenderloin services provider, but left that job because she couldn’t find anyone to look after her young son during her shifts — and the job didn’t pay enough to cover child care costs.

So she enrolled in CalWORKS, a state program administered by the city’s Human Services Agency, which offers subsidized child care, food stamps, and cash aid for low-income parents while they complete six-month job training gigs with employers who have partnerships with the city.

She was less than optimistic when asked if she thought it would lead to a steady job. “The outcome is going to be everybody else’s outcome, which is nothing to look forward to,” she said, adding that for all her friends and family members who’d completed similar six-month job training programs, she didn’t know of any who’d landed full-time jobs as a direct result.

Karl Kramer, director of the San Francisco Living Wage Coalition, said his organization has been working with city agencies to build pathways to help participants in the programs connect with opportunities for full-time employment in civil service positions.

His organization is pushing for legislation to reform one of those initiatives, the Community Jobs Program, “to make it a real job training program that fast tracks participants into available entry-level city jobs. The reports that we get is, for people who have been through the programs, it leads to very few full-time jobs,” Kramer said. So far, his group hasn’t gotten much traction with city officials.

Steve Arcelona, deputy director in charge of Economic Support and Self-Sufficiency at the Human Services Agency, didn’t respond to multiple voicemails seeking comment.

 

UNEVEN RECOVERY

The report comes at an odd time — in San Francisco’s current economic climate, new jobs are being created all the time, and the unemployment rate has declined. But experts note that recovery has been uneven, and only certain sectors have reason to be optimistic about the future.

“The San Francisco region is doing better than most,” Chris Haney, executive director of the California Budget Project, told us.

The city boasts a rise in “high-scale, high-production, better paying jobs” in the flourishing tech sector, accompanied by a rise in “lower-paying service jobs,” he said. “But we’re not seeing a tremendous amount of growth in the middle class, middle paying categories.”

The dilemma follows a broader trend of wage inequality that’s persisted over the last couple decades, he added, giving rise to what economists have dubbed the “missing middle.” A decline in the unemployment rate can mask this dysfunction, he said, because “you may have folks who are employed, but they’re employed at lower wages than before … What’s coming back isn’t as solid as it was previously.”

It’s against this precarious backdrop that, despite $70 million dedicated to connecting the low-income or disadvantaged with decent jobs over the past year, the city’s workforce development system appears to be plagued by dysfunction. Chiu recently introduced legislation to implement the Budget Analyst’s recommendations of undertaking yet another system overhaul.

But for many still struggling to get by, few short-term solutions are in sight. Ever-increasing housing costs make the “missing middle” phenomenon especially thorny in the Bay Area, Haney noted. “It’s harder and harder for low and middle income folks to live in the region,” he said. “They are being given clear signals that they need to move.”

Our freak of a governor

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We all know this, but I have to say it again: Jerry Brown is one strange agent.

His State of the State address was blessedly short: Jer doesn’t waste a lot of time. In fact, a few minutes in, the crowd in the state Assembly chambers was applauding for the second or third time, and he told them to stop; “this is my longest speech and we’re not going to get out of here.” I clocked it, applause and all, at about 16 minutes.

But lordy, lordy, what a crazy amalgam of stuff he packed in. From Montaigne to the Little Engine that Could, the Ten Commandments to Pharoh’s dream about the seven cows, Franklin Roosevelt to Gaspar Portola … all over the map would be a gentle way of describing it.

And that was the political message, too: We can do great things, spend billions on a massive underground peripheral canal and high-speed rail — but we can’t backfill the cuts that are leaving tens of thousands in poverty because we have to live within our means. The mandate for renewable energy is great, but we shouldn’t just keep on passing laws:

Constantly expanding the coercive power of government by adding each year so many minute prescriptions to our already detailed and turgid legal system overshadows other aspects of public service. Individual creativity and direct leadership must also play a part. We do this, not by commanding thou shalt or thou shalt not through a new law but by tapping into the persuasive power that can inspire and organize people. Lay the Ten Commandments next to the California Education code and you will see how far we have diverged in approach and in content from that which forms the basis of our legal system.

Serious, Guv? “Constantly expanding the coervice power of government?” That’s channelling your inner Ronald Reagan, no? Oh, and weren’t you the mayor of Oakland who let the cops do pretty much anything they wanted in the name of public safety — and who is the darling and best pal of the prison guards union? Talk about the coercive power of government. And one of the bills you’ve never supported is Assemblymember Tom Ammiano’s effort to legalize marijuana — eliminating a particularly troubling “coercive power of government” — because you’re worried that we can’t compete with China if everybody’s stoned.

I like high-speed rail, and investing in education, and I agree that there’s too much emphasis on one-size-fits-all standardized tests and measurement tools in the public school system. The school funding formula is, generally, a good idea. And I am utterly on the side of our tightwad leader in the battle to keep tuition from rising at CSU and UC.

So on some of the substance, Brown’s speech made sense. But I’ve been a Jerry watcher for many, many years, and he never ceases to baffle me. I supose that’s part of his point.

Let’s remember: Brown grew up in a wealthy patrician family, and he’s never had to worry about working for a living or finding an affordable place to live. He’s way out of touch with what millions of Californians face every day — and that’s why it’s easy for him to sit up in Sacramento and talk about “living within our means.”

The downside of Jerry Brown’s budget

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The guv is quite proud of his new budget: He’s eliminated the chronic deficits, he’s giving some more money to the schools, and he’s vowing that the state will live “within its means.” Which sounds like no more taxes. And gee, just about everyone in Sacramento is singing Kumbaya; the praise is coming not just from Democrats but from Republicans.

But there’s a downside to the Brown budget: He has, to his credit, stopped the red ink, and he’s presenting things in a brilliant way that makes him look like the grownup the state has needed for many years — but he’s doing very little to replace the the money that services for the poor have lost in the past five years.

“At first blush, it has some good things,” Assemblymember Tom Ammiano told me. “But I don’t see restoration of the cuts for the disenfranchised.”

Ammiano is calling for closing Prop. 13 loopholes and passing an oil severance tax as part of the budget process. And with Democrats holding a two-thirds majority in both houses, those kinds of changes are possible. At the very least, it seems, the progressives ought to demand from Brown a plan to backfill what social service providers have lost. If it can’t all happen this year, it ought to be part of the future budget process.

State Sen. Mark Leno, who chairs the Senate Budget Commitee, was a bit more politic than Ammiano, but he also is concerned that the budget move the state forward:

“With the improvement of our fiscal outlook comes the opportunity to continue our work to restore California. While our recent efforts have focused largely on making cuts in the least harmful manner possible, we will now have more capacity to refine our work to improve essential programs and analyze the role of government and its effectiveness. I look forward to working with Governor Brown and my colleagues in the Legislature to evaluate this year’s budget to help ensure it is the best possible plan for a state on the mend.”

On the mend is right — because the state of California is in way worse shape than it was when Arnold Schwarzenegger took over and screwed things up, and the goal shoudn’t be to keep at a steady state that’s unacceptable. It ought to be returning California to its role as a leader in progressive policy. Sorry, Jerry: A balanced budget alone isn’t good enough.

Oh, and Californians United for a Reponsible Budget, which seeks to cut prison spending, points out that this budget is hardly tough on the bloated corrections budget:

The administration has deserted plans to shrink California’s over-sized prison population, ignoring clear messages from voters. The proposed budget increases prison spending $250 million including a $52 million General Fund increase, bringing the total Corrections budget over $11 billion. Despite the passage of Prop. 36 and continuing realignment,  It also projects an increase in the prison population by 2,262 people over the 2012 Budget Act projections. ”If the Governor believes that ‘we can’t pour more and more dollars down the rat hole of incarceration’ then why is he increasing spending on Corrections, planning for more prisoners rather than fewer and defying the demands of the Federal Court and the voters to further shrink the prison system?” asked Diana Zuñiga, Field Organizer for Californians United for a Responsible Budget.

It’s no surprise that the prison guards’ union is happy.

UPDATE: An analysis by Ammiano’s office shows a few other lowlights of the budget: It reduced AIDS Drug Assistance Program money by $16.9 million. It doesn’t restore any of the deep cuts to the state’s Welfare to Work Program. It cuts community college funding by tying state money to student completion, not student enrollment. It offers no additional funding for child care programs. It caps the number of courses students are allowed to take if they want to receive Cal Grants.

