Democratic Gov. Jerry Brown announced Tuesday morning that despite a state budget surplus, his May budget revision included projected lower budget figures for fiscal year 2013-14, which begins on July 1, than for the previous fiscal year. The reasons are one-time revenue surges because of federal tax changes that last only one year; and the retroactive part of the Proposition 30 tax increase for 2012.

The result will be less program spending, but with most of the spending increases focused on schools and Medi-Cal.

“We have climbed out of a hole with a Proposition 30 tax,” Brown said, referring to his 2012 initiative which increased taxes on those with incomes exceeding $250,000; and increased sales taxes on everyone. “This is not the time to break out the Champagne,” said Brown, who still called for caution despite an uptick in the state’s revenues.

“I am pleased that for the first time since I was elected to the Legislature we are not confronted with a multi-billion-dollar-deficit,” Sen. Mimi Walters, R-Laguna Nigel, said in a statement. “But let’s be clear, that is a result of a questionable retroactive tax that has accounted for the current projected surplus. I believe we can all agree that excessive spending and dubious budgetary gimmicks of this and previous governors have placed undue stress on California families.”

But the “surplus” is thin. Finance Director Anna Matosantos said it’s only a $2.8 billion “surplus” in the $96 billion 2013-14 budget.

Brown’s caution

Brown’s caution about the lower-than-expected revenues was an unexpected shift from media expectations leading up to the May Budget Revision. Many predicted that Brown would take full advantage of $4.5 billion in revenues that came in unexpectedly just this spring, and assign the money to many statewide programs. But Brown took a more cautious approach. He said his finance team was anticipating slower economic growth than previously thought, primarily due to federal spending cuts, Europe’s lower economic projections, and the higher payroll tax workers are now paying because the federal government allowed the payroll tax cut to expire.

“Four percent growth has now become 2 percent,” Brown said. Brown’s revised budget cut the personal income growth forecast from 4.3 percent to 2.2 percent.

Brown said passage of Prop. 30 was the reason for the revenues, but was quick to say that most of the money would be going to schools — especially to schools with high populations of non-English speaking students and children in foster care.

The revised budget for 2013-14 proposes an additional $2.9 billion in the current fiscal year for K-12 schools and community colleges.

The bottom line, though, is more money is going to schools than is coming in. Some say that much of the money will go toward teachers’ pensions.
Debt? What debt?

Brown had little explanation or discussion of the state’s massive debt problem in this $96 billion budget. Before understanding state spending and any talk of a surplus, the state’s debt must also be considered.

According to the Small Business Action Committee, because the Legislature has refused to make any sincere pension reforms moves, nearly $2.5 billion in pension debt has been run up just in the last two years.

Brown occasionally speaks of California’s “wall of debt.” However, he is usually careful in his definition of debt, and only attributes a very small segment of what the actual debt obligation is. He didn’t say much about the “wall of debt” during the Tuesday press conference, but the written May Budget Revision says the budget plan will reduce the wall of debt to less than $5 billion by the fiscal year end of 2017, from $27 billion today.

But it must be difficult to reconcile a supposed state “surplus,” with actual, total bond debt of $79.6 billion, California State Teachers’ Retirement System debt of $70.9 billion, California Public Employee Retirement System debt of $128.3 billion, and other post-employment benefit debt of $63.8 billion, according to SBAC. Where is the surplus?

Not without controversy…

Brown is sticking to big spending on the controversial Common Core education program funding, primarily because of the influx of federal funds coming in if the state adopts the program. “$1 billion for the adoption of Common Core standards puts California in the forefront,” Brown said. Most Californians know just how important it is for California politicians to be at the forefront of every issue in America.

But Common Core is merely another one-size-fits-all, expensive national education standard that purports to be a fix-all to the continually dropping literacy scores — a problem created by the original education national standard.

“We have to get more kids through school in less time,” Brown said about higher education. “We’ve got 10 million immigrants [nationally]. We’ve got to get them legalized and into our schools.”

