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AND THE WINNERS ARE...

Claremont's Architectural Commission announced the winners of the City's Excellence in Design Awards. Six of the seven winning designs were on or affiliated with the Claremont Colleges. The City's website listed the award winners:

Winners of 2009 Excellence in Design Award Announced (May 12, 2010)

The Claremont Architectural Commission has announced the winners of the 29th Annual "Excellence in Design Awards," a program designed to recognize recently completed projects that best reflect the City's standards of design excellence. Seven projects have earned awards in the categories of New Construction, Renovation, Addition, Sustainable Landscaping, and Restorative Landscaping.

The Architectural Commission will formally recognize the award winners at its meeting on Wednesday, June 9, 2010. The meeting will begin at 7:00 p.m. in the Council Chamber, 225 W. Second Street. The public is invited to attend.

The Winners are:
- Claremont McKenna College - Biszantz Family Tennis Center
- 601 E. Foothill Boulevard Commercial Building Claremont University Consortium - - Honnold Library
- Scripps College - Sicilian Court
- McDermott Building
- CGU Residence
- Shafer Residence

• Read the press release (Adobe Acrobat, 27KB)

CITY YARD SALE TOMORROW

Packrats all over Claremont are gearing up for a buying spree tomorrow at the annual City Yard Sale. In a sign of the fiscal times, the City is no longer hosting the event. Instead, the Claremont High School Softball Boosters will be in charge of the annual community yard sale in Cahuilla Park. The yard sale begins at 8am.

Citywide Yard Sale
May 15, 2010

Please note the change in this event!

This event will now be offered by the Claremont High School Softball Boosters and will no longer be offered by the City of Claremont. The 2010 event will take place from 8 am to 11 am at Cahuilla Park 1775 N. Indian Hill Blvd. (corner of Indian Hill and Scripps Ave). For more information please contact the Claremont High School Boosters at (909) 450-1730.

WILDERNESS PARK CLOSED NEXT WEEK

City Manager Jeff Parker's weekly report informs us that the Claremont Hills Wilderness Park will be closed next Monday through Wednesday for what has become an annual training exercise.

If you're curious to see where the exercise will take place, you can see the grove L.A. County Fire has worn into the hills on the west side of Thompson Creek. Rather than changing the area they practice in, L.A. County Fire has used the exact same area each time for their exercise. Every year, the firefighters use a trail that they created by tromping around the hillsides, and all that activity, together with erosion, has resulted an unintended, permanent feature.

This was Jeff Parker's blurb on the subject:

WILDERNESS PARK FIRE TRAINING EXERCISE

On May 17, 18 and 19, the Los Angeles County Fire Department is conducting its annual wildfire training exercise in the City of Claremont Wilderness Park. This exercise will begin at 8:00 AM and conclude at 1:00 PM each day. During this time, the Claremont Wilderness Park will be closed. Mills Avenue north of Mt. Baldy Road will also be closed, except to residents.

MAY BUDGET WORKSHOP

Claremont will hold another budget workshop on Saturday, May 22 in the City Council chambers at 225 W. Second St. The workshop runs from 1pm to 4pm, and the public is welcome and encouraged to attend. This is your chance to take partial ownership of your community's financial decisions. Here's the info from the City:

May 22 Budget Workshop (Mar 25, 2010)

The City Council has scheduled a Budget Workshop on May 22 from 1pm to 4pm to address the budget shortfall in 2011-12 Fiscal Year. The City Council approved staff recommendations for staff and program reductions for fiscal year 2010-11 resulting in a reduction of $1,318,727 in expenditures. In fiscal year 2011-12, staff has projected a $750,000 shortfall which is dependent on several undecided factors. These factors include the outcome of the State Redevelopment lawsuit, negotiations with labor unions, and the California State budget. At the late May workshop, staff will give an update on these factors, and provide additional reduction recommendations if necessary.

In case you were thinking state and local finances were going to be in better shape this year, think again. The Sacramento Bee's Capitol Alert had this budget news today:

May 14, 2010

AM Alert: April shortfalls bring May...

Gov. Arnold Schwarzenegger will release his revised spending proposal for the 2010-2011 fiscal year today.