The Leg needs to take a hard look at this before it signs off on all these cuts.

How Jerry Brown got us here

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Jerry Roberts, who has long been among the best political reporters in California, has a nice, detailed piece on CalBuzz about Jerry Brown’s history and legacy — and how California got into the mess that the Guv is trying to get us out of. (It’s a nice complement to this Chron interview, in which Ol’ Jer takes us back to his seminary days and tells us how much he loves austerity: “I took vows of poverty, chastity and obedience. I am ready, OK?”

Jesus, Guv — we all know you’re cheap, but “obedience” really isn’t part of your personality. And chastity? For real?

But let’s get back to austerity. Brown is clearly hanging his governorship on Prop. 30, his tax measure, and is happily warning us all that things will really, really suck if it doesn’t pass. Roberts does a good job explaining how Prop. 13 — which a much-younger Jerry opposed before he supported it — laid the groundwork for the state’s endless budget mess be capping local property taxes and giving the state Legislature control over how much money flows to cities and counties.

The one missing element: Arnold Schwarzenegger.

The state budget was never simple, and California schools in particular never recovered from Prop. 13, but Schwarzenegger instantly made things much worse the day he took office in 2003 when he terminated much of the Vehicle License Fee, costing state and local government about $4 billion a year. Schwarzenegger derided the fee as a “car tax,” but it’s actually a fee that keeps counties from assessing cars as personal property. Either way, that’s a huge chunk of money, and while it was popular, it played into the idea that we can have something for nothing — similar to the Bush tax cuts.

So I guess all we can do is quote Jerry:

There is a lot of magical thinking in Washington and in Sacramento and, maybe, I might even say, Western civilization,” he said. “We had it easy and now the moment of truth is upon us. … We’ve got to pay for what we want. And if we don’t want to pay, then we have to deprive ourselves of that which we would like, and it’s very hard to get people to make that choice.”

Are California taxes fair?

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Let’s start with an assumption that I think most sane (non-libertarian, non-right-wing-GOP) people agree on: A tax system ought to be based on ability to pay, ought to avoid as much as possible special-interest breaks and should avoid the appearance and the reality of unfairness.

So as Jerry Brown tries to convince voters to approve his fall tax measure that’s part income taxes on the rich and part sales taxes on everyone, how does the state add up? The California Budget Project, which is one of my favorite organizations ever, has a couple of reports out that shed some light on why half of Brown’s plan — taxes on the millionaires — makes sense, and the other half of it doesn’t.

You can read the two reports here. Let’s start with who pays the taxes:

Measured as a share of family income, California’s lowest-income families pay the most in taxes.

Yes, many individual rich people pay more in terms of gross dollars — but when they’re done and the taxes are turned over to the government, the poor have very little left, and the rich have plenty. In fact, even with higher income tax rates, the wealthiest Californians only paid 7.4 percent of their incomes on state and local taxes. They poorest paid 10.2 percent.

Part of that comes from the inherently regressive nature of sales taxes. Part of it comes from the way different types of income are taxed (poor people don’t tend to have a lot of dividend or capital-gains income, which is taxed less than the income you earn from working all day at a job). But overall, the picture suggests that the income taxes on the wealthiest aren’t high enough.

For all those types who complain that high taxes are hurting the state’s business climate, the report shows that California is pretty close to the national median in overall taxes. But it also notes that corporate income has soared relative to personal income: Over the past decade, the total reported taxable income of corporations in the state rose 485 percent. Total personal income rose 24 percent. Meanwhile, corporate tax liability rose only 58 percent, while personal liability rose 42 percent.

The result: Individual working people are paying more of the tax burden and corporations are paying less. (Unless you agree with Mitt Romney that “corporations are people.”)

Now let’s turn to the fairness report. It has some of the same data, but puts it in context:

California’s tax system is modestly regressive … [which] results from the relatively large share of income that lower-income households pay in the form of sales and excise taxes [and] the fact that low- and middle-income households spend all, or nearly all, of their incomes on necessities, including on many goods that are subject to tax.

I’m voting for the tax measure in November because the state desperately needs new revenue. But I say that recognizing that Brown’s proposal won’t do much of anything to address the basic unfairness of the way California raises the money to pay for state services.

 

 

Occupying the Capitol

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It’s an unseasonably hot day at UC Davis, and student activists are milling around a tent city, set up especially for 100 people arriving from a four-day March on Education. The school, one of the hubs of the Occupy movement, gained notoriety when public safety Officer John Pike casually pepper sprayed a line students during a sit-in back in November. Now, officers bike through the idyllic scene, smiling and chatting up occupiers.

Everyone is preparing for the next day, March 5, the statewide day to defend education that will bring thousands of students and teachers to Sacramento to demand an end to budget cuts and fee hikes at California’s schools, community colleges, and universities.

Those on the march hope to highlight the importance of this issue, marching 79 miles from the Bay Area. The first night, the march stayed in Richmond, and the next day Richmond’s Mayor Gayle McLaughlin came out to welcome them.

Students march annually on Sacramento, and say they won’t stop until education is affordable (or, as some would demand, free). A climate of worldwide protest over disparities in wealth and opportunity, including Occupy protests in the United States, helped fuel a larger than usual turnout this year.

More than 5,000 people converged in Sacramento March 5 and marched to the Capitol building, occupying the Rotunda all day. Many chanted “no cuts, no fees, education must be free.”

Community college student throughout the state are reeling from the cuts, and resulting fee hikes—course units, once free, were raised from $26 to $36 per unit last year, and will be increased another $10 this summer. These costs go towards closing the state budget deficit, and not toward a bigger course catalogue; classes continue to be slashed.

Frances Gotoh of San Bernardino Valley College is back at school after being laid off from her longtime job at Bank of America. She said she desperately needs the retraining; without it her job prospects look dim. She needs to support her family—her 20-year-old son is also a college student—but says she can’t afford the increasing fees. “Why is education being taken away?” asked Gotoh. “It belongs to the people.”

Josselyn Torres, a psychology major at Sonoma State University, felt similarly. “Every year, the fees are getting higher but the class size is getting bigger,” said Torres, who noted that many of her friends won’t be graduating with her because so many of the classes they needed were cut. “The politicians have all gone to college. If they keep cutting our education, how can we make it as far as them?”

When the march reached the Capitol, student and state government leaders spoke on the importance of education. Students demanded an end to fee hikes and budget cuts. Assembly Speaker John Perez (D-Los Angeles) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) praised student activists and expounded on the necessity of accessibility to education. Almost all speakers decried the two-thirds majority needed to raise taxes, allowing just a few Republicans to block them.

Lt. Gov. Gavin Newsom also spoke, describing the need to support education in staunchly free-market terms: “You can’t have an economic development strategy without a workforce development strategy.”

Periodically, the crowd interrupted Newsom and other politicians in the midst of making promises with chants of “show us.” They also chanted this election year threat: “You’ll hear us out or we’ll vote you out!”

Around 12:30 p.m., the permitted rally ended and thousands dispersed. About 400 stayed to “Occupy the Capitol.” The group streamed into the building and into the rotunda. California Highway Patrol officers, responsible for policing the Capitol, blocked more than 150 from entering the central area. So, communicating via the Peoples Mic with several rounds of crowd repetition for every sentence spoken, the group participated in a statewide general assembly.

Some building employees showed support, but the only politician to sit down with the protesters was Newsom, who sits on the UC Board of Regents and CSU Board of Trustees. He chatted with students, some of whom requested that he ask police to stop blocking students from meeting in the same area; he didn’t do so, but was able to convince them to give protesters in the rotunda access to bathrooms.

The group managed to collectively decide on demands of the state: support the Millionaire’s Tax ballot initiative, repeal Prop. 13, cancel all student debt, fund all education through college, and democratize the Board of Regents. When building closed at 6 p.m., officers declared the assembly unlawful and arrested 70 who refused to disperse.

Meanwhile, another 400 or so attended a permitted rally on the Capitol lawn called by several Sacramento labor unions to support Occupy the Capitol.

Over the past five years, education funding in California has been cut drastically. Spending per K-12 student per year has gone down by almost $2,000 and higher education has seen program cuts and tuition hikes. Gov. Jerry Brown’s latest budget proposal includes still more cuts to California colleges and universities.

Several proposed ballot initiatives are designed to address this. An initiative sponsored by Brown would bring spending per student per year up by $1,000, stabilizing at $7,658 (it was $7,096 in 2011-12) and reversing a five-year slide. But it would still be less than 2007-08, according to a report from the California Budget Project (CBP).

