California Progress Report

No Virginia, It's Not Just The Spending | California Progress Report

Cecille Isidro — Wed, 19 Aug 2009 08:30:00 -0400

As Mark Paul of the New America Foundation pointed out in his wise article in the latest issue of the American Interest, those cuts are part of the ...

Betting On A Constitutional Convention | California Progress Report

Cecille Isidro — Wed, 12 Aug 2009 07:11:00 -0400

California, said Steven Hill of the New America Foundation, used to be known as a place of innovation; it was time get back to an innovative California. ...

Leveling the Health Care Playing Field | California Progress Report

Cecille Isidro — Mon, 13 Apr 2009 08:12:00 -0400

This week, UC-Berkeley Professor Jacob Hacker put out a new report called "Healthy Competition", sponsored by the Institute for America's Future. He lays out how a public health insurance option could compete fairly with private insurance, ...

Runaway, Budget-Busting Runoffs

Cecille Isidro — Wed, 01 Apr 2009 08:30:00 -0400

This year, California state and local governments will spend close to $10 million on at least three elections we do not need. That makes no sense amidst California’s and our nation’s brutal recession.

Comparing the 2009 California Reforms | California Progress Report

Cecille Isidro — Wed, 04 Mar 2009 09:43:00 -0500

Election reform expert Steven Hill of the New America Foundation points out another flaw in the open primary system, stating “In a very liberal district, say an urban area like Los Angeles, the top two candidates in November likely would be two ...

Why the States Belong in the Stimulus Package

Cecille Isidro — Wed, 19 Nov 2008 13:23:00 -0500

With state revenues in free fall, governors are banging on the door of Congress, calling on lawmakers to put assistance to the states at the top of the list in the next economic stimulus package. In the ubiquitous media shorthand, the states want a “bailout.”

This shorthand, however, muddies the issue and the stakes here.

Giving help to the states is not the same thing as opening up the Treasury to shore up a failing private bank or manufacturer. States and the federal government are partners. In much of what the states do--educate, medicate, and incarcerate--Washington sets the standards and requirements, whether through No Child Left Behind, Medicaid, or the constitutional prohibition against cruel and unusual punishment.

The big items in state budgets--schools, health care, social services--are, to varying degrees, jointly financed by state and federal dollars. When those budgets must be deeply cut, it is not just a state issue. National purposes are being defeated, too.

The shorthand about “bailouts” also misses the central reason for including the state in a stimulus package: to bolster, or at least protect, the economy.

When recession drives state budgets out of balance, states have only two choices, both of them bad.

The first is to cut spending. But every dollar of state spending eliminated to close a budget deficit is a dollar of demand potentially removed from the larger economy. When teachers are laid off and the blind and disabled have their grants cut, they spend less for goods and services. State spending cuts throw the economic multiplier effect into reverse.

The second choice, raising taxes to close a deficit, also weighs down the economy. Tax increases on low- and middle-income households, which generally spend nearly all of their income, reduce their ability to consume. That is less true of higher-income households, which can choose to reduce their saving to sustain their current levels of consumption. But even taxing the rich to close state deficits is likely to drive down demand and slow the economy further.

To understand how bad those choices can be, consider California’s budget situation. It faces a deficit of $28 billion over the next year and a half. Let’s assume it must close that deficit with a combination of tax increases and spending cuts, which would be the case if Congress does not include the states in the stimulus package. And let’s assume that those measures reduce effective demand by an equal amount.

The result? Demand would shrink by about 1 percent of California’s gross state product, making the recession that much worse.

So the question for the stimulus package isn’t, as the media shorthand puts it, whether to “bail out” the states. It’s whether Washington will stand idly aside and watch the states, forced to balance their budgets, take fiscal actions sure to make the recession deeper and longer.

A Tax Commission for California? How It Can Be Made to Work

Cecille Isidro — Mon, 28 Jul 2008 13:32:00 -0400

Both Governor Schwarzenegger and Assembly Speaker Bass have stated that they would like to form a bipartisan commission to find ways to improve California’s tax system. They seek to modernize our tax system, make the state more economically competitive, and have a system that produces stable revenues.

