While California Dreams- Weekly Update Vol.1 No. 28

A weekly update on the goings-on in Sacramento
For the week ending December 15, 2007

Key bills and issues we’ve been following during the
Past week and beyond
While historically a pretty sleepy time of year, this past week was full of bells, whistles and continuing alarms ringing over the state of California’s finances. With the governor deciding to declare a budget emergency for January and the expectation now that the shortfall could go as high as $14 billion, the politicos are gearing up for a battle royal over how we’re going to reconcile our needs and our spending in the coming year.
It was also a week of other surprises, as the Speaker’s health care bill that seemed as dead as a doornail last week has come back to life and is scheduled for a vote as early as tomorrow. Unfortunately, the vote will come without most of the members knowing all that is in it because it’s still being finalized. And predictably there is a lot of controversy surrounding its process and provisions, but that shouldn’t be much of a surprise, given the way we do business here in California.
Not only was the legislature busy, but the courts were busy as well with California scoring a major victory against the automakers in dealing with global warming and the Governor being sued by mental health advocates. The FPPC is also cracking down on spending practices and the Governor has finally coughed up information showing he’s received about 1.7 million in special fund money to maintain his Hollywood lifestyle while working as a servant of the people. A busy week, indeed.
We here at Speak Out California hope to be able to keep you up-to-date on all of this in the weeks and months ahead, so
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The Continuing Budget Mess: The Gov. announces he’s declaring a fiscal emergency
The Governor announced late this week that he will be declaring a fiscal emergency in early January, a procedure which allows him to call a special session and demand the Legislature act on any budget proposals within 45 days. Under the power granted by the people several years ago under Proposition 58, this allows greater flexibility in dealing with this crisis created by the sub-prime mortgage fiasco and the traditional trends of ups-and-downs in the economy. While full of procedural exceptions to the normal legislative process, this will also allow mid-year cuts and other efforts to stop the bleeding. Of course for the Republicans, this means just cutting programs— a call which they have already made. In response, the Dems have suggested that cuts be accompanied by a look at new revenue sources, like closing tax loopholes, re-instating the Vehicle License Fee and taxing services and internet purchases.
While certainly cause for concern and even alarm, the state has seen this large a shortfall before. In 1991, under Republican governor Pete Wilson, the state resolved the problem by sharing the pain. While cutting about $7 billion in services, Wilson and the legislature also increased the sales tax and income on the wealthiest Californians with a 5 year 1% increase on the income of the richest in the state. This is not the intention of this Republican governor, however.
Governor Schwarzenegger has already sounded the political bell by announcing his intention to an across the board 10% reduction in services for every state agency and department. It could also mean a suspension of Prop 98—the school funding mandate which requires that at least 40% of the State’s general fund goes to education spending for K- community colleges, so expect some serious push-back from the educational community and the public as well. For more on this story, check out the Sac Bee article here.
The Resurgence of a health care measure
It will be interesting to see how this announcement plays out in the context of the bleak budget prognostications. A universal health insurance program, backed by the Governor, the Assembly leader and several unions is presently scheduled for a floor vote Monday. Although it is the result of many months of negotiation and its parts are complicated, the measure doesn’t address how this is all going to be paid for. The measure requires that all Californians buy health insurance from various private, for-profit companies, some of whom are the subject of lawsuits for their improper treatment of their insured’s (see below). It also requires that companies pay a varying percentage for employee health coverage, among its provisions, but it doesn’t say how it’s all going to be funded because it won’t get through the 2/3rd vote requirement in the legislature. So that expected $14 billion price-tag is expected to be presented as an initiative in November 2008. This raises the obvious question: How are we going to close a $14 billion budget gap and raise another $14 billion to fund an ambitious health care proposal. For more on the deal, check out the articles at the LA Times and the SF Chronicle and for the most up-to-date analysis of the measure as it continues to be revised, click here for the California Progress Report.
The elation of the Governor and the Speaker of the Assembly on this healthcare deal has been tempered by Senate leader Don Perata who has announced that his house isn’t going to rush to judgment on this plan. He has publicly stated that he will not be calling the Senate into session to vote on the proposal this year and cautioned that the measure should not be taken up until the public sees what kinds of cuts the governor is going to make on existing healthcare services.
Other groups have piped-up about the rush to judgment of an early vote tomorrow as well. While some labor groups support the plan (specifically the Service Employees International Union, best known as SEIU), others are either strongly opposed (the California Nurses Association for one) or wary enough about the current and still emerging plan, to call for a delay in the vote (the California Labor Federation). For more on this story, check out today’s LA Times story here.
Lawsuits and rulings of the week:
Mental Health advocates take on the Governor