The outlook? Not so good. Here's what we know so far:

• Cash commitments from federal officials have amounted to about $3 billion -- far less than the $6.9 billion in federal aid Schwarzenegger counted on in his January proposal.
• Last month's drop in personal income tax revenues ruined any chance of a "May surprise" revise -- the state ended April about $1.3 billion short of revenue projections.
• The governor's office has warned of "absolutely terrible cuts," including to social services programs.
• Democrats say they want "everything on the table," including tax increases to close the gap. Republican leaders and Schwarzenegger say the topic of taxes is a non-starter.

The bottom line: Get ready for another long budget fight.

Bee colleague Kevin Yamamura reports today that one proposal expected to be included in today's revision would revive a plan to house some 15,000 nonviolent felons in county jails instead of state prisons. Read more on that here.

The big rollout of the governor's proposal, set for 1 p.m. at the Secretary of State building, will be broadcast live here.

Another Year Older and Deeper in Debt

Local governments around California let out a collective groan last week when Sacramento Superior Court Judge Lloyd Connelly issued a ruling that supported the state's right to take $2 billion in redevelopment funds from redevelopment agencies across the state over the next two fiscal years.

The state, as you know, needs the money to help balance its $18 billion budget deficit. It seems to us that we were in just about the same place this time last year. The plan is for the state to take $1.7 billion for 2009-10 and $350 million for 2010-11. The money, legislators say, is supposed to go to local schools, which have their own problem with the state withholding money.

The first $1.7 billion payment was due yesterday. Monday's Daily Bulletin had an article about the state's latest money shift. The article described the impact of the redevelopment money grab on Inland Empire cities. Claremont City Manager Jeff Parker told the Bulletin that at least one Claremont Redevelopment Agency job will be eliminated because of the money transfer:

The Claremont redevelopment agency takes in about $3.8 million in property taxes, but has to pass along $1.3 million to other local agencies or into its low-income housing fund. Of the remaining $2.5 million, half goes to pay for debt incurred for past projects.

That leaves $1.25 million, with the state next week taking $1.19 million.

"It basically takes everything from that one year," Claremont City Manger Jeff Parker said.

That means Claremont will lay off its only full-time employee focused solely on economic development.

Claremont's City Hall has resigned itself to coughing up that $1.19 million Parker alluded to. The City's website has this news blurb:

Claremont Will Pay State Redevelopment Funds (May 6, 2010)

On Tuesday, May 4, 2010, the City was notified of the decision in the CRA lawsuit against the State of California. Sacramento Superior Court Judge Lloyd Connelly upheld AB X4 26, the state budget bill passed in July 2009 as part of the 2009-10 state budget that requires redevelopment agencies statewide to transfer $2.05 billion in local redevelopment funds over the next two years.Anticipating this decision, the City of Claremont put aside $1.2 million and is prepared to make the payment by the May 10 deadline.

Advocates of smaller government should be happy. Because of Sacramento's financial ineptitude, along with the refusal of state legislators to come up with reality-based methods for balancing the state's budget, every level of California government will have to enact even more austerity measures in the coming year. Those cuts will likely include such things as releasing older prisoners to reduce the state's prison costs and even taking a look at reforming public pensions.

Anti-tax groups won't be pleased, though, with the revenue side of the budget equation. Along with more cuts in services, the state will have to find replacement income to help reduce its deficit. Californians will soon have a clear picture of the exact size of that deficit when Governor Schwarzenegger's May budget revision (the "budget revise") is released.

The state's deficit is almost certainly to increase when the May revise comes out. Last week, the LA Times reported that the state's tax revenues were down 30% year-over-year. That translates to $3 billion, so the hard times are likely to continue a while more.

Sales Slumps Roll Downhill

Claremont Toyota, whose sales have slumped severely because of the recession, faces even tougher times. Yesterday's Los Angeles Times had a front page story about Toyota's decision to halt the sales and manufacture of eight models because of problems with the gas pedals sticking.

The Times article reported:

Industry experts could not recall any time in recent history when a carmaker had stopped both production and sales of so many models at once. Tuesday's move follows two recent recalls aimed at preventing Toyota-made vehicles from surging out of control, which has been blamed in at least 19 deaths and scores of injuries over the last decade, more than for all other automakers combined.

Toyota could pay dearly for the problem, industry analysts said.

Aside from the immediate drop in sales, Toyota's position as the global sales leader, built on its vaunted reputation for trouble-free cars, is now being called into question.