These are great goals. California’s tax system was designed decades ago in a manufacturing era when borders were important and tangible goods ruled. Our tax system was not designed for the current information age with its mobile capital, worldwide-based workforce, and goods and services transferable over the Internet. Serious work is needed to bring our tax system into the 21st century.

A tax study commission is not a new idea. We’ve had several in the past and recommendations were made. California’s last tax review group was called the Commission on Tax Policy in the New Economy. Formed in 2000 by the legislators and governor, it held 17 public hearings and issued its report, with recommendations, in 2003. There is also a 2000 report by then Assembly Speaker Villaraigosa’s Commission on State and Local Government Finance. We also have a 1999 report from then State Controller Connell’s SMART task force.

Very few of the numerous recommendations of these commissions were seriously considered by the legislature or enacted. What would be different if yet one more commission studied our tax system?

Well, taxes are complicated and thoughtful consideration of the strengths and weaknesses of our current system is needed to bring it into the 21st century ways of living and doing business. However, elected officials and the public must have a strong willingness to accept change for a commission’s work to be worthwhile. Otherwise, we’ll end up with yet one more unused report.

Here are six suggestions that should increase the chances that the commission approach will help improve our tax system.

First – serious commitment. There must be serious buy-in from the legislature and Governor. The commission should be established by legislation with the Governor and legislature selecting the members. Legislative hearings on the final report should be required within two months of its issuance. The tax-writing committees and governor must also be required to propose tax law changes in response to the report and hold legislative hearings by a specified date. If they find the recommendations unacceptable, they should be required to issue a statement explaining why.

Second – able, willing and non-partisan commissioners. Commission members should have a strong technical and practical understanding of our tax system and the economic impacts of taxes. They should understand today’s global economy and how it affects business decisions and how a tax system can support economic growth. Commissioners should be willing to propose changes even if they would result in tax increases for themselves or their employers.

Also, while the Governor and Assembly Speaker have called for a bi-partisan commission, they should consider a non-partisan one as it may get more support from the public. Governor Pawlenty of Minnesota recently formed the 21st Century Tax Reform Commission and noted that he only knew the party affiliation of two of its 15 members.

Third – principles and goals. A set of principles should be adopted and followed that support good tax policy, such as equity, efficiency, transparency and simplicity. The National Conference of State Legislatures has a set of these principles, as does the AICPA. Also, several states have useful sets of guiding principles for reform, such as Washington and Arizona. In addition clear goals for reform should be established that harmonize with California’s goals for economic growth, social welfare and the environment.

Fourth – reality. Taxes must make sense for the system to be respected such that compliance is high. An approach that might make great economic sense but is too difficult to comply with won’t be a lasting change. Also, change can’t happen overnight so transition rules must be considered.

Our current system was not designed with any thought of how technology can help compliance; today it must be considered.

Labor and capital are more mobile today than decades ago. Demographics have also changed. Consideration must be given to what has changed and that the economy, society and technology will continue to change. Mobility and state competition to attract businesses also makes consideration of how other states tax relevant in the design of California’s tax system.

In addition, state taxes affect other levels of government. Commissioners must be mindful of local government tax concerns and how tax system design can benefit both California and local governments.

Fifth – time-saving background work. There are numerous reports from other states, think tanks, business and government organizations, and academics that can help the commission with its work. Also, lessons can be learned from other states that have recently studied and reformed their tax systems, such as Ohio and New Jersey.

Finally – public education. Concurrent work is needed by the legislature and tax agencies to help the public understand current tax problems and their direct and indirect effects on their lives and the state. This will help ensure that the commission’s recommendations get the careful consideration they’ll need in order for tax system modernization to become a reality.

Tax commissions typically spend hundreds of hours on their task. Staff and individuals who present testimony to these commissions also devote numerous hours to the cause. California’s tax system is in need of improvement and a commission can accomplish a lot in making thoughtful recommendations towards that goal. The six suggestions outlined above should help ensure that the commission’s time is well-spent so that California’s tax system can indeed get a strong opportunity to join the 21st century.