With Christmas cheer in suspension this week, mental health advocates filed suit against the Governor to overturn a decision to fund a $55 million homeless program by shifting the money source from the state budget to a voter approved initiative that calls for a 1% additional tax on California’s millionaires. The suit claims that by substituting this money from the funding pool created by Proposition 63, the Governor is undermining the intent of the measure to provide more money for mental health programs, not simply substituting from one source to another. For more on this story, click here.
Court upholds California’s global warming legislation
On another legal front this week, a Federal District Judge in Fresno upheld the State’s mandate that motor vehicles reduce their greenhouse gas emissions and improve their fuel economy to an average of 35 mpg by 2016 as required under AB 1493, passed in 2002. The court threw out the world’s major automakers suit that tried to claim only the federal government has the authority to issue such a mandate. While just one in a string of attempts by the recalcitrant auto industry to step-up-to-the-plate on their role in global warming, they continue to pump millions into lawsuits rather than into trying to be part of the solution.
Although a major victory for California and the war on global warming, the State’s mandates still face reluctance from the Bush administration whose own U.S. Environmental Protection Agency has yet to grant us the waiver required for us to proceed. That failure to act is the subject of another lawsuit filed by the State of California last month to force the U.S. EPA to act, which is based on a prior lawsuit that the Supreme Court ruled on earlier this year. In that decision, the Court found that the EPA has the duty to regulate greenhouse gases, regardless of the impact on fuel-economy standards. In other words, the big automakers and the complicit Bush administration keep suing and keep losing on the climate change problem. And we thought they hated lawyers and lawsuits???? For more on this story, click here.
Insurance Commissioner goes after Blue Shield:
Not to be kept out of the limelight, Insurance Commissioner Steve Poizner announced this week he will be seeking $12.6 million in fines against Blue Shield of California for improperly and illegally terminating the insurance coverage of more than 200 people. In his announcement, the Commissioner claims that Blue Shield, one of the companies that stands to benefit from the proposed health care plan being voted on tomorrow, committed over 1200 violations in their dealing with their insured’s before terminating their coverage. Of course Blue Shield is howling, but recent investigative news reports have exposed practices by this and other big insurance companies showing how prevalent this kind of behavior has been. For more on this story, click here.
What the polls are saying this week:
The highly regarded PPIC has come out with another poll this week which contains few surprises. It shows that 65% of Californians expect bad economic times ahead. The poll also questioned voters on their thinking about Prop 93, the term limits/expansion initiative with 47% being in favor, 38% being opposed and 15% not having an opinion either way. That’s today, of course, but let’s see what the final numbers are on election day after both sides spend millions bashing politicians. Who will survive this carnage is anybody’s guess at the moment. For an excellent summary and analysis of the report, check out Frank Russo’s column here. And if you missed our analysis of the ballot measures for the February 2008 election, we had a run-down of them in last week’s While California Dreams that you can find here.
The Rest of the Story
Our blogging offerings for the week:
Random Thoughts for a mid-December Day – The budget mess and other random thoughts while holiday shopping
The Line at the DMV – what you spend is what you get

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Until next week,
Hannah-Beth Jackson and the Speak Out California Team