"This could be an extended issue. It is very serious," said Aaron Bragman, an analyst at IHS Global Insight.

The eight models affected accounted for 57% of U.S. sales last year of all Toyota brands, including Lexus and Scion.

Toyota's woes will hurt Claremont Toyota, and that in turn will trickle down to the City of Claremont, which is heavily dependent on the Toyota dealership for sales tax revenue. At its peak, the local dealership accounted for something like 57% of the City's income from sales tax.

Claremont has been working hard to diversify its sales tax base, but Claremont Toyota remains the town's largest source of that revenue stream. Toyota's decision couldn't come at a worse time for Claremont. The state of California forecasts a $20.7 billion budget deficit through fiscal year 2010-11, thanks to the refusal of the state's leaders to deal with problem in a meaningful way last year. That means the state will be looking to raid more local money to fix its problems, and towns like Claremont will have another budgetary hole to climb out of.

All in all, 2010 is beginning to look a lot like 2009.

The Budget Results Are In

At last Saturday's city budget meeting, the Claremont City Council approved a $2.32 million budget makeover, the Daily Bulletin reported. The changes were need to help the City deal with what the city was saying was going to be a $2.69 million shortfall in Fiscal Year 2009-10. This comes on the heels of a $1.5 million deficit for FY 2008-09.

That's total shortfall of $4.19 million through July 31, 2010, and it could have been worse. Luckily for Claremont, the state of California didn't touch local transportation funds when state legislators and Governor agreed the budget compromise last week, otherwise the hit for local governments would have been $1 billion worse. As it is, because our leaders can agree to a permanent fix to the budget process, our state leaders will probably be having another budget showdown in a few months. The Sacramento Bee's Dan Walters is calling it our state's five-month budget cycle.

So, Claremont's budget solution may not represent a real fix at all, and that 2009-10 deficit could still grow, depending on how the economy performs and what future revenues the state tries to take.

The cuts the City Council approved last Saturday include "golden handshakes" to encourage employees to take early retirement, raising fees for some city programs, and increases in parking ticket fees. The City will also have to workout an agreement with employee associations for either a 38-hour work week or a four-day work week. This will amount to a 5% pay cut for most employees. The City is also likely to eliminate some positions entirely.

The Bulletin article reported that Councilmember Peter Yao was the sole vote against the measure:

Councilman Peter Yao voted against the proposed changes. His objections were the cost of the Public Employees Retirement System "Golden Handshake" retirement package, where an employee receives two years of PERS service credit, and a larger police department budget in 2009-10 than in 2000-01, despite a similar budget projection.

"I can't honestly support it," Yao said, adding he felt the proposal was a temporary and not permanent fix.

* * * * *

The council also meets tonight for their last meeting before their August break. The city website was down for much of today, or we'd offer you a breakdown of some of the issues. Try checking out the city's website yourself at www.ci.claremont.ca.us.

Some interesting items on tonight's agenda:

• The College Ave. affordable housing project.
• The official city flower (staff says, "Sticky-leafed Monkeyflower").
• Expansion of the Oak Park Cemetery.
• Renaming the 100 block of East 11th St. The new name would be "Drucker Way." This is being proposed by the Claremont Graduate University.
• The City's investment report for FY 2008-09 (not all financial news is bad, it seems).
• City commission appointments and reappointments (some surprises here, including Butch Henderson, who landed a spot on the Human Services Commission).
  

The council meeting begins at 6:30pm in the City Council Chambers at 225 W. 2nd St. in the Claremont Village.

The Bill Comes Due

It was difficult for Claremont officials to paper over the bad news at last week's State of the City luncheon. The event, hosted by Claremont Chamber of Commerce, was by all accounts well-attended, and all five councilmembers took shots at finding silver linings in Claremont's fiscal state.

Mostly, they had to point to projects already under way or recently completed, from mundane things like road resurfacing to grander projects like the Padua Ave. Park or the College Ave. affordable housing development (thanks, Sam Pedroza, for that bit of sunshine).

