What happened within minutes Monday may just be coincidence, but if so, it’s a cosmically foreboding one.
In Sacramento, Gov. Jerry Brown released the first online ad of his campaign to persuade California voters to endorse his sales and income tax increase measure. One snippet declared that under Brown, “California’s bond rating is now positive.”
It was, to put it charitably, misleading. In fact, California has the lowest bond rating of any state now and, according to a recent survey by Pew’s Center on the States, the worst credit rating record over the past 11 years.
In Pennsylvania, state officials were told by Moody’s, a major bond rating agency, that the state is being downgraded because of “large and growing pension fund liabilities.”
In Petaluma, the $234 billion California Public Employees’ Retirement System revealed that it earned just 1 percent on its investments during the 2011-12 fiscal year that ended June 30.
That’s a fraction of the 7.5 percent earnings assumption on which it bases its ability to pay pensions to hundreds of thousands of state and local government retirees, meaning its already large unfinanced obligations are continuing to grow.
Really the answer is obvious.
California is on a financial cliff and even passage of Jerry Brown’s tax increase in November will not solve the structural deficit problems of the California state budget.
Real reform is required, but it won’t be coming anytime soon from Brown or his public employee union supported Democrat Legislators who have massive majorities in California Legislature.
The campaign to pass Proposition 30 — Gov. Jerry Brown’s tax raising measure — released its first web ad Monday and guess what: Not once is the word “tax” mentioned.
The one minute, 39 second ad features people including Merced County Sheriff Mark Pazin and California Federation of Teachers secretary treasurer Jeff Freitas, along with others, talking about Brown’s actions so far in office, such as his vetoing a budget last year and cutting back on state issued cell phones and cars.
Translation: You can trust Brown with your tax money, though, again, the T-word never comes up. In its place are “the plan asks the wealthiest to pay their fair share” and that it “asks everyone to do their part.”
Prop. 30 would increase the sales tax by a quarter of a percentage point for four years and increases the personal income rate on a sliding scale for those making more than $250,000 per year. The income tax increase would be in place seven years. You can read a detailed breakdown here.
Can centrist politicians survive and thrive in today’s political climate?
Former California Gov. Gray Davis doesn’t think so.
“Those people are toast today,” the California Democrat said in a taped interview that first aired yesterday, describing his own ideological score as governor as “left of center, maybe a moderate liberal.”
Davis made his comments in an interview that aired at the end of “Chasing the Hill,” a Web-based series that debuted Sunday. The political drama chronicles a fictional California congresswoman’s tough re-election fight in the primary.
Davis, who has been active in California politics since the 1970s, said he’s seen partisan gridlock get worse over the years, saying the “the heightened partisan divide has made governing extraordinarily difficult.”
“You have to either be on the left or the right or else you end up with both sides shooting arrows at you,” he said.
The weekend brought good news and bad for Rep. Howard Berman, who is gripped in a tough race against fellow Democratic Rep. Brad Sherman for a San Fernando Valley congressional seat.
The latest campaign finance reports showed Berman has outpaced Sherman in fundraising since the 2012 election cycle began. Berman added some $500,000 to his coffers during the latest reporting period, bringing the total raised to almost $3.5 million. Sherman has reported collecting more than $2.7 million altogether. But, because he had stockpiled funds raised earlier and lent himself $700,000, Sherman has much more money in the bank—more than $3 million, compared with Berman’s $447,000—as the competitors move into the final months before the Nov. 6 election.
The so-called “super-PAC” supporting Berman, the Committee to Elect and Effective Valley Congressman, reported it was down to $7,800 cash on hand and was nearly $48,000 in debt. The group, which is allowed to raise and spend unlimited amounts from donors so long as it does not coordinate its efforts with the candidate’s campaign, spent nearly $600,000 to support Berman during the primary.
Also Sunday, the Berman campaign fell just short of getting the 60% of delegates needed to win an official endorsement from the California Democratic Party. The 58.5%, compared with Sherman’s 23.4%, certainly gives Berman bragging rights—Berman on Monday called the margin “a clear sign of our campaign’s momentum.” But it wasn’t enough to win him the money, campaign volunteers and other help an official endorsement could have brought.
Rep. Kevin McCarthy, the third-ranking House Republican, came to town for lunch at Costa Mesa’s Center Club and didn’t hesitate to trash the same high-speed rail plan supported by his lunch host.
The majority whip from Bakersfield spoke to the midday gathering of the Orange County Business Council and the OC Forum, displaying a sharp wit and offering an explanation for Washington’s high level of partisanship. But let’s start with his attack on California’s high-speed rail, which is endorsed by OCBC President Lucy Dunn.
“It’s not the right time or the right approach,” McCarthy said during the question-and-answer period, expressing particular concern about there being just $8 billion available at the moment for a project that will cost well over $50 billion. “I want a new house but I can’t afford one. So do I go buy a front door?”
After lunch, I asked Dunn about McCarthy’s comments.
“Having every dollar in the bank before you begin – that’s not how infrastructure gets built, ” said the Republican, who served as director of the state Department of Housing and Community Development under Gov. Arnold Schwarzenegger. “I really admire Kevin McCarthy… but I’m much more realistic about infrastructure getting built and not so political.”
I then got a chance to sit down with McCarthy and read him Dunn’s comments. He argued that highways and airports have ongoing funding sources to cover their costs, pointing to gas taxes and flight surcharges. (He didn’t mention local measures, like Orange County’s Measure M half-cent sales tax. Measure M raised $4 billion in its first 20 years and could raise $15 billion over the next 30 years and is a key source of funding for freeway improvements and other transportation projects.)
“If you’re going to build a road, you pay a gasoline tax,” he said. “If you’re going to build an airport, you pay taxes on tickets. High-speed rail will not pay for itself – it needs subsidies.”
Enjoy your morning and Dan Walters Daily video: Will CalPERS’ low earnings boost Jerry Brown?