That report shows K-12 education spending is the biggest piece of the state budget, although California ranks dismally low compared to other states for spending on K-12 education: 47th in the country.

The governor’s proposal would raise funds with a combination of a tax increase for those earning $250,000 and over per year and a sales tax increase. But critics say the increase in the sales tax, which is notoriously regressive, would hurt lower and middle income families.

The measure is up against other potential ballot initiatives that would raise revenue strictly from the wealthiest Californians. The so-called Millionaire’s Tax, for example, would raise funds for education by increasing taxes on those making $1 million or more per year. The Millionaire’s Tax also has the advantage of resulting in a permanent change in the law, while Brown’s measure would apply only for the next five years.

“California’s problems have also been exacerbated by tax cuts, one-time ‘solutions,’ overly optimistic assumptions, and the fact that the two-thirds vote requirement for the legislature to approve any tax measure has blocked adoption of a balanced approach towards bridging the budget gap,” according to the CBP report.

Teachers’ unions are divided over the best ballot measure. The California Teachers’ Association has endorsed Brown’s measure, emphasizing that it includes a plan to close the budget deficit.

“The governor’s initiative is the only initiative that provides additional revenues for our classrooms and closes the state budget deficit, and guarantees local communities will receive funds to pay for the realignment of local health and public safety services that the Legislature approved last year,” said Dean Vogel, CTA president, in a press release.

But the Millionaire’s Tax was sponsored by the California Federation of Teachers, and it has now been endorsed by this student general assembly. John Rizzo, president of the City College of San Francisco Board of Trustees, also endorsed the measure.

“We’ve got to tell the state of California that we cannot continue this. We cannot continue the cuts to our community colleges, to UCs, to the California State Universities,” said Rizzo, speaking at a March 1 rally in San Francisco.

According to a recent report, of five polls conducted throughout California, each initiative has majority support, but voter prefer the Millionaire’s Tax, with a recent Field Poll showing 63 percent support.

Legislators are also at work trying to increase education funding. Assembly Speaker Perez has introduced a bill that would slash tuition fees by two-thirds at CSU and UC schools for students of families making less than $150,000 per year. The bill would also allocate funding to city colleges throughout the state, for them to determine how to best use the money.

The cost of the plan, about $1 billion, would be paid by eliminating a corporate tax loophole that the Legislature approved in 2009, which would allow companies to choose the cheaper of two formulas for calculating their taxes. Critics have called the legislation bad for business, saying that removing tax incentives would hurt California companies.

“The California Middle Class Scholarship Act is very simple,” Perez told students at UC Davis when he unveiled the bill on Feb. 3. “Too many families are getting squeezed out of higher education. For students whose families make $150,000 a year or less, too much to qualify for our current financial aid system, but not enough to be able to write a check for the cost of education, without feeling that pinch, the Middle Class Scholarship Act reduces fees at the UC system and at the CSU system by two-thirds, giving tremendous assistance to those families to make college affordable again.”

Education advocates say California needs to do something to reverse the spiraling cost of higher education in California, which could do long-term damage to the state, affecting young people and businesses that need skilled workers and spiraling out from there. And these advocates say this short-sighted strategy is easily preventable if there is the political will to address it.

“There are a lot of sources of revenue that are not being taken advantage of,” Lisa Schiff, a member of Parents for Public Schools of San Francisco, told us.

Even if tuitions were lowered or—as the most ambitious of protesters demand—higher education was made free, most former students would still be saddled with massive debt. As costs have risen, debts of hundreds of thousands of dollars are commonplace. With the job market recovery slow and painful, graduates often feel helpless to pay back their debt.

Robert Meister, a professor of Political and Social Thought at UC Santa Cruz and president of the Council of UC Faculty Associations, has long argued that the state’s higher education systems ought to focus on keeping tuitions low and student debt in check (see “In the red,” 1/11/11).

Yet he told us that growing income inequality makes people even more desperate for a college education and willing to accept levels of student debt that limit their ability to become anything more than corporate cogs after graduation. “Their ability to raise tuition is a function of the growth of income inequality,” he told us.

In his speech at UC Davis, Perez cast the issue as one of a disinvestment in the state’s future: “California’s public colleges and universities has been one of our most prestigious institutions, and, unfortunately, because of the collapse of the economy, we’ve moved away from fully investing in those universities and colleges.”

A month later, the school again served as a backdrop for illustrating the problem and calling for reform. Dani Galietti, a MFA student at UC Davis who was setting up a performance art piece when I arrived, greets everyone cheerfully and is thrilled about the Occupy movement.

“I wanted to share myself and my work with the movement,” Galietti tells me while taping a “paper trail” to the sidewalk; she plans to walk on it with home-made stamps attached to the bottoms of her shoes.

But her mood darkens when I ask about her student debt. “I came out of five years of education $100,000 in debt,” says Galietti, “and I’m not the only one.”

She is a first generation college student, she explains, who helped pay for school with McNair scholarships.

“I grew up one of five, with a single mother,” Galietti explains. “We struggled my whole life, as a lot of people have, financially.”

“So many people are graduating with so much debt. There’s this looming fear, fear and hopelessness. The economy’s bad, the job market sucks. I’m so thankful that they’re out here. People are active, they’re making a difference.”

“We need education,” Galietti says. “I mean, knowledge is power.”

 

Why the public thinks government is fat

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Polls from the PPIC are typically pretty accurate, so I have no reason to doubt the results of a recent one showing that a majority of Californnians still think government can be cut substantially without a reduction in services. It’s hard to fathom; as Brian at Calitics notes,


Cuts to government expenditures mean direct cuts to services. There is simply no way to provide the same level of services for an ever decreasing amount of money. Go take a look at your local government offices and then compare it to the offices of your local bank corporate office.  There are no fancy waterfalls and lavish breakrooms offering wide selections of Odwalla and Rice Krispies, there are just a dwindling level of state employees working ever harder to keep up.  


So, while most voters strongly support raising taxes on the rich, 59 percent also think that government can easily be cut just by eliminating waste. Even Arnold Schwarzenegger, who took office pledging the same thing, left saying there wasn’t much waste left to cut. And while I fully believe that any organization that spends $80 billion a year is going to have some things in the budget that don’t belong — it’s simply humanly impossible to run anything, public or private, that big without some employee sleeping in the supply room or somebody sneaking cookies on the company dime — it’s also the case that what’s missing in the California budget is more important than what’s being mis-spent.


Why don’t people get this? Part of the reason is a 30-year concerted campaign by the right wing to convince people that the public sector is a waste of money. But part of the reason is also that the news media, by its very nature, is much more likely to report on waste in government than similar (or worse) waste in the private sector.


For one thing, it’s easy: Government records are public. Figuring out how Enron, which kept its records private, stole $40 billion from the state of California is really, really hard. There’s also the (correct) notion that the government is spending OUR money, so we ought to watch where it goes.


And of course, corrupt politicians like Willie Brown give everyone in government a bad name, and there are plenty of them.


But remember: The government typically spends a lot of our money on private contracts with companies that don’t make their records public. How many employees of the contractors building the Central Subway are sleeping on the job, double-billing, charging fancy lunches and wasting the public’s dollars? That takes a lot more digging — weeks of investigative reporting — and it’s not the sort of stuff that can just pop up in a Matier and Ross column, the way a city worker who pulls in a lot of overtime can (and does).


I think there’s also a general lack of interest in exposing corporate wrongdoing. PG&E’s records are public, and all the money the company spends is OUR money (we’re ratepayers, and we have no choice). But how much do you see about overpaid PG&E executives compared to how much you see about (far less) overpaid city employees? PG&E has hundreds of executives making far more than the most bloated City Hall salaries, and they all have nice pensions — but you never hear about PG&E needing pension reform, or how the utility needs to tighten its belt to keep rates low in a recession.


When you’re bombarded day after day with stories about a deputy sheriff or a nurse who works a huge amount of overtime and takes home $150,000 a year, you can’t help but think that the public sector’s wasting your money. But the private sector does a lot worse.


And sure, under capitalism, a wasteful private company should pay the price in the marketplace — but we all know that a lot of the big private companies don’t really compete much (see: the financial sector), and when it comes to regulated utilities like PG&E, they don’t compete at all. You think ATM fees and checking account fees and all the other shit that banks hit us with isn’t in part a result of waste, fraud and bloated payrolls? Isn’t that my money, too?