The council was wise to tout its public works now. With the City already facing a $2 million budget shortfall for Fiscal Year 2009-10 because of falling sales tax revenues and the state poised to borrow more local funds to balance its books, it may be a while before the Council can spend as freely as they've become accustomed to. The Claremont Courier quoted Councilmember Peter Yao (right), who acknowledged the City's budgetary realities:

“Despite the best efforts of the city council and staff earlier this year to balance the budge, the economies of California and Claremont have continued to deteriorate,” Mr. Yao explained. “Due to further reductions in local revenues and the turbulent environment of the state legislature, the city is facing an addition shortfall of $2 million.”

The Courier also noted that the City will hold a special budget workshop this Saturday from 9am to 1pm in the council chambers at 225 W. 2nd St. in the Claremont Village. Now that the state has a budget deal semi-worked out, the City can make some projections about the size of the hit it's going to take.

From what we've picked up on our Twitter wire, it ain't pretty, folks. Thanks to the state's borrowing of funds owed to local governments, that extra $2 million shortfall Councilmember Yao alluded to may grow considerably. And that has to be added to the pre-existing $2 million 2009-10 deficit, as well as the additional (as yet undisclosed) amount the City will have to pay CalPERS for its underfunded employee pension account (CalPERS reported a 23.4% loss in its investment portfolio for FY 2008-09.)

As a result, at Saturday's budget meeting you may hear talk of staff and service cuts for the first time. You hate to see anyone lose their jobs, and the City is quite understandably pinning much of the blame on Sacramento's inability to manage their own finances without stealing from local governments.

However, Claremont and many other cities and counties bear a certain share of the blame for their own budget problems because of thoughtless spending on things like costly and unnecessary projects (insert Claremont Trolley photo here) and overly lavish employee pensions and benefits in good times. Claremont has also never been shy about feeding at the state grant trough for any number of projects, and, in doing so, it made its own small contribution to Sacramento's current fiscal state of affairs.

Like everyone else, Claremont is having to rediscover the idea of limited resources and deferred gratification. Rather than pointing the finger at the state government, the City ought to take a good, long, honest look in the mirror and figure out what lessons it can take from the present situation. Some city employees and the services they provide may end up suffering because of this mess, and it's a shame that Claremont set itself up for fiscal failure by making revenue projections that didn't take into account the possibility of a recession as severe as the present one.

The good times never go on uninterrupted, but Claremont's movers and shakers have consistently refused to acknowledged this rather obvious fact of financial life. Sustainability, Claremont's favorite buzzword, begins with fiscal sustainability, and the City risk management strategy failed in the most basic way - by neglecting to hope for the best while planning for the worst contingency.

Tweets from City "All Hands" Meeting

Our Twitter feed captured the following tweets from someone who appears to be a City employee at an "all hands" meeting at City Hall this morning:

●Parker: $6 million bite out of $20 million budget.

●Employee next 2 me: "At least he got his $14,000 raise."

●$2.? million "borrowed" by State.

●$1/2 million gas tax? hit

●On top of $2.5 million earlier, $5-6 million total hit.

●Permanent?

●Dept heads: plans for cutting staff.

●Prizner release = need for cops.

●Not just attrition-cheezit, here comes Ramos.

At this the tweets ended.

More when we have it.

State Delays Payments to Local Schools

The state of California delayed $4 billion in Prop. 98 payments to California school districts, the Daily Bulletin reports.

The Bulletin article says the payments were supposed to go out last Friday but have been pushed back 20 days. The article explained the ramifications for our area:

State Superintendent of Public Instruction Jack O'Connell and state Controller John Chiang announced Friday that $4 billion scheduled to be distributed Friday - the last payment for the 2008-09 fiscal year - will instead be issued on July 30.

"The delay of this school funding payment is a consequence of California's economic crisis and our very serious cash shortage. Public education continues to bear a disproportionate share of the cuts needed to solve our state budget shortfall. And delays in funding as a result of the state's cash flow problems transfer those problems to our local schools," O'Connell said.

The payment, known as the Principal Apportionment, is the largest annual distribution of state funds to the public education system through Proposition 98, which constitutionally requires minimum-funding for K-12 schools and community colleges.

For San Bernardino County schools, the IOU amounts to $348 million. In Los Angeles County, the figure is $1.33 billion.

For districts counting on that money, the delay could cause a cash flow problem. The Bulletin piece also says that federal stimulus money has eased some of the fiscal pain.