The Groundhog Day Election In Los Angeles

Ron Tang — Mon, 23 Jun 2008 08:22:00 -0400

After a fiercely fought primary election, no winner emerged in last week's election in the LA County Supervisor race between City Councilmember Bernard Parks and State Senator Mark Ridley-Thomas. With barely one-sixth of all voters participating, millions of dollars spent, and a race that turned increasingly negative, neither Ridley-Thomas nor Parks could muster a majority (50 percent plus one) in the nine-candidate field. As a result, both candidates must now duke it out for another five months until the November general election -- leaving voters in the crossfire of more mudslinging and personal attacks.

According to some political consultants and politicians, runoff elections are good for democracy. In theory, they give voters a “second look” to size up the top two finalists. But in all honesty, how much more will voters learn about Councilmember Parks and State Senator Ridley-Thomas that we don’t already know? What will we learn from another five months of attack mailers and sound bites?

One things we will definitely learn is how low mudslinging campaigning can go. To date, the two million residents of the sprawling 2nd District -- which stretches from Venice to Koreatown to South Los Angeles to the City of Carson -- have been subjected to increasingly vitriolic charges and countercharges. And that’s not counting the additional millions of dollars spent on this race by so-called independent expenditure committees.

This is not the first time that Los Angeles voters have had to endure nasty, negative and expensive runoff elections. Previously we saw it in the mayoral races in 2001 and 2005, in some city council districts, as well as a community college district runoff in 2007. In each race, voters were hammered with attack ads telling us what’s wrong with the future winners -- undermining our faith in our leaders.

Adding insult to injury, LA taxpayers shell out millions of dollars to pay for the administering of these runoff elections. The May 2007 runoff cost $5 million for an election where only 6 percent of voters participated, a 40 percent dropoff from the March primary. Some precincts had no voters -- yet taxpayers paid $40 per voter for this wasteful election.

Fortunately, there is a better way to elect our local leaders -- it is called instant runoff voting (IRV). It works much like our current runoff system, but it elects the majority winner in a single election, thereby saving millions in taxes. It also has the potential to boost voter turnout, and reduce the negative campaigning. Here’s how it works.

With the current method, voters who did not support Parks or Ridley-Thomas in June will pick their second choice this November. With IRV, voters indicate their second choice at the same time as their first choice by ranking up to three candidates, 1-2-3.

If any candidate wins a majority of first rankings, the election is over (just like now). But if no candidate garners a majority of first rankings, the instant runoff begins. If your first choice cannot win, your vote will go immediately to your second choice. In this way, the runoff rankings are used to determine the majority winner. It’s like the current runoff system, but you get it over in one election.

With IRV, voters, candidates and organizations can focus on a single election. According to the Los Angeles City Clerk, IRV will save taxpayers $8 to $9 million each election that a citywide runoff is not held.

Moreover, by reducing the number of elections, IRV will reduce voter fatigue and help boost voter turnout. It also has the potential to reduce negative campaigning. Other places using IRV have found that a winning candidate may need to receive second rankings from the supporters of his or her competitors. As a result, candidates have a greater incentive to find common ground and forge coalitions instead of attacking each other.

IRV has already been adopted by a growing number of cities, including Oakland, Minneapolis, Santa Fe, Cary, North Carolina and San Francisco. In San Francisco, IRV has been used in four elections since 2004. One study found that IRV boosted citywide voter turnout by 168 percent, and by 300 percent in the most ethnically diverse neighborhoods. Another study found that 87 percent of San Francisco voters understood IRV, a measure that cut across all racial lines.

IRV already has considerable support in Los Angeles, and has been endorsed by a broad coalition that includes the League of Women Voters, Los Angeles Area Chamber of Commerce, Los Angeles County Federation of Labor (AFL-CIO), voting-rights groups, some neighborhood councils, and noteworthy leaders like former Mayor Richard Riordan, labor leader Dolores Huerta and California State Controller John Chiang.