 


 

The good news about the mid-year state cuts

6

Well, there isn’t much good news, really — Gov. Jerry just announced another $1 billion in cuts, mostly to education and services for the disabled and poor. Check out the state’s priorities: $429.6 million in cuts to education, $225 million in cuts to MediCal, In-Home Supportive Services and developmental services — and a whopping $20 million in cuts to the prison system.

Supporters of K-12 education will walk away a little happier than they expected; the direct cuts (which could have meant losing an entire week of the school year) will amount to far less, only about $11 a student. But that doesn’t include $248 million in cuts to state funding for school transportation, which a lot of district will have to absorb in other ways. In San Francisco, it’s easier for kids in middle school and high school to take Muni; in more rural areas, school buses are a bigger deal.

Missing in a lot of the MSM coverage of the midyear cuts is the fact that the state is actually spending more money than expected. As Calitics points out, that’s no surprise:

It turns out that during a bad economic period, people need more services, but in the current climate in Sacramento, getting the legislature to approve the revenues for those services is an impossible feat even for somebody with the experience of Jerry Brown.

But here’s what’s interesting. In his press conference, Brown noted that the bright spot on the state’s fiscal front was increased money coming in from Prop. 63 — a surtax on incomes of more than $1 million to pay for services for the mentally ill. Which means that there’s additional money to be made by taxing the very rich.

And the voters seem more than willing to do just that.

 

Why Occupy? Here’s why

2

The Chron buried the story below an item about Chevron cutting its grants to PBS, but if you want to see the case for the Occupy movement, it’s laid out perfectly in a powerful new report by the California Budget Project. Read it here (PDF) The data is solid; the policy impacts are clear.

For starters, California’s 33,900 millionaire taxpayers (people reporting more than $1 million in income in 2010) — that’s two-tenths of the top one percent — earned $104 billion — 11 times the amount needed to lift every single California out of poverty. That’s right — a ten-percent surtax on incomes of more than $1 million could end poverty in California.

California, the report states, has the 7th worst income gap in the nation, between Alabama and Texas.

The San Francisco/Marin/Oakland metropolitan area has the 7th worst income disparity of any major urban area in America.

And it’s not the Invisible Hand of Adam Smith that caused the problem: “Public policy,” the report states, “narrow income gaps less today than they did a generation ago.”

San Francisco’s electing a new mayor today. When you go to the polls, think about economic justice. And when you hear complaints about Occupy SF, think about the fact that before the Occupy movement, the wealth and income gap was barely on the political agenda.

 

Cleaning up UC’s mess

5

news@sfbg.com

By 7 a.m., when engineering students begin to trickle into Cory Hall at UC Berkeley, Arnold Meza has already scrubbed the floors, wiped clean the chalkboards, and emptied the trash of 30 offices and many of the classrooms and hallways of the six-floor building.

His early shift as a custodian is a gift, he says, because it is steady compared to his former swing-shift schedule, but Meza is still barely making rent. And he is a single father of four. Like many service workers in the University of California system, Meza wonders how the university can refuse to give him a 3 percent wage increase while top UC executives receive six-figure bonuses every year.

“It falls on broken promises,” Meza said while tying up a bag of trash, one of hundreds he would take out that week. Meza was referring to an agreement in 2009 between the university and its service workers unions, including Meza’s union, AFSCME (American Federation of State, County and Municipal Employees). At that time, the administration established a minimum wage (currently $13 per hour) for the more than 7,000 service workers and agreed, if funding was available, to increase wages annually to bring their low-wage workers out of poverty.

But the university is going back on its promise, refusing to increase wages with the funding dedicated for that very purpose, the East Bay Alliance for a Sustainable Economy and the Partnership for Working Families (EBASE) notes in its recent report titled “Bad Budgeting, Broken Promises.”

As the UC Office of the President sees it, the 2009 discussion was not an agreement at all, but a “conditional memorandum of understanding” that would only be effective if state funding was available, said UCOP spokeswoman Dianne Klein.

“We’ve already taken $500 million in cuts. We’ll have to take another $500 million in cuts. Because there is no new money, the memorandum of understanding is moot,” Klein told us.

The state budget vetoed by Governor Jerry Brown last week would have set the UC system back $150 million in cuts on top of the $500 million in cuts approved by Brown in January. How much more will actually be cut from UC funding remains to be seen, but the forecast is not promising.

Despite the cuts, the proposed budget bill states that $3 million in distributed state funds should go toward the salaries and benefit of service workers in the UC system. In a March 24 letter to the governor, UC President Mark Yudof requested that the governor veto that restriction so the university could use the dedicated $3 million “to preserve our flexibility in dealing with the $500 million reduction.”

Compared to the total UC budget of $21.8 billion, that $3 million makes up only 0.014 percent — nickels and dimes to give employees a living wage.

Meanwhile, Meza and his fellow coworkers struggle to put food on the table, making ends meet by working two jobs. After his 4 a.m. to noon Monday through Friday shift, Meza works eight-hour shifts as a car mechanic on weekends. Similarly, many UC service workers collect cans to get a few dollars from the recycling center.

“When I started here 20 years ago, I was making close to $9 an hour. That wasn’t enough,” recalled Meza, who put his four children through public high school on that salary. Today, Meza brings home about $2,400 a month, barely enough to cover rent and a few bills at his El Cerrito home.

“I want my kids to go to college. But financially, I can’t afford it,” he said. “For me, it’s a sad reality.”

Meza’s union, AFSCME, is working with UC to lower the workers’ contribution to retirement pensions to 1.5 percent. The university proposes a 3.5 percent pension plan to go into effect this July and 5 percent in July 2012—the same amount requested from top UC executives. At their low wage, that would cost the service workers the equivalent of one biweekly paycheck a year.

Some UC executives, such as UC Berkeley Chancellor Robert Birgeneau, receive additional retirement perks. Roughly 200 highly paid UC executives receive a supplemental retirement benefit of 5 percent of their annual pay, said Nikki Fortunato Bas, the executive director of EBASE. That’s a total annual cost to UC of $4 million.

“If UC gets its way in 2011, instead of getting to climb that next rung on the ladder out of poverty, [the low wage workers] will take a step backward through a combination of increased contributions to retirement and healthcare and UC withholding a 3 percent raise,” Bas said. “All the while, UC is showering already highly-paid executives with six-figure bonuses.”

In an infamous budget battle that has required the UC system to restructure its quickly diminishing funding from the state, more than 100,000 employees’ paychecks have been reduced while top execs like UCLA Ronald Reagan Medical Center CEO David Feinberg receive thousands of dollars in bonuses. In September 2010, Feinberg’s base pay was increased by 22 percent and he received a $250,000 “retention bonus,” for a total compensation of $1.33 million.

These astounding numbers, as part of a $3.1 million package in bonuses for 37 UC executives last September, were quoted in the EBASE report, using data from the UC Regents website (www.universityofcalifornia.edu/regents).

UCOP says the retention bonuses are necessary “because we pay below market as it is [for top executives’ salaries],” said Klein, and the UC needs to offer huge bonuses to keep the executives from moving to higher paying universities. “You have two options: sayonara or we’ll match it,” Klein said. “You can’t recruit in the classifieds for these people … and you’ll have to replace them for the same money, anyway.”

The bonuses are not state-funded, said Klein, but are taken from research grants, patient care, and even federal funding. But Bas said the problem is with UC’s priorities: “Time and again, they have shown that they can find money to give bonuses or backfill sports programs,” she said. “UC may look at this as a matter of technicalities, but we cannot ignore the stories of employees and their families who are struggling to get by.”

As it stands, UC is short-staffed when it comes to service workers. “We’ve been short-staffed for the last 10 years,” said Meza, who estimates that UC Berkeley employs about 140 custodians, less than one-third of the 460 or so custodians the university employed in the 1980s. The result is that the students suffer, said Meza. “The students are getting the short end of the stick because we can only clean once a week in some classrooms because we’re short staff. We see the students pay a lot with tuition, and they’re getting less.”

Already, student fees have increased by more than 32 percent, and another 8 percent fee increase is pending, reported EBASE. As the state continues to make cuts, students and low wage service workers suffer the consequences.