Other big spending programs include the Affordable Care Act, which will dramatically expand California’s publicly funded Medi-Cal health care program for low-income individuals. The ACA is another federal program Brown has embraced.

“California’s economy is not recovering at its full potential, weighed down, in part, by policy decisions made in Sacramento, like tax increases, the cap-and-trade program, and other regulatory burdens on state businesses. Regrettably, we are sending the wrong message to job creators in today’s May Revise,” Assemblyman Jeff Gorell, R-Camarillo, told media after Brown’s press conference.

“The elimination of funding for the state’s enterprise zones pulls the rug out from under hundreds of businesses that have relied in good faith on this program by moving operations into enterprise zones and hiring new employees,” Gorell said in a statement. ”The decision, if carried forward, will likely result in expensive litigation for the state and less savings for state government than projected, as was the experience with the elimination of redevelopment agencies.”

“Finally, I think the Governor should lay the groundwork for a rainy day fund that would smooth out the volatile tax revenue that California receives,” Gorell said.

While Brown warned that there’s essentially no extra money in the budget after education programs, when asked about restoring cuts to mental health and welfare programs, he emphatically said, “No. No. There’s no money.”

Gesturing at the Capitol building, Brown added, “This place is a big spending machine.”

TODAY at least 7 bills that would directly undercut various provisions of Prop. 13 will be heard in committee. If approved, these bills could cost every property owner thousands of dollars.

There are seven bills pertaining to Proposition 13 that are up in the Senate Governance and Finance Committee.  Six of these bills directly undercut various provisions of Proposition 13.

The bills are: SCA 3, 4, 7, 8, 9 and 11.

THE FOLLOWING BILLS PLACE A BULLSEYE ON PROPOSITION 13 AND TAXPAYERS:

Senate Constitutional Amendment 3 (SCA 3), Mark Leno (D—San Francisco): Lowers the threshold for school district per-parcel property taxes from two-thirds to 55%. This is a direct assault on Proposition 13 because it makes it easier to increase property taxes above Proposition 13′s one percent cap.

Senate Constitutional Amendment 4 (SCA 4), Carol Liu (D—La Canada) and Senate Constitutional Amendment 8 (SCA 8), Ellen Corbett (D—San Leandro): Lowers the threshold for the imposition, extension or increase of local transportation special taxes from the Proposition 13-mandated two-thirds vote to 55%. Most transportation special tax increases consist of very regressive sales tax hikes. These add to the burden of California taxpayers who already pay the highest state sales tax in the nation.

Senate Constitutional Amendment 7 (SCA 7), Lois Wolk (D—Davis): Lowers the threshold from two-thirds to 55% in order to approve a bond to fund public library facilities. Lowering the threshold for school facilities to 55% has already resulted in billions of dollars of additional property tax payments that otherwise would not have been approved by voters.

Senate Constitutional Amendment 9 (SCA 9), Ellen Corbett (D—San Leandro): Lowers the threshold from two-thirds to 55% to increase special taxes to fund community and economic development projects.

Senate Constitutional Amendment 11 (SCA 11), Loni Hancock (D—Berkeley): Lowers the threshold to 55% to allow for voters representing ANY local government entity to approve a special tax for ANY purpose. This is far and away the broadest application, and thus the most egregious, of these constitutional amendments.

Assembly Constitutional Amendment 8 (ACA 8), Bob Blumenfield (D—Woodland Hills): Lowers the threshold to 55% for city and county voters to approve a local bond measure in order to fund emergency service facilities projects.

Tell your representatives that you oppose these bills that attack your Prop. 13 protections.

One supportive bill, Senate Constitutional Resolution 25 (sponsored by State Senator Mark Wyland, R—Escondido) is also up in the committee today and honors Proposition 13 on its upcoming 35th anniversary.

Stay tuned: Two additional bills, Assembly Constitutional Amendments 3 and 8 also diminish Proposition 13′s protections. These will head to hearing soon.

