Last Essay from Senator Sheila Kuehl From the Capitol

The Governor has made six proposals. In no particular order:

Cuts

2.5 billion from K-14 education, 132 million from higher ed, reduction of SSI and SSP grants to the federal minimum, six month reviews on eligibility for CalWORKS, one day furloughs each month for state employees, eliminating two state holidays, parole reforms that protect public safety but cut costs, and reducing Medi-Cal benefits (not payments to doctors, which the court overturned).

Taxes

A temporary sales tax increase from 5% to 6.5% for three years, broadening the sales and use tax to include appliance and furniture repair, vehicle repair, golf, veterinarian services, amusement parks, and sporting events, imposing an oil severance tax on oil producers similar to that imposed by all other oil producing states, and increasing alcohol and excise taxes to fund drug and alcohol treatment and prevention services.

Unemployment Insurance Fund

An increase in the amount employers pay to the fund by increasing the maximum taxable wage and the minimum tax rate, reducing benefit levels, and maintaining current payments by taking out a federal loan.

Economic Stimulus

These proposals may be troubling to the democratic majority in both houses. As the Governor proposes actions to stimulate the economy, he also takes the opportunity to reduce environmental protections and other regulations.

He proposes: accelerating hospital construction by "streamlining" the permitting process (reducing regulatory interference) for non-structural projects under $2 million. He wants to get more Prop 1B money out to fix local streets and roads as well as using Workforce Investment Act funds out for training. This proposal would also include regulatory "relief." He wants to provide overtime exemptions for those earning more than $100,000 no matter how many hours they work, and to allow more "flexible" work schedules by allowing 10 hour days with no overtime. He proposes more "design-build" projects which, he maintains, gets the job done faster, but also allows one builder to secure both parts of a project at once. He proposes tax credits to the movie industry, but no other industry.

All of these proposals, he maintains, get more work started, and more jobs. However, most of these proposals have been made year after year to rid the business community of those pesky regulations and would be very difficult to justify as economic stimulus now.

Mortgage relief

He adopts a few of the proposals in the mortgage relief bill he vetoed in September, but, all in all, his proposal is weaker. He proposes: a 90 day stay of the foreclosure process, a "safe harbor" under which lenders will be able to exempt themselves from the 90 day stay if they have their own modification program in place. He is also convening a summit on housing and begging the feds for more help.

Tax Commission

Establishes a bipartisan Commission on the 21st Century Economy to (once again) propose refinements to California's tax structure. The major roadblock to any changes in the past has been the 2/3 requirement for raising taxes (with only a majority vote required to cut them) and the 2/3 vote requirement for the budget.

Conclusion

By the time the dust clears on all the decisions, it is likely my essay mailing list will be archived. I hope you will sign up for my new lists so that I may continue to inform you on these issues and others as they come up. Thank you for having been a subscriber. If you got this essay by forwarding, you are also invited to sign up, as indicated above.

As of December 1, 2008, Sheila Kuehl will no longer be a California State Senator as she has reached the maximum time she is allowed to serve under term limits. We hope, however, that she continues to write essays and communicates her thoughts. We will happily publish them for the readers of the California Progress Report. She will be missed in the Capitol.