According to the California Budget Project, a single-parent family needs to make $68,375 a year just to make ends meet in Alameda County. “UC workers have reduced-cost healthcare, so this number could be adjusted downward to $58,544,” said Bas. “For a custodian at UC Berkeley or UC San Francisco making $30,000 or even $40,000 a year, this means working two jobs and collecting cans just to scrape by.”

When his oldest was nine years old, Meza remembers, he used to drive his family to the recycling center to get cash for cans he had taken out of the garbage. “The kids were happy in the car because I was going to get money for food when I recycled cans,” which meant there would be dinner on the table that night, Meza said, apologizing for getting teary-eyed at the memory.

“I just don’t want people who work here to go through what I went through to raise a family,” he said.

No matter how many cars Meza fixes on the weekend, he never seems to have a break from the stress of trying to cover fuel, rent, heating bills, doctors’ bills, and other necessities. He’s only 43, but he feels much older after 20 years of working two jobs, seven days a week, providing for four children on his own.

UC workers, unions like AFSCME and other stakeholders have proposed $600 million in budget alternatives such as reducing the excessive 7-to-1 employee-to-management ratio (at UC Berkeley, the average is four employees to one manager). Yet UC does not appear to be seriously considering these alternatives; its current goal is to take back the $3 million dedicated to its low-wage service workers.

“We think this is a matter of finding the will within the UC administration to do what’s right by honoring their word to protect working families’ a path out of poverty,” Bas said.

Two months ago, Meza and his fellow union members marched into UC Berkeley’s Chancellor Robert Birgeneau’s office and asked him to spend one day in the life of a service worker on campus. He still hasn’t answered their request.

“People are really struggling here. We are committed to working and we give 110 percent — that should be accounted for,” said Meza. “Give us our 3 percent. We earned it.”

A tax break for the billionaire Fisher family

1

The L.A. Times reported Oct. 6 that the Fisher family — the heirs to right-wing power-broker Don Fisher’s GAP fortune — is set to get a $20 million tax break in the new state budget. It’s astonishing, and an example of how the backroom budget process is utterly corrupt.


From what I hear in Sacramento, the proposal came from the Republicans, although so far, nobody outside the small circle of budget dealmakers knows exactly which legislator or lobbyist pushed the issue. And it now appears, I’m told, that the tax break won’t be in the main budget; it will be addressed later in the week, as part of another bill.


But it’s not going to be easy to defeat — there are plenty of Democrats who support the deal, in part because the Fisher family is saving some old-growth redwoods.


But please: This is one of the richest families in America. These folks don’t need a $20 million handout from the state of California. 

Holding corporations accountable for job creation claims

0

Amid the ongoing state budget impasse and an election season dominated by scapegoating public employee unions for public sector fiscal problems, Sen. Leland Yee (D-SF) today introduced legislation to hold corporations that receive tax breaks accountable for the jobs they claim to create, a bill that was quietly killed earlier this year after being approved by both houses of the Legislature.

Opposition to the bill by corporate interests should puncture the oft-repeated myth that tax breaks spur job creation rather than simply increased corporate profits, a myth that leads everyone from SF Mayor Gavin Newsom to Gov. Arnold Schwarzenegger to push business tax breaks that have hobbled the ability of governments to effectively function.

After intense lobbying against the measure by banks and the California Chamber of Commerce, SB 1391 fell one vote short on the concurrence approval it needed on the last night the Legislature’s regular session after some Southern California legislators who had originally voted for it decided to let it die. So Yee has reintroduced the bill as SBx6 20 for consideration during the upcoming special session that the governor called to deal with tax reform, which begins when legislators return to vote on the state budget as soon as this week.

The measure would require corporations that claim job creation tax credits to annually file information with the Franchise Tax Board listing how many full-time positions they offer. If the number of jobs at the company drops over a three-year period – a common occurrence in this era of outsourcing and downsizing – the corporations would be required to pay back taxpayers for their tax breaks.

“It is wrong for California to provide upwards of $14 billion in corporate tax credits without transparency and accountability,” Yee said in a public statement, also adding, “A working mother on CalWORKS or disabled senior receiving in-home supportive services has to jump through numerous bureaucratic hoops to receive minimal life-sustaining benefits, but if you are a Wall Street bank or big corporation looking for scarce tax credits, no one asks any questions.”

Numerous studies and books such as the Great American Jobs Scam have shown how the pervasive argument that cutting business taxes promotes job growth just isn’t true, even though it is taken as an article of faith by corporation and business-friendly politicians. But one need only consider the current jobless economic recovery – in which corporate profits have rebounded while unemployment remains stubbornly high – to doubt the Chamber of Commerce messaging.

Yee’s Chief of Staff Adam Keigwin tells the Guardian the measure simply makes sense, particularly in the context of a discussion about tax reform: “Here we have found a majority vote solution to a revenue issue and a fairness issue,” he told us. “If we’re going to give these tax breaks, fine, but make sure there’s accountability.”

Arnold’s budget casts most vulnerable as The Expendables

5

As California’s Budget Conference Committee moves forward with negotiations for the 2010 budget, Assembly member Nancy Skinner (D-Berkeley) is promoting her movie, “Faces Behind the Governor’s Cuts,” to different Bay Area venues in an effort to send a message to Gov. Arnold Schwarzenegger that his proposed cuts on services ignore the needs of the poor, parents who use child care facilities, and the elderly.
http://www.youtube.com/watch?v=cA3UieZCYj0

Skinner had her first screening of the movie just days after the blockbuster premiere of “The Expendables,” which includes a Schwarzenegger cameo. Yet instead of high packed action featuring a slew of legendary actions stars, Skinner presents a one minute short featuring interviews with home care workers, a single mother, a teacher, and an elder day care provider – all of whom would be severely impacted by the Schwarzenegger’s budget proposals.

The Budget Conference Committee released its balanced budget on August 4, rejecting Schwarzenegger’s cuts on jobs, senior care, and closure of child care centers – exactly the issues that the stars of Skinner’s film address. The committee suggested ways of raising revenue in lieu of cuts on vital services, such as closing the oil drilling loophole and delaying new corporate tax breaks. Despite the Committee settling on a budget with $14 billion in spending reductions and $4 billion in new revenue, Schwarzenegger still wants more cuts.

Yet Skinner says that Schwarzenegger’s plan would cost more than 430,000 private sector, local government and school jobs. The committee’s budget protects these jobs and creates thousands of new jobs from a $300 million private sector jobs fund.

“Unemployment is not the path to economic recovery,” Skinner told the Guardian. “There’s a way to craft a budget that protects people and jobs and it’s going to require a little revenue. There’s no way to do an all cuts budget – at this point in time – that doesn’t bring harm.”

Schwarzenegger spokesman Aaron McLear didn’t see Skinner’s movie, but responded to Skinner’s concerns, telling us, “We understand Assemblywoman Skinner supports a massive tax increase to protect public employee pensions and the status quo for unions. We simply disagree.”

But looking beyond tensions between Schwarzenegger’s camp and the budget committee are the people these budget decisions affect – parents who work full time and use state-subsidized care for their children and the in-home attendants who the elderly rely on for care.

Daniel McGrath is an in-home supportive services (IHSS) caregiver who takes regular trips to Sacramento to speak out about the issue. “Life and death should never be on the table,” McGrath told us. “These disabled, elderly, and sick community members – our grandparents, brothers, sisters, cousins – are the most vulnerable in our society and the fact that they have to fight for themselves is ridiculous.”

McGrath accompanies his clients, Mark Beckwith, to Sacramento despite a health condition that only allows Beckwith to move his fingers. Beckwith comes to Sacramento to send the message that “the IHSS program saves the state so much money. In institutions like nursing homes, it costs five times as more.”

In addition to cuts to elderly care, Schwarzenegger’s budget plan cuts eliminates child care programs – a blow to parents who work full time and cannot afford to pay for market rate child care and will have no choice but to quit their jobs to take care of their children full time.

Michelle Alvarez, an administrative assistant at UC Berkeley, said in a written statement, “I don’t think my family would have been able to survive with out the help of BUSD preschools and after school programs. The state childcare has allowed me to have a stable job here at UC Berkeley for the past 8 years. Without the state childcare, it would be hard for not just my family, but other low income families to keep our jobs or go to school and care for our kids.”

As the budget committee and Schwarzenegger continue to duke out their differences, the fate of these people lingers in the distance. But Skinner poses a question for Schwarzenegger to think about: “For the governor, it appears that the numbers math is easy, but what about the human math – the impact on people, their livelihood, their jobs, and the ability to live independently?”