Stimulus money or no, the pain continues to trickle down. The Bulletin also reported that Claremont Unified School District has had to make additional cuts in its 2009-10 budget. The cuts include the elimination of three non-teaching positions at Claremont High and San Antonio High, as well as reductions through attrition and reductions in school transportation.

Sacramento Report

Wikimedia image
The state's budget impasse continued over the 4th of July weekend. California, as you have heard, has begun issuing registered warrants, or IOU's, because the state legislature and Governor Schwarzenegger have been unable to reach an agreement on how to bridge the budget gap. The IOUs began going out after the 2008-09 Fiscal Year ended on June 30.

Local governments, including the City of Claremont and the Claremont Unified School District, will just have to wait to see how much of a hit they're going to take once all the dust settles. Incidentally, while the bickering in Sacramento dragged on last week, the state's budget deficit rose by a couple billion dollars, from $24.3 billion to $26.3 billion. Hey, guys and gals, you're going the wrong way!

And some of our fearless leaders aren't going anywhere, right way or wrong way. State Assembly Speaker Karen Bass (D-Los Angeles) yesterday boycotted a meeting of the "Big 5" (the heads of both parties in the State Assembly and State Senate, plus the Governor). According to the Sacramento Bee, Bass is complaining that the Governor is pushing things unrelated to the budget crises (things like permanent fixes to avoid this situation in the future):

The Republican governor and legislative leaders are still discussing various permanent changes to state health and welfare programs that would tighten eligibility and Schwarzenegger believes would combat waste and fraud.

Democrats and labor unions insist that the governor is overstating the extent to which the state can save money from such changes, such as fingerprinting In-Home Supportive Services recipients and providers. But Schwarzenegger believes that such changes can bring in real cash, as much as $400 million to $500 million in IHSS alone -- and $2 billion in 2009-10 for all of his various changes to state programs.

Bass boycotted this morning's meeting on grounds that Schwarzenegger is demanding these changes in exchange for agreeing to fewer cuts. She said these reforms are "unrelated" to the $26.3 billion deficit and that leaders should instead work on other solutions that would bridge that gap, with a promise to consider the permanent program reforms later. She also warned she may not attend the afternoon Big 5 meeting.

Bass' concern about any cuts in health services is understandable. Groups like the Service Employees International Union are some of the biggest donors to Democratic candidates, and any reduction in state health spending means fewer SEIU members. So Bass' willingness to tolerate a little waste and fraud makes sense when you see where her money comes from (what's a few billion between friends?). Hence the bait-and-switch: let's just patch things over and work out a real fix at some indefinite future time. Bass (and a good number of Republicans as well) doesn't want to admit that the budgetary landscape has shifted dramatically and that yesterday's political games are so, well, yesterday.

Meanwhile, as the debacle drags on, Fitch Ratings has cut California's long-term bond rating from A- to BBB. As a result, Californians will have to pay much more in interest in order to float bonds for things like big public works projects. The SacBee tells us how much more:

State Treasurer Bill Lockyer last week warned that a rating downgrade to BBB+ -- one grade higher than California's new BBB -- could result in an estimated $7.5 billion in interest costs over a 30-year period. California last had a BBB rating between December 2003 and September 2004, when the state grappled with a significant budget deficit.

Lockyer spokesman Tom Dresslar said that California will pay higher costs the next time it tries to borrow money for public works projects. He said he the state could be saddled with a lower credit rating for some time.

"The last time we got downgraded in this type of environment when we issued IOUs, it took years to recover," Dresslar said. "So even when we adopt a budget solution, our rating probably won't go up magically overnight."

The New York Times Magazine last Saturday surveyed the contenders for California's 2010 gubernatorial election, and the budget impasse formed the backdrop to the piece, which was titled, "Who Can Possibly Govern California?" The NYT Magazine piece described what Californians already know to be the root of the problem:

Passing a budget or increasing revenues in California is dicey in the best of times. The state constitution requires that two-thirds of the Legislature agree on a budget or higher taxes — the kind of overwhelming political consensus, in other words, usually reserved for amendments to the federal Constitution. (California is one of just a handful states that require a two-thirds vote to pass a budget.)

