Ben Zycher responds to Genest in Round IV.

I will jump in here to say, again, that with all of these VERY REAL concerns about the cap being expressed by a noted conservative economist, isn’t it time to put on the breaks? Genest is a great guy, but it doesn’t change the fact that his office is under strong pressure to pass this "Big Five Big Taxes" budget deal… Zycher’s responses (he is responded to Genest’ points here): 1. Mr. Genest continues to insist that there would be no transfers from (or reduced transfers to) the BSF after 2010-11, unless the governor decides that there is a need to "cover a current services budget." Therefore, there will be such transfers from the BSF to the general fund as long as the governor decides that there is a "need." And "population plus inflation," as I noted earlier, is far more elastic that Mr. Genest is willing to admit, so that the current services baseline in reality will… Read More

Director of Finance Mike Genest’s latest volley back in the great Zycher-Genest Spending Cap debate. Genest is responding to a back and forth that can be seen here. No doubt will hear from Zycher soon. Genest and Zycher and their significant others are more victims of pushing through this plan on Valentine’s Day evening…

From Genest:

I have the actual bill, which is in print, ACA 1 in the 3rd extraordinary session. Look on page 4, lines 25 through 28: "For fiscal years commencing on July 1, 2011, this subdivision shall be operative only if a transfer of moneys from the budget stabilization fund to the general fund is authorized pursuant to subparagraph (A) of paragraph (2) of subdivision (f)."

That means, after 2010-11, there will be no more transfers from the rainy-day fund unless needed to put just enough back in the general fund to cover a current services level budget. That’s not interpretation, it’s… Read More

Some folks are getting paid to provide some good coverage of the legislative session goings-on.

KQED Public Radio’s John Myers is twittering here. There are also updates from the Sacramento Bee’s Capitol Alert blog.

You’ll know pretty quick if, in fact, Republican legislators facilitate $14++ billion in new taxes on Californians.… Read More

Ever seen sausage being made. Here are some summary documents being distributed to the press of the Big 5 Big Tax deal. There are a lot of interesting items in there. You can be your own judge of whether the "concessions" given up by the Dems are worth the $14.8 billion in new taxes being "given up" by Republicans.

The documents are linked below (h/t to the Sacramento Bee website).

I should note that these are the first written documents detailing this budget deal that I’ve been able to get my hands on.… Read More

OK, it’s getting hard to format what is nowa back-and-forth between Pacific Research Institute Economist Dr. Benjamin Zycher and Mike Genest, the California Director of Finance. In a nutshell, they are going back and forth over the language of the potential spending cap that is in the Big-5 Big-Tax deal. So, below you have in RED summaries of Zycher’s observations as penned by Genest (you can see all of Zycher’s original observations here). Then in GREEN are Genest’s responses. Now, in BLUE are Zycher’s responses to Genest.

I HAVE FAITH IN ENTERPRISE LEGISLATIVE STAFF MEMBERS TO MAKE SURE THIS IMPORTANT EXCHANGE GETS TO THEIR BOSSES DOWN IN CAUCUS… :-)

Oh yes – this is a great opportunity to make a further editorial comment about how this process is being rushed way too quickly. Heck, we can’t even get policy experts to agree on what should be very objective issues. Isn’t it time give this a few more days and let all of these questions be answered in a less harried environment?… Read More

This just off the transom…

California Assemblyman Chuck DeVore Resigns Leadership Post Due to $14 Billion Tax Increase Deal

Feb. 14, 2009, Sacramento, CA – California State Assemblyman Chuck DeVore resigned today as Chief Republican Whip due to his opposition to a massive tax increase deal brokered by Republican legislative leaders. DeVore said, “The St. Valentine’s Day deal to raise taxes on hardworking Californians will neither close the budget deficit nor control spending. I believe leadership thinks they are doing the right thing – but I cannot be a party to this agreement as I believe it will harm California.”

Excerpts of DeVore’s letter to Assembly Republican Leader Mike Villines follow:

“…the recent agreement you negotiated to increase taxes in exchange for a spending limit will not likely accomplish the twin aims of deficit reduction and budget control that you seek.

“This proposed agreement also strikes at the heart… Read More

In response to Cap Weekly’s mention of possible GOP leadership rumblings over the current budget deal, Jon Fleischman notes in a post below that he typically refrains "from commenting on legislative caucus politics."

Fair enough. However, the rumors of rumblings does evoke some memories of the last Assembly GOP rumble. Then-Republican Minority Leader George Plescia was ousted a bit over two years ago — and replaced with Mike Villines — ostensibly for the crime of being too accommodating of legislative Democrats and Governor Schwarzenegger, meaning not standing firm enough in representing GOP Caucus interests and ideals when it came to budget negotiations.

Fast forward. Today we have an Assembly Republican Caucus, a clearcut majority of its members sharing the conservative, no taxes stance of the 2006 version. Just last November, the GOP leadership in both houses excoriated the Governor for proposing tax increases. Yet, the budget deal to be considered tonight, as negotiated by leaders of both parties and… Read More

I will happily acknowledge that I am NOT a policy wong. Some of the back and forths below from policy-wonks on the language of the proposed spending cap (that would go before the voters, tied to extending taxes that are raised in this Big 5 deal) are above my pay-grade.

That said, my "open question" on the cap is this?

I am going to throw out there that there is distinct possibility that Republicans joinin hands with the Democrats for a plan that includes $14.8 billion in tax increases is going to cause a big problem for the GOP, and that it may very well lead to losses of seats in the Senate and the Assembly. When the smoke clears after the 2010 election, Democrats may have a supermajority of the legislature (yikes).

If that were to happen, AND the spending cap as proposed in this deal were in place (having been passed by the voters) — is the cap strong enough to keep Democrat supermajorities from racheting up spending (beyond the cap)? In otherwords, when we are forced off the beach, and back onto our landing craft, have we left some protection behind?

As I understand it, there is a big gaping hole in this proposal. To put… Read More