Alerts

0

alert@sfbg.com

WEDNESDAY, MAY 12

Fix California’s budget


Ever wonder if you could do a better job balancing the California budget than the professionals? Now’s your chance to take part in a simulated Budget Challenge that mirrors the decisions the Legislature will make in the next few weeks, accounting for all revenue and expenditures, the governor’s cuts, and more. Share your responses with the Legislature.

6 p.m., free

Richmond City Hall

450 Civic Center Plaza, Richmond

(510) 286-1400

THURSDAY, MAY 13

Ride ’em, city slickers


Join thousands of SF commuters in cycling solidarity at this year’s Bike to Work Day. Slip into the commuter convoy, which provides cool company and the safety of riding in a group; stop by an energizer station, where you can fuel up with free coffee, snacks, and goodies; and use the complimentary downtown bike parking station located at Market and Battery streets.

All day, free

Everywhere SF

www.sfbike.org/btwd

FRIDAY, MAY 14

Berkeley Critical Mass


Live in the carfree world you dream of for an evening at this monthly critical mass ride promoting self-powered commuting and community. Fill the streets with human interaction and DIY transportation!

6 p.m., free

Meet at Berkeley BART Station

Center and Shattuck, Berk.

www.berkeleycriticalmass.org

SATURDAY, MAY 15

Mourning Mothers’ March


Help raise awareness for ongoing homicide violence in Oakland and the impact it has on victims, survivors of victims, and the community at large. Mourn the senseless loss of life and spread hope for the future at this march around Lake Merritt.

Noon, free

Meet at Lake Merritt bandstand

Grand and Bellevue, Oak.

(510) 581-0100

Peace Flag-raising Ceremony


Celebrate International Conscientious Objector’s Day at this raising of a second Peace flag with war resisters from World War II, the Korean War, the Vietnam War, the Gulf War, and the Iraq and Afghanistan wars.

11 a.m., free

Civic Center Park, flagpole

2180 Milvia, Berk.

www.couragetoresist.org

Stop the Tea Party


Attend "Tea Party: Corporate and Racist Politics in Disguise," a public forum on how to fight back against extremist Tea Party politics. The event features Marsha Feinland from the Peace and Freedom Party, Don Belcher from Single-Payer Now, and Mark Ostapiak from Socialist Action.

7 p.m., $3–$5 donation

Center for Political Education

522 Valencia, SF

(415) 401-7471

TUESDAY, MAY 18

"Oakland’s Health Disparities in Black and White"


According to a report produced by the Alameda County Public Health Department, "compared to a white child in the Oakland Hills, African American children born in West Oakland can expect to die almost 15 years earlier." Hear Dr. Muntu Davis, one of the authors of the report, and representatives from the African People’s Education and Defense Fund (APEDF) discuss how the African American community can control of health care as part of the solution to the current community health crisis in Oakland.

7 p.m., free

Humanist Hall

390 27th St., Oakl.

(510) 763-3342 2

Mail items for Alerts to the Guardian Building, 135 Mississippi St., SF, CA 94107; fax to (415) 255-8762; or e-mail alert@sfbg.com. Please include a contact telephone number. Items must be received at least one week prior to the publication date.

The state budget isn’t growing

11

I heard a great show on NPR the other day about the new rules on compensation for executives whose banks got federal bailout money. The feds have cracked down (a bit), and some of those massive salaries have been cut and top bankers are now accepting much less pay, and stock that can’t be sold for three years.


And guess what: More than 80 percent of these people are still hard at work at their desks, including almost all of the most senior folks. Very few have left. It puts the lie to this notion that extreme salaries are needed to attract and retail the top talent; even after those salaries have been cut by more than half, the “talent” doesn’t flee.


There’s a new study by the California Budget Project (PDF) that says makes the same kinds of points. Jean Ross, the director of the nonprofit, nonpartisan group, says that urban legends die hard, so she’s chosen the top ten myths about the state budget and demonstrated how utterly inaccurate they are.


For example, the anti-tax folks love to crow about the massive growth in state spending and how the budget is “out of control.” Truth:


Current year spending is $16.9 billion below 2007-2008 levels and proposed 2010-2011 spending is $20.1 billion below  2007-2008 levels.


2009-2010 spending is $21.5 billion below the baseline levels projected by the Legislative Analysts Office in 2004.


As a share of the state’s economy, state spending is at its lowest levels since the early 1970s.


And it’s not just the recession:


State spending as a share of personal income has declined significantly in recent years.


And guess what: taxes aren’t driving businesses out of the state — or hampering personal wealth creation.


The number of millionaire taxpayers has increased more rapidly than the number of taxpayers as a whole since the passage of Prop. 63, which imposed an additional tax on high-income individuals.


And guess what, you bureaucracy bashers:


California ranks 41s [among the 50 states] with respect to the number of state and local government employees per 10,000 population.


So no, California doesn’t have a spending problem. The state has a revenue problem.

The lesson of California

0

news@sfbg.com

Much of the right-wing agenda that has thrown this nation into economic chaos can be traced back to what was once called the Golden State.

The tax revolts that started here under Gov. Ronald Reagan and continued to sweep the country and the world under President Reagan never abated. Indeed, they have only been strengthened by the big business power that created and benefited from them.

But now that California is showing signs of being the country’s first failed state — caught in fiscal freefall and mired in political gridlock as a generation’s worth of neglected problems surge to the surface — this state has become a cautionary tale for that anti-government ideology.

Trends in America tend to start out west, and the economic and political disaster that California has become contains critical lessons for the rest of the country.

Lewis Uhler — president and founder of the National Tax Limitation Committee — speaks candidly and proudly of his key early role in helping build a conservative movement to limit the size of government and do battle with those who want the public sector to actively promote social and economic justice.

Uhler, a UC Berkeley Boalt Hall School of Law graduate who did legal work for conservative causes in the 1960s, was tapped by then-Gov. Reagan in 1970 to be the director of the Office of Economic Opportunity, a federally-funded legal assistance program created as part of President Lyndon Johnson’s war on poverty.

While that may seem like a strange role for an avowed conservative and former member of the John Birch Society, Uhler says Reagan basically brought him in to wreck the program and fight the feds. “I was asked to put my money where my mouth was for my conservative philosophy,” Uhler told the Guardian. “OEO was set up to ensure conflict and confrontation … The mission of legal services was to change public policy through lawsuits they decided to file. I thought it was a corruption of the legal system.”

At the time, public-interest law and liberal economic and social policies were on the rise in California and spreading to the rest of the nation. So the Reaganites fought back.

Rather than helping poor plaintiffs file environmental, consumer protection, equal rights, or other types of lawsuits designed to level the playing field with powerful interests, Uhler blocked lawsuits brought by attorneys he calls “ambulance-chasers” and gutted the program. “Ultimately,” he said, “we vetoed funding for California Rural Legal Assistance.”

And for his efforts, Uhler was rewarded with a cabinet-level position: assistance secretary of the Health and Welfare Agency. Again, his role wasn’t to make the agency more effective, but to make it less effective in a realm where he believes government was too big and too active.

“The problem was uncontrolled state and local spending,” Uhler said. “Intuitively, everyone who gathered around Reagan shared the same philosophy that government doesn’t really contribute anything to economic growth.”

In 1972, Reagan gave Uhler the opportunity to work more directly on the mission of cutting taxes and shrinking the size of government, naming him chair of the Governor’s Tax Reduction Task Force. It was, in many ways, the beginning of the vast right-wing conspiracy.

“I asked to be given the chance to go across the country and find the best free market minds in the country to develop these policies,” Uhler said, explaining that he wanted to borrow the liberal strategy of giving an academic veneer to their ideas, as presidents Kennedy and Johnson had done in the realm of foreign policy. “Our side had never really done that.”

Uhler’s first stop was the University of Chicago School of Economics, where he met with noted free market economists Milton Friedman, James Buchanan, and George Stigler, who were brought into the cause.

Today’s vast network of conservative think tanks didn’t exist at that time, so Uhler tapped conservative thinkers from the American Enterprise Institute and the Hoover Institute at Stanford University, as well as other conservative economists such as Peter Drucker from Claremont McKenna College.