Here is a link to a graphic from the Los Angeles Times “Campaign contributions by special interest,” showing reported direct and independent expenditures on behalf of the two major candidates, Eric Garcetti and Wendy Gruel. Over $6.0 million has been spent by labor unions, more than twice as much as the next four largest categories of contributors. And that’s only partly why these unions are buying this election.

Using data from the LA Times graphic, we’ve come up with our own table, one that shows what percent of each contribution – by category – went to each candidate. This data illustrates an important fact: Union spending tends to be monolithic, favoring a particular candidate or party, whereas political spending from most other identifiable categories – usually lumped together as “business” – is split evenly. On the table below, it is evident that Wendy Gruel’s mayoral campaign has garnered 86% of the union campaign contributions. But nearly every other interest group has split their campaign spending almost equally between the candidates.

This data offers additional support to the theory that political contributions from individuals and businesses tend to be diverse, usually focused on narrow issues of particular importance to each contributor, and balanced between candidates and parties. But public sector unions have a unified agenda that never deviates: More pay and benefits for public sector workers, and more public sector workers. And the rhetoric is always compelling, even if the agenda is pure self-interest. For public safety. For the children.

Take a look at this partial list of  labor endorsements for Wendy Gruel:

Los Angeles Police Protective League (LAPPL)
United Firefighters of Los Angeles City (UFLAC) Local 112
Association for Los Angeles Deputy Sheriffs
Los Angeles Fire Chief Officers’ Association
Professional Peace Officers Association (PPOA)
Law Enforcement Association of Asian Pacifics (LEAAP)
Los Angeles County Firefighters Local 1014
Los Angeles School Police Officers Association (LASPOA)
Amalgamated Transit Union (ATU) Local 1277
American Federation of State, County, and Municipal Workers (AFSCME) District Council 36
AFSCME United Nurses Associations of California/Union of Health Care Professionals (UNAC/UHCP)
AFSCME Local 1902
Los Angeles County Federation of Labor
Service Employees International Union (SEIU) Local 721
SEIU 121RN, Southern California Nurses
SEIU 721
SEIU United Long Term Care Workers (ULTCW) 

The common thread that runs through these union endorsements, in most cases, is the fact that taxpayers are footing the bill for the pay and benefits for the government workers they represent (and, of course, the dues they pay to their unions). And the common fallacy that informs the agenda of these unions is that somehow it is economically feasible to pay over-market wages and benefits to public sector workers, and, by extension, to all workers. Witness Gruel’s latest campaign pledge, calculated to boost her support among Latino voters.

As reported in the Los Angeles Daily News, on May 13 “Eric Garcetti criticizes union mailers promising wage hike if Wendy Greuel is elected L.A. mayor:”

“Campaign mailers sent to Latino voters promising a hike in the $8 minimum wage if Wendy Greuel is elected are sparking controversy in the Los Angeles mayor’s race. Two mailers, sent by an outside committee supported by the Los Angeles County Federation of Labor that represents 600,000 union workers and supports Greuel, were sent in Spanish and English last week. The mailers suggest the minimum wage, currently $8 an hour, will be hiked under a Greuel administration. Voters go to the polls in one week. ‘On May 21, our votes will elect la Wendy and raise the minimum wage for housekeepers and cooks and dishwashers to $15 per hour,’ reads one mailer.”

Gruel is invited to explain exactly how she expects the small businesses in Los Angeles will adapt to a nearly doubling of the minimum wage. But other promises she’s made will be harder to break. When special interests split their money between candidates, as our chart above proves is the case in the 2013 Los Angeles mayoral race, it is relatively easy for a victorious candidate to do the right thing. After all, whoever’s toes are being stepped on was giving just as much money to the candidate that lost. But the public sector unions gave 86% of their money to Gruel, and if she wins, it will be because of them. They will own her.