Complicating matters further, the major parties in California are both effectively controlled by their most partisan elements, a byproduct of gerrymandered voting districts that force lawmakers to appeal to their ideological bases. After many earlier failed efforts, a ballot initiative championed by Schwarzenegger finally passed last year that will redraw the districts. But that won’t take effect until after the 2010 census, so for now the two parties are largely controlled by what Bruce Cain at Berkeley calls “the Taliban.” The result? Gridlock in Sacramento, a standoff between the parties of “no more taxes” (Republicans) and “no more cuts” (Democrats).

The Taliban! You have to love that truth of the term and its emphasis on the blame both parties and the interests that back them share for this mess.

Slow-Motion Train Wreck

It's possible this time it's for real, but don't count on it. The state fiscal year ended at the stroke of midnight Tuesday with no budget, no agreement, and Controller John Chiang waving a fistful of IOUs. (See here for the Controller's word on how these IOU "warrants" work.) Early news is here.

It has been a slow-motion train wreck.


Even we were affected here, put on furlough last Saturday but given a reprieve to do this post.

The similes and metaphors were flying yesterday. Governor Schwarzenegger likened the actions of the legislature to Kabuki:

"What they're working on right now is, I think, all part of the kabuki," Schwarzenegger said. "They're wasting time by going through those drills, by trying to pass a simple majority illegal tax increase. I will never sign anything like this."

Still, for most people the wheels aren't falling off the wagon. Despite the extent to which the state and even local government get into our lives, most people in Claremont at least are relatively unaffected. If you cashed your State income tax refund check while the getting was good you might not be soon affected.

We hear that all those "vital state projects" of late last year, roads, bridges, wetlands projects, nursery schools, parks, and the like are OK this time around. The State sold bonds in the Spring to fund them

City Manager Jeff Parker spoke on the impact on Claremont as he saw it. (Click here, and then click on "City Manager Report", the seventh item below the video window. You may also run the video slider out to 10:17, where he starts the subject.) He refers to the Kabuki that in fact did take place yesterday. The State seems to be leaning against raiding the property tax fund for it's 3-year "loan", but will take gas tax money and redevelopment money. The gas take would be $600K in one year and $450K next year with the probability that this "take" would continue beyond two years. Claremont has $1M in the bank, which would soften this blow at first.

The redevelopment money is more complicated. Responding to an earlier legal challenge, the state plans a shell game of moving $150K to $200K in redevelopment money from the City to the schools, taking a like amount from the schools, getting its hand on the dough that way.

Parker says that, "Redevelopment is the best way to create jobs." Oh.

The League of Cities and various special-interest agencies say this is all unconstitutional, Parker reports. He goes on to say that the gas tax and redevelopment gambits may be floated just to make the earlier-rejected property tax "loan" more palatable.

Well, as we said, we are on furlough, not parole, and we see them coming to get us...

Hey, Sacramento, Hands Off, Say Cities

The Daily Bulletin has an article by Liset Marquez, who writes about Governor Schwarzenegger and the state legislature's threat to tap into gas tax revenues that are supposed to go to local governments for road maintenance and repairs.

Marquez writes that cities, counties, and the League of California Cities are mobilizing to sue the state if necessary, arguing that Sacramento would violate the state's constitution if it took those local gas tax dollars. Cities across California are passing resolutions in support of possible legal action:

To stop the state from seizing nearly $1 billion in gas tax funds from cities and counties, Ontario has agreed to allow its city attorney to work with the League of California Cities attorneys.

In the Inland Empire the cities of Rancho Cucamonga, Diamond Bar and Fontana have already passed similar resolutions, Speigel said.

Sixty-seven cities throughout the state have sided with the League. In the next couple of weeks at least 30 more cities will also pass resolutions, she said.

Claremont, too, will discuss passing such a resolution at the next City Council meeting tomorrow night.

Saving Your City

Click to Enlarge

Claremont Mayor Pro Tem Linda Elderkin unknowingly received a promotion when she did a YouTube spot for a website called SaveYourCity.net. The site listed her as "Mayor Linda Elderkin."

Elderkin and three of her fellow councilmembers - Corey Calaycay (also described on the website as Mayor), Sam Pedroza, and Peter Yao - each taped short messages arguing against Governor Schwarzengger's budget proposal that would take $2 billion from money that is supposed to go to local governments.

You can find all four spots here.

Sam Pedroza's, incidentally, is by far the most watched of the four videos, but for some reason those hits are coming mostly from one residence on Cinderella Dr. in South Claremont.