“There were 35 people who helped us design the first effort at a constitutional initiative in California to limit year-over-year growth of the state’s general fund,” Uhler said. “All of us as free market enthusiasts and economists all shared the belief that government beyond a certain level eats the seed corn of the nation and doesn’t produce anything.”

While voters narrowly rejected their group’s first effort to cap government growth — Proposition 1 on the November 1973 ballot — the ground had been prepared and the seeds had been sown for the tax revolts that would sweep the country in the late 1970s, with many of the campaigns coordinated by Uhler and the organization he formed for that purpose in 1975, the National Tax Limitation Committee, and a rapidly growing network of similar, interconnected organizations.

As Uhler worked with Reagan to weaken California’s government from within, his fellow travelers were developing national and international strategies to create aggressive, coordinated, well-funded campaigns to attack government and spread the free market dogma.

In August 1971, Lewis Powell — a conservative corporate attorney who President Richard Nixon had just nominated to the U.S. Supreme Court (where he served from 1972-87) — wrote a confidential memorandum to the leadership of the U.S. Chamber of Commerce titled “Attack on the American Free Enterprise System.”

He sounded the alarm that the ascendant environmental and consumer movements were going to destroy capitalism in the country unless corporate America aggressively fought back in a coordinated fashion, which he spelled out in great detail.

He called for all major corporations to develop aggressive legal and public relations strategies for fighting the left, creation of a network of think tanks and media outlets to push the conservative message, manipulation of the legal system, and sponsorship of university programs to study conservative ideas and incubate future leaders — which all came to pass in the coming decades.

“American business [is] ‘plainly in trouble’; the response to the wide range of critics has been ineffective and has included appeasement: the time has come — indeed, it is long overdue — for the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it,” Powell wrote.

Part of that strategy involved having the federal government promote and popularize free market economic theories being developed by Friedman and his colleagues at the University of Chicago, a movement that is well-documented by journalist Naomi Klein in her book The Shock Doctrine: The Rise of Disaster Capitalism.

In 1971, Friedman and his colleagues began working with rich conservatives in Chile who were allied with Gen. Augusto Pinochet, who in turn were conspiring with the CIA to overthrow and assassinate the democratically elected, leftist President Salvador Allende, which they successfully did on Sept. 11, 1973.

Friedman’s economic theories called for a radical restructuring of society — slashing taxes and social spending; removing most regulation and trade restrictions; crushing labor unions; promoting economic growth at any cost — and Pinochet executed the strategy in brutal fashion, ordering the death of at least 3,200 of his political opponents, including the car-bomb assassination of economist Orlando Letelier in Washington, D.C., in 1976.

Friedman and Pinochet consulted openly and shared a basic disdain for social programs and progressive taxation. “The major error, in my opinion,” Friedman wrote in a letter to Pinochet in 1975, referring to the government antipoverty programs Pinochet dismantled, was “to believe that it is possible to do good with other people’s money.”

The model Pinochet and Friedman developed in Chile would eventually go global — promoted by its top cheerleaders, Reagan and British Prime Minister Margaret Thatcher — and be implemented (with disastrous results for most citizens but creating huge profits for wealthy individuals and corporations) in Indonesia, Bolivia, Argentina, Peru, Russia, Poland, South Africa, Japan, and elsewhere.

But with the corporate media and conservative opinion-shapers focused mostly on economic growth — ignoring persistent poverty and the brutal tactics used to suppress the popular movements that tried to resist Friedman’s “economic shock therapy” — Friedman had become a sort of free-market prophet by the time he died in 2006.

“In the torrent of words written in eulogy to Milton Friedman, the role of shocks and crises to advance his worldview received barely a mention,” Klein wrote. “Instead, the economist’s passing provided an occasion for a retelling of the official story of how his brand of radical capitalism became government orthodoxy in almost every corner of the globe.”

California’s fiscal shackles have been in place since 1978, when Proposition 13 and subsequent measures capped property taxes and required an undemocratic two-thirds vote to either raise taxes or pass the annual budget.

A Republican landlord lobbyist named Howard Jarvis charged onto the field that Reagan, Uhler, and their team had prepared and took advantage of a gaping hole in political leadership to set off a movement that would cripple the United States of America.

There was some logic to it then. Times were good in California in the 1970s, good enough that people were flocking to the state by the millions. That was driving up property values — and thus property taxes.

Jarvis bought his home for $8,000 in 1946; 30 years later, it was assessed at $80,000. In fact, inflation was running at close to 10 percent a year in California. Homeowners were getting huge tax hikes each year, and tenants were getting huge rent hikes at a time when state government had a budget surplus.

Homeowners saw millions of dollars sitting in the coffers in Sacramento while they couldn’t pay their tax bills. Yet nobody in the Legislature or governor’s office came up with a solution.

So when Jarvis showed up with petitions to roll back property taxes and prevent future increases, he found a broad base of support. Even tenants went along — Jarvis and his gang promised that property-tax cuts would be passed on to tenants and would mean the end of the escautf8g rent hikes.

Jarvis collected signatures for a radical measure that essentially blocked all property tax increases and allowed new assessment only when a parcel sold. It was, in the end, a huge tax giveaway to major corporations. Since commercial property turned over far less often than residential property (and since commercial sales could be hidden as stock transfers), big businesses wound up paying far less of the state’s tax burden. Corporations used to pay about two-thirds of the state’s property taxes, and individuals one-third; now that is reversed.

It didn’t help tenants, either. Few of the landlords who saw the benefits of Prop. 13 passed the money along to their renters. Most just kept it. San Francisco activist Calvin Welch likes to say that Howard Jarvis was “the father of rent control.”

The campaign against Prop. 13 warned of the dangers of cutting local government; police and fire chiefs appeared in ads opposing it. But the No on 13 folks never talked about the huge windfall big corporations would get from the measure, or the huge disparities in wealth that would be created by defunding government and dereguutf8g corporations.

If the goal was to skew the concentration of wealth in the state, it worked brilliantly. According to the California Budget Project (CBP) of the Franchise Tax Board, recent data taken before the current economic recession illustrates an ever-widening chasm between the wealthiest taxpayer and the working-class person.

The total adjusted personal income for Californians rose by nearly $64 billion in 2006-07 — with approximately three-quarters of that increase going to the top fifth of wealthiest taxpayers, and 30 percent going to the top 1 percent. That left only $19 billion for everyone else.

“The average taxpayer in the top 1 percent experienced a $128,261 increase in AGI [adjusted gross income] between 2006 and 2007, which was more than three times the total AGI of the average middle-income taxpayer in 2007 ($36,115),” stated the June 2009 report.

This continues a long-term trend in which the wealthy continue to leave the average income-earner behind in a trail of dollar-sign dust. From 1995 to 2007, income gains for that top 1 percent come to a whopping 117.3 percent increase — nearly 13 times more than the gains of the middle-income taxpayer.

The nation’s income gap has reached a “level higher than any other since 1917,” according to a paper by University of California, Berkeley economic professor Emmanuel Saez. According to Saez’s analysis of census data, there’s been a steady increase in the income gap since the 1970s, rising 20 percent over the years.

Yet even today, the defenders of Prop. 13 continue to sound the same consistent themes. “Those who are directly involved in government are a militant special interest,” Howard Jarvis Taxpayer Association executive director Kris Vosburgh told us. “They don’t like anything that limits their revenue stream.”

While that last statement could be applied equally to corporations or other private sector enterprises, as Vosburgh reluctantly admitted when asked, he continues to imply malevolence to those who defend government. He said the state’s current fiscal collapse can only be solved by slashing government expenditures.

“It is not valid to be talking about revenue-side solutions,” he said. “Our position is the state has enough money to accomplish its goals.”

People have never liked paying taxes, but the antitax movement is about far more than just that basic individual desire to hold onto our money.

The attacks were well planned, carefully targeted, and part of a much larger effort aimed at maintaining corporate and conservative power, undermining the New Deal, reducing taxes on the rich, and radically reducing the size and scope of the public sector.

As Powell called for, corporations have aggressively challenged, in legal courts and those of public opinion, every significant progressive advance — from San Francisco’s attempt at universal health care to California’s tentative first steps to address global warming.

With a level of discipline unheard of on the left, conservative opinion-shapers pound their talking points and enforce party unity through mechanisms like the “no new taxes” pledge that every Republican in the California Legislature has signed and heeded, under the very real threat of recall.