Wendy Gruel may or may not win next Tuesday. The race is a dead heat, perhaps because voters are finally realizing that public sector union endorsements and money are not given in the public interest, but in the public sector worker’s interest. Either way, however, this campaign is a replay of a political dynamic that has, over the past 20 years, turned California into a state where most local governments and agencies are run by the government employee unions, who own the politicians who are supposedly authorized to manage them.

*   *   *

Ed Ring is the Executive Director of the California Public Policy Center, and the editor of UnionWatch.org.

The most obvious question: Since the budget only requires a majority vote, and the same political party controls the legislature and the Governor’s office — what is keeping Democrats from using the budget process to — well — do the budgeting?   I don’t agree with it, but could at least understand the idea that when you needed to do some sort of “deal” with Republicans (which, I might add, always resulted in bad budget anyways) — then I could at least understand, but not agree with, back room negotiations.

If one wanted to make an educated guess as to why Democrats still want to craft their budget deals in back rooms — it is because, in large measure, the Democrat legislators who fill so many seats in the Senate and the Assembly are complete tools of Sacramento special interests — especially the state’s massive public employee unions.  So when Governor Brown, Senate President Steinberg and Assembly Speaker Perez are in the back room, “negotiating” a budget — it is lobbyists whom they are trying to please, assuage, and placate.

Republicans have long made it clear that passing these empty bills in advance of a deal is a bad way to do business.  Although I would note that such complaints were never followed up with resolve to reject a budget so crafted, back when Republican votes were needed.

Today Governor Brown will present his May Revision to his proposed budget.  In it the Governor would likely confirm that billions of dollars in unanticipated revenue to the state will largely go to public schools, based on a complex set of formulas set out in Propositions 98 and 111, two measures passed by voters that really implemented ballot box budgeting in terms of funds going to K-14 education.  Otherwise, we will likely be looking at yet-another status quo liberal budget.

The only real effort that I am aware of in semi-recent history in terms of really trying to change the way the state (and its budget) do business was done by California Performance Review Commission (during the reign of Arnold 1.0) who issued a lengthy report recommending over a thousand changes that could be made, with the potential savings in tens of billions dollars.  Of course the Democrats in the legislature pretty much torpedoed the proposal reforms — go figure.

No, Governor Brown’s revised budget will largely retain the status quo and be one that every Republican should feel comfortable opposing.

“Welcome to this week’s meeting of the ‘Don’t Leave Them With Two Nickels to Rub Together Committee’  It is good to see that the public employee union bosses, who represent the highest paid government workers in all 50 states, are in attendance.  They are the heart and soul of our movement.   Then of course, we must acknowledge those newspaper editors from some major papers, who work so hard to help our cause of increasing the tax burden on average Californians.  Special mention and thanks must go to the representatives of the Los Angeles Times, a publication whose institutionalized hostility to Proposition 13 is legendary — it hardly seems like it has been 35 years since Howard Jarvis labeled your paper ‘the enemy of the people.’  Also, I want to give a shout out to the several leftist professors from taxpayers supported universities who have joined us today.  And lest I forget, our special interest enablers in the private sector, most of whom profit directly from government spending, are here today to lend their support.”

“As you know, our number one target continues to be Proposition 13 and its protections for taxpayers.  Although we have been successful in making California number one in state sales tax, gasoline tax, and in income tax rates, we rank only 15^th in property taxes.   This, I know you all agree, is an outrage.   California, must always strive to be number one.”

“Of course, we are aware that Proposition 13, which limits annual increases in property tax bills, and requires that voters have the final say on new local taxes, is very popular with the public at large.  Surveys show that it is at least as popular as it was when it received almost two-thirds of the vote in 1978.”

“However, we have a clever plan to increase the tax burden on all taxpayers, but especially homeowners, without ever having to admit that we support higher taxes.  Our objective is to reduce the two-thirds vote needed to approve new per parcel taxes, taxes that can be used for any purpose and are imposed over and above the regular property tax.  We also want to make it easier to raise sales taxes that everyone pays, to support our favorite projects.”

