April, 2012 | Issue 52
From Diane Harkeys Desk to Yours
Under the Dome - Good Things Do Happen
Good things do happen in Sacramento, but we must remain focused and vigilant, and that is very difficult with the Governor, 120 Legislators and so much going on. Many of you may not have heard about the Court Case Management System (CCMS). Briefly, CCMS was the tech upgrade that was supposed to speed up court operations, scrap old methods of gathering paper files and allow judges to check everything from criminal histories to child support records at their own computer. The initial cost approved years ago by the Legislature was roughly $300 million, which escalated to $1.3 billion by the time I was elected in 2008, to over $2 billion at present.
Many of my colleagues and I have been asking for proper reporting and tracking for the system for the past few years, but funding was always included in the final budget. The reason given was that the Legislative Branch did not want to question the Judicial. This never made sense to me, as we were not interfering in a legal issue - we were considering an appropriation of public funds (our job).
Finally, in a bi-partisan vote last month, legislators rejected additional funding. Many judges and opponents of CCMS testified that not only had the costs grown, but the project was more time consuming and difficult to use. As such, many counties had become disenchanted and upgraded their own systems. In addition, witnesses (which included judges) stated rather than continue to feed the beast they would prefer to have the money allocated to keeping courts open. What a novel idea!
As a result, the State Judicial Council, the policy arm of the courts, on Tuesday, March 26, voted to pull the plug on a $2 billion computer boondoggle for California's 58 trial courts. I applaud their decision.
Speaking of boondoggles
My staff and I are making quite a bit of headway securing support for AB 1455, the High Speed Rail Lemon Law. You may recall the bill uses Article XVI of the State's Constitution to repeal the remainder of the $9 billion voter-approved bond for the project.
Last week San Diego, the second largest county in the state, joined Orange, Kings, Kern, Shasta and Tulare counties as well as the cities of: Atherton, Bakersfield, Burlingame, Chowchilla, Hanford, Laguna Niguel, Mission Viejo, Oceanside, Orange, Rancho Santa Margarita, San Juan Capistrano and Tulare in support of AB 1455. Many other counties, cities and industry groups have sent letters of opposition to the project.
Considering the millions of dollars the state spends promoting HSR with no approved plan, no confirmed ridership, no committed funding sources, violations of state law, and (similar to CCMS) escalating costs to construct, our office efforts and the willingness of local elected officials to dial back the "spin" get to the facts, and actually approve AB 1455 deserves kudos.
The bill will be heard in the Assembly Transportation Committee on April 16th.
Gravy Train Update
As you may have heard, yet another new HSR business plan has been released attempting to restructure the entire project, since the much heralded former business plan was released last November. With $3.3 billion in Federal Stimulus Funds that must be spent by 2017, a frenzied effort is underway to give away "billions in future goodies" to local transportation agencies and state union trades to try to secure votes in the Legislature for match state debt bond funding of $2.3-7 billion. It will be interesting to thoroughly analyze how the latest plan will fit with what the voters approved in Prop 1A and the underlying legislation AB 3034.
Recall we were sold on high speed rail system that would magically pay for itself and carry passengers non-stop from LA to San Francisco in 2 hours and 40 minutes, with no state operating subsidy. The new plan whatever it is, is still without confirmed future funding sources and requires match funding from local transportation agencies for any moneys received, and is guaranteed to require operating subsidies, which ALL public transportation does (especially HSR and other forms of rail). I paid my own way to walk the halls of Congress Mid-March and can confirm, no future HSR funds or other bailouts of "free money" are coming to California. However, there will be regional and local transit grants under several new and existing programs. At the present, the House plans to extend the existing Transportation Bill once again rather than approve the new Senate Transportation bill.
Coming upon the heels of harsh reviews of the California Legislative Analyst, the State Auditor and the CHSRA's own Peer Review Group, the US Government Accountability Office (GAO) has been commissioned by the House and Senate to review California High Speed Rail plans. I met with the GAO while in DC, requesting that they review ridership, project and operating costs, funding and other specific criteria, which appears to be the plan.
As many have stated before, we can get from LA to San Francisco - we have trouble getting to work. There is consensus that local transportation improvements for roads, highways, airports and yes, rail are sorely needed statewide. We can only hope that with the statewide uproar over this project and its multi-billion dollar price tag, we are seeing movement in that direction. I can assure you that the costs for alternative infrastructure is NOT as expensive as building HSR, cutting through prime farmland in the Central Valley. We have done the math.
Just like the smaller boondoggle, CCMS, keeping this project front and center will ensure that it eventually morphs into something reasonable or... we pull the plug. If we can get some usefulness out of the money that the Governor seems determined to spend, not indebt our state into perpetuity, and not tear up productive farmland in the Central Valley it could be a win. I will keep you posted.