Opposition to taxes is now so deeply embedded into the psyche of the California electorate, and such a core tenet of today’s Republican Party, that elected officials who tout fiscal responsibility allowed the state’s debts to go unpaid (destroying its credit rating in the process) and its education and transportation systems to be decimated rather considering new revenues.

Gov. Arnold Schwarzenegger’s spokesperson Aaron McLear told us, “He believes we ought to live within our means and pay for only the programs we can afford.”

That simple talking point gets repeated no matter how the question is asked, or when we point out that it means we’re being forced to live within historic lows this year. But they claim the people support them.

“We had tax increases on the May ballot and they were rejected by a 2-1 margin. We should listen to the will of the voters,” McLear said.

Never mind that this regressive, dishonest package of temporary tax hikes was opposed by the Guardian and a variety of pro-tax progressive groups. McLear wouldn’t even admit that point or respond to it honestly.

And he’s certainly right that most polls show a majority of Californians don’t want new taxes. But these polls also show that people want continued government services, more investment in our neglected state infrastructure, and a whole bunch of other contradictory things.

That’s why newspapers and analysts around the world are looking at California, the world’s eighth largest economy, and wondering (as the Guardian of London headline asked Oct. 4): “Will California become America’s first failed state?”

In many ways, it already is. The question now is whether we’ll try to learn from and correct our mistakes. Ryan Riddle contributed to this report. ———–

THE CONSERVATIVE RELIGION

When I asked Lewis Uhler, one of the architects of the Reagan revolution, what Americans believed in these days — where the people he likes to talk about who hate the government (but are also admittedly disillusioned with Wall Street) turn — he answered simply: religion.

It should come as no surprise that many religious fundamentalists tend to side with the free market conservatives — both ideologies require a leap of faith and ignoring certain troubling facts, such as increasing disparities of wealth, natural resource depletion, and global warming.

Their arguments mostly make sense — until these inconvenient truths come up.

Certainly, turning over more public resources to free market capitalists, cutting taxes, and slashing government regulation will spur private sector economic growth, just as advocates claim.

But that growth has a cost. The wealth won’t be shared by everyone. Indeed, poverty has persisted even through even the economic boom of the 1990s — but almost everyone will be affected by underfunded road, education, public safety, and other essential systems.

As the conservative movement has successfully limited taxes and cut regulation over the last 40 years, working class wages have stagnated as the rich have gotten richer. Many of the world’s oil reserves have peaked and gone into decline, and rapidly increasing carbon emissions have collected in the atmosphere and caused global warming.

So how do conservatives respond to these realities as they argue for the continued dismantling of government, which is the only entity with the scope and incentive to deal with these problems? They simply deny them.

Uhler decried the “pseudoscience of climate change” as hindering economic progress and claimed that there’s actually been a global cooling trend in the last 10 years. (Actually the last 10 years have been some of the hottest on record, causing glaciers around the world to melt, according to data and observations from a consensus of the world’s climate scientists, including NASA, the Union of Concerned Scientists, and the United Nations Climate Change Conference.)

It’s the same story with the consolidation of wealth, which hurts the free market fantasy that letting the super-wealthy keep more money will eventually trickle down to benefit us all. Uhler simply denied the growing disparity of wealth, saying the “movement between quintiles is significant.”

He was talking about people’s ability to go from poor to rich with a little hard work and initiative, the core idea of free market conservatives. But data from the U.S. Census Bureau and many other entities indicate that median wages have been stagnant for decades (which wouldn’t be true if there was lots of upward mobility) and that most of the wealth created in the U.S. over the last 40 years has pooled with the top 1 percent.

In fact, when it comes to measuring social impacts, Uhler has simply one metric: “Governments at all levels are twice the size they should be to maximize economic growth.” (Steven T. Jones)

 

What went wrong

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EDITORIAL David Dayen, a political blogger at Calitics, had the best line on the California budget crisis.

"Whoever cares the least about the outcome wins," he wrote July 20. "If you don’t care whether children get health care, whether the elderly, blind and disabled die in their homes, whether prisoners rot in modified Public Storage units, whether students get educated … you have a very good chance of getting a budget that reflects that."

In the end, the Republicans largely carried the day because they had all the power: they could block any budget deal, they refused to raise any taxes, and they don’t really care if the state goes bankrupt. In fact, Gov. Schwarzenegger was happy to draw the crisis out as long as necessary — it helped his poll rating.

San Francisco should have had a very different situation and a very different outcome. The progressives control the Board of Supervisors and the mayor is in a tight spot — he’s running for governor and wants to show that he can manage San Francisco better than anyone in Sacramento is managing the state. It’s part of his campaign theme. A prolonged budget standoff was not in his interest.

And while the city budget is far, far better than the state budget, and the progressives managed to get a few concessions, the bottom line remains: this is a no-new-taxes budget, balanced largely with cuts and regressive new fees. In fact, for all the mayor’s talk of working with the board on possible tax measures, it now appears likely that there will be no revenue proposals whatsoever on the November ballot.

And the mayor is going to make another deep round of cuts soon, when the figures on what San Francisco will lose in state funding (almost certainly more than $150 million) become available.

It took last-minute efforts by Sup. Ross Mirkarimi, supported by Sup. David Campos, to win back funding for the Public Defender’s Office and at least a shot at funding the public finance system for the next local elections.

The supervisors, frankly, should have pushed harder. The message to Newsom should have been: no budget without new revenue. And as the board approaches the next fiscal year — projections already call for a $300 million deficit — that absolutely has to be the bottom line. Critical services have been cut too deeply already.

The process needs to be better too. Allowing two supervisors — the budget committee chair and the board president — to negotiate a closed-door deal with the mayor without briefing their colleagues or letting the other stakeholders know what was going on was a big mistake that can’t be repeated.

The New York Times ran a front-page story July 21 describing in bleak terms how California has abandoned its safety net and given up the ambitious dreams that for so long defined the state. "At no point in modern history," reporter Jennifer Steinhauer wrote, "has the state dealt with its fiscal issues by retreating so deeply in its services, beginning this spring with a round of multibillion-dollar budget cuts and continuing with, in total, some $30 billion in cuts over two fiscal years to schools, colleges, health care, welfare, corrections, recreation and more.

That can’t be the model for San Francisco to follow. *

Editorial: What went wrong in Sacramento

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In the end, the Republicans largely carried the day because they had all the power and could block any budget deal, refuse to raise taxes, and don’t really care if the state goes bankrupt

EDITORIAL David Dayen, a political blogger at Calitics, had the best line on the California budget crisis.
“Whoever cares the least about the outcome wins,” he wrote July 20. “If you don’t care whether children get health care, whether the elderly, blind and disabled die in their homes, whether prisoners rot in modified Public Storage units, whether students get educated … you have a very good chance of getting a budget that reflects that.”

In the end, the Republicans largely carried the day because they had all the power: they could block any budget deal, they refused to raise any taxes, and they don’t really care if the state goes bankrupt. In fact, Gov. Schwarzenegger was happy to draw the crisis out as long as necessary — it helped his poll rating.

State budget secrets: $2.5 billion in tax giveaways

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By Megan Rawlins

There’s no building-sized rock in Sacramento hiding 264 tons of cash – the approximate weight of the state’s budget deficit measured in $100 bills. But groups like the California Budget Project and the American Federation of State, County and Municipal Employees have published reports arguing there are smaller rocks, $100-million rocks, $1-billion rocks that can save services for some of the state’s most vulnerable populations.

In fact, according to a report CPB released June 3, the state Legislature quietly added three new corporate tax breaks in the last round of budget cuts — and just closing those loopholes could save the state up to $2.5 billion a year. The tax-law changes provide multi-million dollar tax breaks to a small nadful of the state’s largest corporations.

“Why,” Jean Ross, executive director of CBP, asked, “is the state giving away money?”

Prison report: Inmates will be back

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Editors note: Just A Guy is an inmate in a California state prison. Read his last blog entry (and links to past ones) here. His dispatches run Monday and Thursdays; he tries to answer questions and comments as quickly as possible, but it’s a bit tricky communicating from prison, so be patient.

By Just A Guy

The tides have turned and the language is changing as politicos try to salvage their political futures via a different spin on the old tune.

As the State of California budget fiasco lays the foundation for massive cuts in spending the results will be: early releases (eventually) for prisoners and even LESS rehabilitation, NO welfare, LESS education spending, and less aid in general. The long term result, unarguably, will be MORE people in prison and HIGHER recidivism!!!