Voters must approve a charter amendment to adopt IRV for local runoff elections. If the Los Angeles City Council and Mayor Villaraigosa act to put IRV on the November ballot, voters will finally have the chance to get rid of wasteful, low turnout runoffs for all Los Angeles city, school board, and community college elections. But time is running short. For this to happen, the City Council's Rules Committee (chaired by Council President Eric Garcetti) must pass an IRV bill by this Wednesday (June 25) -- and the full Council must approve it by July 2.

Like Bill Murray’s character in “Groundhog Day”, voters desperately need relief from having to sit through endless reruns of the same election. It’s time to kickstart our democracy -- end voter fatigue, save millions of taxpayer dollars, reduce mudslinging campaigns -- by adopting IRV.

Thirty Years After Prop 13, California Voters Supported Tax Increases In Tuesday’s Election

Ron Tang — Thu, 05 Jun 2008 11:27:00 -0400

Voting just three days before the 30th anniversary of the passage of Proposition 13, the landmark Jarvis-Gann initiative that cut property taxes and triggered a tax revolt across the country, voters in the primary election approved dozens of tax increases in local communities around the state.

By my count from semi-official election results available the day after the election, they passed 26 of 32 proposals to issue school and community college bonds; each of these measures, which raise local property taxes to repay the bonds, required a super-majority (55 percent) vote for passage. They approved 13 of 24 proposals to create or raise local per parcel property taxes to pay for a variety of services, including schools, libraries, parks, and law enforcement; parcel taxes can be passed only with a two-thirds vote. They approved tax increases not just in the liberal Bay Area but also in the Central Valley and Orange County. Overall, they passed 49 of the 75 tax-increase measures on local ballots around the state. And in many of the cases where the measures failed, it was with a majority that fell short of the required 55 percent or two-thirds requirement.

The result flies in the face of several different kinds of conventional wisdom. Turnout for the primary appears to have been the lowest in the state's history, about 22 percent of registered voters. Since it's generally assumed that low-turnout elections are dominated by older, better educated, affluent, and more conservative voters, the dismal turnout should have spelled death for many of the bond and tax measures. This time it didn't. It's also assumed that the combination of falling home values, rising gasoline prices, and a softening job market makes voters reluctant to open their pocketbooks to pay for public services. In the primary election, at least, that maxim didn't hold.

Why? It will take some good political scientists armed with regression analyses to know for certain, but I have a couple of hunches.

The first is what might be called California's residual electorate, the one that dutifully turns up at the polls, no matter how desultory the contests at stake, may still skew old, affluent, and educated, but it's less conservative than it once was, especially along the coast.

The second hunch is that the political consultants who run school bond campaigns have increasingly mastered the techniques of targeted recruitment and turnout of pro-bond voters, especially parents of school children. When they can run a school bond in an otherwise low-turnout election, they are not just making the case for the bond measure, they are picking the electorate too.

This article was originally published in New America Voices.

California Progress Report Highlights 'Exporting California' Event

Communications — Thu, 22 Mar 2007 15:58:00 -0400

I attended a program earlier today, "Exporting California: California's Influence in 2008 and Beyond", hosted by the Public Policy Institute of California, the James Irvine Foundation and the New America Foundation. The main fare centered around our state's influence on the 2008 Presidential election and also on "Making Policy in the 'Nation-State' of California. There will be some articles on that tomorrow.

But what caught my attention were some comments by Michael Villines, the Republican leader in the Assembly and Governor Schwarzenegger on prison reform and their suggestion that a deal is imminent.

Villines' comments came first during a freewheeling panel where there was a fair amount of bonhomie and visions dancing in his head and that of Speaker Nunez of bipartisan cooperation. They had both just landed back from Washington, D.C. where they and a number of their colleagues had met with members of the California Congressional delegation and other Senators and Members of Congress...

For the complete article, please visit the California Progress Report website.