State Dems Release Budget Plan

Democratic state legislators unveiled their counter-proposal to Governor Schwarzenegger's budget plan, which relies entirely on spending cuts and raiding local government funds to balance the projected $24.3 billion state budget deficit for 2009-10.

According to an article the Daily Bulletin, the Democratic plan would still cut $11 billion in services, but would also raise taxes and fees to the tune of $2.1 billion. Among these increase would be a $15 hike in the vehicle license fee, a 4.8% charge on property insurance premiums to pay for state-funded firefighting efforts, a 9.9% oil extraction tax, and a $1.50 a pack tax on cigarettes.

Among the cuts are $4.5 billion from K-12 education, $2 billion from state colleges and universities, and $490 million from community colleges. Health care, public safety, and human services will also take hits, though not as much as under the Governor's plan.

The plan also includes some gimmicky proposals, such as deferring state employee paychecks by one day, from June 30, 2010, to July 1, in order to push about $1.2 billion in spending into the next fiscal year.

California Placed on Negative Credit Watch

The credit rating agency Standard & Poors placed the state of California on a negative credit watch yesterday due to Sacramento's inability to deal with its $24 billion deficit. California already has the lowest credit rating of any of the 50 states.

The Sacramento Bee's Capitol Alert had this information:

The credit watch notification on general obligation and lease-revenue bonds reflects "our assessment of the state's projected depletion of cash by the end of July 2009 absent the adoption of a significant revision to the fiscal 2010 budget," S&P said in a statement.

"Although we continue to believe the state retains a fundamental capacity to meet its debt service, insufficient or untimely adoption of budget reforms serve to increase the risk of missed payments in our view," the notice continued.

If the state cannot balance the budget soon, California will run out of cash some time in July. Investors holding California general obligation bonds and lease-revenue bonds would not only lose out on income but would see the value of their bonds crater if the state starts missing payments to bondholders.

S&P seems to be telling the state that business as usual will not do, something everyone other than our state legislators and the special interests backing them realize.

Blue Flu Coming Today

An article in the Daily Bulletin warned of a possible flu outbreak in Southern California. Don't worry, though, unless you're a state employee, you don't have much exposure risk.

The Bulletin article says that state employees may stage a sick out today to protest ongoing furloughs and future job cuts:

"The blue flu hits Monday," said Fernando Gandera, a Caltrans employee in San Bernardino. "We're not taking this sitting down anymore." [Well, yes, it sounds like you are. -ed.]

Gandera, a local steward for the Service Employees International Union, which represents about 95,000 California employees, said about 1,500 workers in Southern California plan to take today off.

He has said employees will be coming down with either "blue flu" - a nickname derived from sick-outs called by police officers - or "grizzly flu" - a reference to the grizzly bear on California's flag.

"WE want to show the governor we're angry," he said. "The union is fed up, employees are fed up."

Sounds to us as if the SEIU may be overestimating its clout, especially in the wake of some serious recent scandals. SEIU members aren't the only ones fed up. The people who've been paying their salaries may yet have a say if they continue to overreach.

Torres Fiddles, Sacramento Burns

Now that former Pomona mayor Norma Torres (pictured, left) is settled into her job as the representative for the state's 61st Assembly District, she seems to feel comfortable enough to speak to the Ontario Chamber of Commerce last Friday about the state's budget crisis.

Torres strongly opposes any cuts in state services. Her position comes as no surprise, given the fact that most of the money that backed Torres' campaign last year came from organized labor, particularly the Service Employees International Union and government workers' organizations.

According to the Daily Bulletin's coverage last Saturday, Torres believes that rather than the Draconian sort of cuts in state government proposed by Governor Arnold Schwarzenegger, California needs to make structural changes in Sacramento's budget process to ensure the state's long-term viability:

"I began with, 'Why don't you start with the realization that probably none of you are going to be back here next year?' " after the November elections, Lockyer recalls.

"That's a very liberating thought, and with it you can get a lot done."

He acknowledges: "They didn't stand up and applaud."

Speaking to members of the Ontario Chamber of Commerce of Friday morning, Torres, D-Ontario, said elected officials should "address the root of the problem," rather than filling the hole.

"The changes we make for the long term can help our economy," Torres said. "We don't just want to balance the budget, we want to fix the root of the problem."