“Our strategy is to promote the lowering of the vote required to approve new taxes by saying we are just trying to make voting on tax increases more democratic.  This way, we can appear to have clean hands, while making it much easier to increase the tax burden on average folks.”

“This week, a number of our favorite bills will be heard by our friends in the Senate Governance and Finance Committee.  These bills would make it easier to approve new property taxes for school facilities, new bonds for libraries – paid for through higher property taxes — new sales taxes to fund community and economic development projects, and new sales taxes for transportation projects. And you will be pleased to learn that we have many more bills like these in the pipeline.”

“On a final note, as we move forward with our agenda, let’s remember, the best way to get more out of taxpayers is to make voters think someone else will be paying the higher taxes.  Look at Proposition 30 as a template for further success.  We were able to convince many voters that the burden would be borne by the wealthy, although it also increased sales taxes on everyone.  So, let’s stay focused on divisive taxes, like parcel taxes, that appear to impact only property owners, even though renters, too, will pay through higher rents.  And as we work to undermine Proposition 13, let’s remember to keep repeating our talking points.”

“When we attack the two-thirds vote, tell the folks that we are not trying to raise their taxes, ‘We are just making the process more democratic.’  And when new taxes appear on the ballot, focus on gaining the support of those who are unlikely, or who believe they are unlikely, to have to pay.  Just say, ‘The tax burden will fall on someone else who should be paying their fair share.’  Finally, if voters remain unconvinced, say, ‘It’s for the children.’”

“This week’s meeting of the ‘Don’t Leave Them With Two Nickels to Rub Together Committee’ is adjourned.  Let’s go out and redouble our efforts to undermine the taxpayer protections provided by Proposition 13.”

In West Orange County next year, on the natural, there is an open State Senate seat and an open Supervisorial seat, where Lou Correa and John Moorlach, respectively, are facing term limits.

Supervisor Janet Nguyen

Former Assemblyman Jose Solario

The 34th State Senate District is a “new” seat, redrawn in the decennial redistricting process. While the retiring Correa is a Democrat, the newly drawn boundaries of this district actually make it much more fertile territory for a Republican. Currently the match-up for this seat is Republican Supervisor Janet Nguyen, and retired Democratic Assemblyman (and now community college trustee) Jose Solorio. Nguyen has been aggressively campaigning for this seat for some time. The only real variable out there that potentially impacts this dynamic are reports that Nguyen is under scrutiny by federal investigators. If nothing comes of it, then Nguyen has an advantage in this show-down. Waiting in the wings, on the Republican side, is former Assemblyman Jim Silva, who has amassed a sizable war chest of hundreds of thousands of dollars. But it is not expected that Silva would challenge Nguyen for the GOP nod. (For those looking ahead, should Nguyen win the Senate Seat, she would then vacate her Supervisorial seat, and it is expected that Correa would run in that special election — but that’s a story for another day).

BOE Member Michelle Steel

The Second District Supervisorial District that comes open with Moorlach’s forced departure opens up this “safe” GOP seat. So far the only “official” candidate for the seat is conservative Michelle Steel, who is currently in the middle of her second allowable term on the State Board of Equalization (BOE). Steel has represented Orange County on the BOE since her election in 2006. She and her husband, former State GOP Chairman Shawn Steel, moved to Sunset Beach in the OC from the Palos Verdes Peninsula last year. Steel has opened a committee and has been aggressively raising funds, and as supporter of her candidacy, I am privy to the impressive host of endorsements she has in hand. Her campaign formally kicks off with a fundraising event at the Huntington Beach home of OC GOP Chairman Scott Baugh this weekend.

