This story was reported for the San Diego News Network on March 11, 2010.
It’s a busy week in California. Gov. Arnold Schwarzenegger is putting more pressure on legislative leaders to take action, the Assembly Speaker is giving raises and the CSU system is selling millions of dollars worth of bonds.
I doubt any of these people had time to celebrate St. Paddy’s Day and if they did, their hangovers are probably nothing compared to the budget headaches they’ve faced in the past couple of years. But if you did have time to celebrate, be sure to check out SDNN’s hangover solutions after you finish reading this.
Here’s your post-Patrick CBCD update.
Call for budget action: Schwarzenegger met with legislative leaders Tuesday pushing them to make cuts to address the expected $20 billion-plus shortfall expected next fiscal year.
In a letter after the meeting, Schwarzenegger acknowledged that it has been nine weeks since he forced the Legislature to have a special session on budget cuts. But a delay in making decisions, he said, will result in more cuts.
“California is still spending approximately $600 million more per month than we have in revenue,” he stated in the letter. “The two-month delay in dealing with the budget shortfall will require up to $2.2 billion in deeper spending cuts. In addition, the legislature has failed to take meaningful steps to stimulate job creation. Californians don’t have months to wait for action by the Legislature.”
Schwarzenegger is also pushing the Legislature to adopt his job creation plan including offering tax breaks to Californians through different avenues. He concludes his letter by stating he welcomes all ideas.
“As I have said to each of you, I am more than willing to consider job creation bills from either side of the aisle,” he wrote in the letter. “It has been my hope that leaders of both parties would sit down and strategize on how to move these job creation bills quickly.”
Despite the closing of the letter though, on Wednesday, Schwarzenegger said he’d veto the Democrats’ idea to cut $1.1 billion in the public transit system.
Speaker gives raises: California Assembly Speaker John A. Pérez, who was just sworn in March 1, has approved some hefty pay increases for his staff.
According to The Sacramento Bee, he “handed out pay increases or promotions totaling nearly $132,000 per year the day he was sworn in this month, including a $65,000 raise to his chief of staff.”
“Of eight staff members targeted, Sara I. Ramirez received by far the largest raise, jumping her pay from $125,256 to $190,008 for serving as Pérez’s top assistant, according to documents obtained under state open-records law.
Ramirez will be paid $80,204 more per year than her boss or Senate President Pro Tem Darrell Steinberg, whose pay was cut from $133,639 to $109,584 last year by the state’s independent salary-setting commission.
Ramirez’s salary will equal that of her predecessor, Nolice Edwards, who retained her $190,008 annual salary after her boss, Karen Bass, relinquished the gavel to Pérez.”
The changes, reported the Bee, will result in additional “$216,000 per year, a tiny portion of the lower house’s $149.4 million annual budget” for Californians.
JFK award: The recipients of the prestigious John F. Kennedy award for bipartisanship, aren’t really showing bipartisanship as criticism continues to rise across party lines.
According to The San Francisco Chronicle, it’s a repeat of what happened last year.
“The John F. Kennedy Profile in Courage Award recognizes people who make difficult decisions despite personal and political consequences and was awarded to Sen. Dave Cogdill, R-Modesto, Assemblyman Mike Villines, R-Clovis (Fresno County), Assembly Speaker Emeritus Karen Bass, D-Baldwin Vista (Los Angeles County), and Senate President Pro Tem Darrell Steinberg, D-Sacramento.
So controversial was last year’s compromise by the two Republicans — who agreed to tax increases in February 2009 — that both were ousted from their leadership positions by their GOP colleagues.
‘Faced with the most difficult choices and a budget crisis of unprecedented magnitude, these legislative leaders had the courage to negotiate a compromise that they felt was in the public’s best interest,’ said Caroline Kennedy, president of the John F. Kennedy Library Foundation, in a statement announcing the award. She is a cousin of first lady Maria Shriver.”
Specifically, Steinberg is taking shots.
“But shortly after receiving his award for cooperation, Steinberg blasted the governor’s decision and said it made him concerned about the ability of state leaders to solve the $20 billion deficit.
He said the governor ‘is sort of at 30,000 feet right now’ as he is in the waning months of his term.”
CSU bonds: The California State University system is putting millions of dollars of revenue bonds on the market.
According to Bloomberg, despite the state’s poor credit rating, CSU is doing quite well.
“California State University, the largest four-year system in the U.S., will market about $208 million of taxable Build America Bonds today after selling $124.3 million in tax-exempt debt yesterday.
The university, with more than 430,000 students on 23 campuses, offered tax-exempt yields of 0.65 percent to 4.66 percent on maturities from 1 to 20 years, preliminary data showed. The pricing will continue today. Moody’s Investors Service rates the securities Aa3, the fourth-highest, and Standard & Poor’s awards it an A+, fifth-highest.
Cal State’s first issue in a year ranked as much as four levels higher than the debt of the most populous state. The budget deficits California has faced amid the worst economic recession since the 1930s have left it with the lowest credit grade among U.S. states. It is rated Baa1, three steps above high-yield, high-risk junk bonds by Moody’s, and A-, four levels above speculative grade, by S&P.”
The market move comes after CSU was forced to raise tuition and fees and layoff teachers to close a budget reduction of $584 million for the 2009-10 school year.
Big bills: Thousands of Californians who sold their homes in short sales or modified their mortgages last year are facing the prospect of huge state tax liabilities.
That’s because state lawmakers have not passed a bill to mirror federal tax relief for people who had mortgage debt forgiven in 2009.
Republican Gov. Arnold Schwarzenegger says he intends to veto the bill because Democratic lawmakers added an unrelated provision dealing with tax fraud penalties on big business. Democrats say they are simply conforming to federal tax rules signed by President George W. Bush.
According to the California Franchise Tax Board, conforming state law to the federal standard would help an estimated 16,000 people reduce their California taxes between 2009 and 2012.
Associated Press writer Judy Lin contributed to this report. Hoa Quach is the political editor for the San Diego News Network.