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California Cracking

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Arnold Schwarzenegger, in happier days last year in this New West Notes video, trying to work a health care plan with Democrats, unions, and Republicans such as the fellow referenced below now trying to hold the California budget hostage for a right-wing wish list.

That noise you hear is that of California cracking. The state's chronic fiscal crisis, dramatically deepened by the national financial crisis, is now even more exacerbated by conservative GOP intransigence. California doesn't have the biggest fiscal problem of the states in proportional terms, but it is the largest in absolute terms.

Governor Arnold Schwarzenegger, who's had his own role to play in the mess, having slashed the state's unpopular car tax and having resisted tax hikes prior to this year while approving more spending, officially declared it a crack-up today, a fiscal "Armageddon."

Answering state Assembly Minority Leader Mike Villines' cheeky new list from yesterday of non-fiscal demands before "considering" a compromise involving new revenue, Schwarzenegger, at a hastily called press conference right before noon, said that California's budget is nearly $15 billion out of balance. He unveiled a budget clock, showing the cost of legislative inaction on a second-by-second basis.

Right-wing Republicans have systematically made themselves irrelevant in statewide California politics. However, on account of the state's two-thirds requirement for passing a budget -- which it shares with only two other, very small, states -- and because of past partisan gerrymandering (knocked out in the next decade by an initiative narrowly passed by Schwarzenegger, Common Cause, and the League of Women Voters), they have enough votes in the state Assembly and Senate to cause this kind of trouble.

Yesterday, Villines -- who prior to his own election as a state legislator was chief of staff for a far right state senator who lost by nearly 20 points to former Governor Jerry Brown in a 2006 race for state attorney general -- revealed a lengthy list of demands not related to the fiscal crisis. It's a sort of conservative business wish list on economic and environmental matters. "If you do all those things, then of course we have to talk about that piece of the puzzle," Villines said of revenue increases. "But we're a long way from going there - and the cart shouldn't go before the horse," he told the Sacramento Bee.

The cart's been waiting for this horse for over a year.

With this, Schwarzenegger realized he needed to get talks on California's chronic budget crisis, now very serious indeed, serious as is no money in Febrary, unstuck.

Speaking of the Legislature, Schwarzenegger said: "They met, they debated, they postured and they did nothing. They didn't deal with one of those issues, and that was after being three months late with the budget this year. If that isn't a shameful performance, I don't know what is."

Schwarzenegger and Democrats generally agree that a package of budget cuts, tax increases and economic stimulus is needed.

However, Schwarzenegger's fellow Republicans -- mostly far more conservative than he, elected from such safely gerrymandered districts that the 61% to 37% tidal wave for Obama in California yielded only three new seats in the state Assembly and none in the Senate -- talk only of cuts. And borrowing. Sans specifics.

The Wall Street crisis, presided over by Treasury Secretary Hank Paulson, has deepened California's fiscal crisis.

There's a certain lack of seriousness, let's say, about the Republican stance. Since this has been going on for over a year and there's no alternative GOP budget and no agreement to a compromise.

Schwarzenegger today rolled out a display labeled "Legislature's Failure to Act: Day 35." He said that refers to the time since he called a special legislative session in November. The "clock" runs up the amount of money California has been losing since July 1: $470 every second $28,000 a minute, $1.7 million an hour, $40 million per day.

Schwarzenegger says the $11.2 billion deficit in the current fiscal year's budget has now climbed to $14.8 billion.

Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke defended their management of the $700 billion bailout last month, just one week after the administration abandoned the original strategy behind the rescue.

And over the next 18 months, if no action is taken, it's apparently $41 billion.

"I'm frustrated," said Schwarzenegger. "We have a system where we rely on the 120 legislators to make those decisions. I cannot make them stay here, I cannot lock them into the building, I don't have those kinds of powers. Believe me, I would do it otherwise."

He especially criticized GOP legislators for being "always vague and not prepared" in negotiations. He also criticized Villines for his list of workplace and environmental demands not related to the fiscal crisis.

"That is not the way you negotiate," Schwarzenegger said. "They have to start negotiating and they have to take this seriously rather than playing 'chicken,' which is what is going on now, this 'who blinks first,' that's a very dangerous game."

Last year, right-wing Republicans held the budget hostage in efforts to stop Attorney General Jerry Brown from getting localities to include greenhouse gas reductions in development plans. That failed.

This year, with the fiscal situation far worse, they have an even longer list.

The Villines wish list:

REGULATORY CHANGES - EMPLOYMENT LAW FLEXIBILITY
Employee Schedule Flexibility
Expanding Health Care Options for Employees (Health savings accounts)
Reducing Unwarranted Litigation
Overtime for high way earners
Meal and Rest clarification
Eliminate "needs test" to allow more apprenticeships

REGULATORY CHANGES - BUSINESS DEVELOPMENT
Design-build
Public Private Partnership
ADA compliance
Streamline small business certification process for micro businesses and sole proprietorships
Reclassify "destination management companies" (DMS) as consumers rather than retailers (SB 1628)
Streamlining the permitting process (THPS, development)
Contracting out

ENVIRONMENTAL FLEXIBILITY
Expanding deadlines for engine retrofits (on and off road)
Extending deadlines for greenhouse gas regulations (AB 32
Regulatory flexibility for agricultural industry
3rd party analysis of economic impact of ARB regulations

TAX CREDITS
A new employee tax credit for businesses that hire out-of-work Californians
A manufacturing investment credit to help businesses purchase the equipment they need
Capitol gains reduction for businesses that invest in California
Modification of the tax code to encourage companies to locate jobs in California
Suspension of regulatory burdens that "discourage job creation"

Notice that none of this directly relates to the California fiscal crisis.

What it does relate, primarily, to is a hyper-partisan political agenda most Californians have repeatedly shown they oppose.

Check things out during the day on my site, New West Notes www.newwestnotes.com