Assemblyman Allan Mansoor

There are two others contemplating run for Supervisor as well. Assemblyman Allan Mansoor has been making noises about a run. He’s made some calls, sent out an email to supporters asking them their opinion of his running, and even announced in last week’s meeting of the Assembly Republican Caucus that he is looking at a run. Mansoor’s district overlaps a decent portion of the Supe seat. But a bid by Mansoor has its challenges. Probably the most significant is that Mansoor, a solid conservative, has a demonstrated inability to raise money. It was, in part, his scarce campaign funds going into 2010 the led to him drawing moderate Newport Beach City Councilwoman Leslie Daigle as an opponent. Daigle was heavily financed by Bay Area liberal Republican Charles Munger, Jr., who’s father is the wealthy business partner of Warren Buffet. Fortunately for Mansoor, the County GOP leadership stepped up with a six figure fundraising effort, and a grassroots campaign, that helped Mansoor defeat Daigle. There will be many who were involved in that effort who will, no doubt, be frustrated at Mansoor walking away from his Assembly seat leaving an allowable third term on the table. It worthy of note that Mansoor’s name has also been discussed for a potential run for the State Senate, but that would be a special election in 2015 (if Senator Mimi Walters succeeds in her run for a different Supervisorial seat).

Huntington Beach Councilman Joe Carchio

Mansoor is not alone in looking at a run for Supervisor. I have heard that another other local city council member is contemplating a run. Huntington Beach Councilman Joe Carchio has sent out an email to his supporters, where he explains that he is seriously contemplating running for Supervisor.

One West County conservative not running for Supervisor is former Huntington Beach Mayor Don Hansen. Hansen for some time had talked about running — but he sent out a heartfelt email to his supporters recently letting them know that after serious contemplation, he had decided against a run.

Attorney Keith Carlson

But wait, there’s more. If Allan Mansoor does run for Supervisor, this means his 74th Assembly District Seat will be wide open. What does that look like? Well, it’s too early to really tell. I feel pretty confident that attorney and former California Republican Party Treasurer Keith Carlson would enter the race for this seat, and will be a very strong contender. Carlson had been running for the Assembly in 2011 and into 2012, hoping to succeed the then-retiring Assemblyman Silva. But when the final districts were drawn, Carlson’s home was no longer in the “open” seat — instead Carlson was drawn into the 74th with Mansoor. Not wanting to divide conservatives, Carlson decided to suspend his candidacy. But Carlson had raised an impressive amount of money, and garnered many key endorsements. He would be strong out of the gate.

Huntington Beach Councilman Matthew Harper

Also hopping into the race the would be Huntington Beach City Councilman Matt Harper. In 2010, Harper moved from the 74th District into the 72nd (Huntington Beach is split between the two), where he ran for Assembly in 2012. While assembling a strong list of endorsements, Harper had challenges in the fundraising department. He ended up dropping his bid before the close of filing, throwing his strong endorsement to the ultimately unsuccessful Troy Edgar. That said, he has said the he will move back to the 74th District to run to replace Mansoor, and should tradition continue in Huntington Beach, Harper would actually hold the office of Mayor in 2012.

Harper and Carlson are both conservatives with a track record of volunteerism within the GOP. Of course others names will likely surface. Perhaps even Leslie Daigle may run again with an open seat at hand.

Supervisor John Moorlach

The last variable out there is the question of where Supervisor John Moorlach goes from here. Moorlach has been rather publicly floating a trial balloon about running for Governor, speaking to the Lincoln Club and others about his potential bid. No doubt he would provide a much more palatable candidate for conservatives than Abel Maldonado. But Moorlach has also been said to be looking at a run for County Auditor-Controller. In fact many people explain the appointment of county “lifer” Jan Grimes, a Democrat near retirement age, to fill the vacant Auditor-Controller’s office as a “play” by Moorlach to ensure that he can seek an “open seat” (it is doubtful Grimes would run for a full term). But now, with Mansoor’s potential Supervisor bid, a third option opens for Moorlach — a run himself for the State Assembly. Certainly three very different options for Moorlach, each with their own pro’s and cons. I spoke with Moorlach late last week, and he said the he has not decided which path he will take — but he did tell me that he plans on making a decision by month’s end.

As Matt Drudge would say, this story is developing…