Cap and Trade auctions have been delayed. What I hope this means is that the Brown Administration is examining the implementation of the policy, and that is a good thing. Many of us question the policy in total, as we believe AB 32 or the Green House Gas Reduction legislation will deter businesses from expanding in California and will cause some to leave. Implementation of AB 32 increases the cost of electricity for everyone, as well as the cost of most products we use. However, one of the stated goals of the policy is to prevent "leakage" or businesses leaving California, so let's see if CARB or the Governor's folks can prevent or monitor leakage.
As you know, the policy, as approved by the Legislature was ratified by the voters in 2008. So, my goal is to ensure that that the state does not get "fleeced" by the investment banks in the secondary market for our new currency or "carbon pollution certificates" as well as the derivatives that will spring up as a result of hedging. For a review of my concerns see the editorial that appeared in the OC Register here.
I assure you we have not been idle. Again this year, my caucus of Senate and Assembly Republicans put forth a "no tax increase" balanced budget that does not resort to draconian trigger cuts to education or raise taxes. It is still possible to get our state house in order without punishing small or large business owners or you, the taxpayer. President Pro-Tem of the Senate, Darrell Steinberg, confirmed our plan would work when he stated that Republicans were putting forth a "one-time solution." SOLUTION is the operative word.
Every budget or revision that has been implemented since 2008 (roughly 6-7) has not balanced to actual revenues, due to the inclusion of "phantom" revenues and spending in advance of receipts, more than we actually take in. I would think a one-time fix would be welcome, as it would allow us time to work on long-term solutions in a deliberative manner.
However, while I was in DC, the majority party passed 37 blank budget bills that they will fill with their own solutions (a product of the Majority Budget initiative), and then eventually deliver to the respective committees and or directly to the floor for comments and votes. Let's hope they at least use some of what we have put forth. You can encourage them to do so by emailing or calling the Majority party offices or the Speaker of the Assembly and the President Pro-Tem of the Senate. Visit here for more information.
To read more about our proposal as well as other budget related issues view the Roadmap section on the Fact Check website here.
So you see - Good Things Do Happen - incrementally, but we are moving in the right direction....I will keep you posted!
We are struggling with a $35 billion, recurring, annual general fund deficit (the Governor's inherited mountain of debt) plus over $90 billion of long term debt, $10 billion in Unemployment Insurance deficit, over 11% unemployment, and we are spending at greater than pre-recession levels (all funds). It's past time for a serious workout plan.
Governor Brown inherited a mess, and we can still dig out, if we do no more harm. The HSR project could, if left unchecked, double our state's debt. Cap and Trade could deliver unrecoverable losses in business opportunities as well as potential huge state losses as the state and municipal staff and electeds, unfamiliar with the risks inherent in derivative markets, try to implement and monitor the market mechanisms. And with term limits, all supporters need do is wait this election out, as few of the remaining legislators do or will understand this complex project and financial plan, and none of the 40+ new members will have time to engage. Unlike 2008, the Feds will not be funding this project or backfilling our education and social service expenses with stimulus funds. I heard it directly from the horse's mouth.
Around the Town
I attended the Festival of Whales in Dana Point on March 3rd, and boy, has this event grown! Numerous school, non-profit and classic car and other groups marched or rode the route. It was picture perfect weather as you can see from the photo here.
In the Annual Swallows Day Parade in San Juan Capistrano on March 24th, I rode in a horse-drawn wagon with the City Council as well as Congressman Ken Calvert and Darrell Issa. Beginning with a Rotary Pancake breakfast near the route, the non-motorized parade included hundreds of horses, numerous wagons, marching bands, schools, charitable and civic-related groups and displays. See photo here.
I also had the pleasure of honoring Terry Rifkin, of Dana Point, as my Woman of the Year on March 25th. Terry has a long list of professional and philanthropic accomplishments and a sophisticated, talented, intelligent young daughter currently interning in Washington, DC for Congressman Devin Nunez. Terry's most recent passion has been volunteering for the Dana Point 5th Marine Support Group, where she serves on the Board. A brief video of the day's events may be viewed here.
I also had the privilege of participating in a read-in at Mrs. Kawahara's second grade class at Lomarena Elementary School in Laguna Hills. Our book was "The Lorax" by Dr. Seuss. Since the book was written in 1971 I thought a sequel was due so I wrote one. See here for the sequel and a picture of the class and me below.
I had the pleasure of speaking at the annual board meeting of CalTax, comprised of many major companies doing business in California, with a focus on issues, especially taxation, that affect business and expansion in California. Needless to say, there is much to be discussed these days!
I also enjoyed speaking to members of the Western State's Petroleum Association sharing data on our state's finances. WSPA is comprised of large and small mom-and-pop distributors and suppliers of goods and services related to the oil industry. Many participants are small business owners in the Central Valley and Los Angeles areas. See here for a picture of myself and CalTax President Teresa Casazza.
In closing have a wonderful Easter or Spring Break, check your city's website to get information about egg hunts and other festivities in your community. Most importantly, keep the faith. We can and will come out of this financial drama with a little patience and much rowing together.
Thank you again for your support. Please visit my website for updates here