Torres she and a couple of "freshman" assemblymembers are looking to make these changes.

The goal is to look at the foundation of the state budget so that elected officials do not find themselves in the same predicament years from now, Torres said.

All well and good, but Torres, in the Bulletin piece at least, offered no details on what changes she would propose. She didn't mention tax hikes or borrowing, but those would have to be part of the answer if she isn't going to cut services. Torres had better speak up quickly. This is, after all, now a $24 billion (and rising) problem that must be settled in the next two weeks if California is to avoid running out of cash.

Apparently, Torres doesn't read the Los Angeles Times or attend her Democratic caucus meetings. The Times' George Skelton had a column last week in which he reported on some comments State Treasurer Bill Lockyer, a Democrat, made to state Democratic legislators at the invitation of Assembly Speaker Karen Bass (D-Los Angeles). Skelton wrote:

Lockyer reminded the lawmakers that voters are very angry. "They want you to solve the problem. And if you don't solve the problem you're going to get kicked out of office, so you might as well solve the problem."

"Fair or not, people blame you" for 12 years of flowing red ink, Lockyer continued. "You're not going to get reelected. Just put the politics out of your brain."

Lockyer's lecture was confirmed by a caucus attendee, who didn't want to be identified because there's a gag order on such meetings. "He was very forceful."

That might be the best advice ever given to any group of politicians, though like a lot of good advice it will probably be ignored by politicos such as Torres who are more interested in acquiring and maintaining their fiefdoms than they are in actual governance. What meaningful thing could someone like Lockyer, who is a former state attorney general and former state Senate leader, have to tell Torres and the SEIU?

Really, even you or I could do a better job of budget balancing than Torres. If you don't believe it, try for yourself on on the LA Times' budget balancer.

State's Finances Force Cal Poly Budget Cuts

You may have heard that Cal Poly Pomona was forced to cancel a good chunk of its summer school classes - those paid for by state funding - thanks to the state's continuing budget problems.

Cal Poly's website carried this announcement:

CAL POLY POMONA CANCELS STATE-SUPPORTED SUMMER COURSES

The onset of massive budget cuts to the California State University (CSU) has forced Cal Poly Pomona to cancel state funding for the 2009 summer quarter. All classes that had been scheduled for Summer 2009 are now cancelled with the exception of Study Abroad and Early Start programs. This cancellation includes classes that had been scheduled to begin on June 22 and July 29.

To support student graduation requirements, the university will offer a fee-based summer schedule through the College of the Extended University beginning on July 13. These fully transferable accredited courses meet Cal Poly Pomona degree requirements. Formal admission to Cal Poly Pomona is not a requirement. Stafford Loans, Pell Grants and Work Study may be available for regularly admitted students. Suggest the classes you would like offered by clicking on the green button on this page.

University business operations will remain open throughout the summer on a 4/10 schedule. For more information, please view the Frequently Asked Questions page.

Fee increasing are in the offing as well, and Cal grants are another item on the Sacramento chopping block, something that would affect students at private colleges like the 5C's as well as state schools.

For the foreseeable future, students, faculty, and administrators at college campuses all over California will have set aside their frustrations and deal with the fallout from the state's fiscal crisis. Over at Cal Poly it means the university will have to find a way to cut $20-35 million from its budget.

Cal Poly President Michael Ortiz spent a few hours yesterday at the school's student center talking to students and faculty about the problems they face. The Daily Bulletin's Canan Tasci reported on the meeting:

For two hours on Thursday, Ortiz and his staff responded to a multitude of comments, suggestions, personal and specific questions pertaining to graduation, fall schedule, housing and financial aid.

"It was very informative but I still feel there were some questions I'd like to be answered," said graduate Justin Baron. "We still don't know if student housing and parking fees will increase as a result of the budget cuts."

Ortiz said the university doesn't know a number of the students' answers because the state has not yet completed its budget for the next year.

DIY: State Budget Remedies

Okay, smarty-pants, you keep telling us how absolutely useless those state legislators are. If only they'd let you show them how to fix Sacramento's budget problems.

Now's your chance. The Los Angeles Times has an interactive widget that allows you to make your own choices about what to cut and/or what to tax.

You can find out more about what you are chopping or taxing by rolling over the item with your cursor.

Have at it!

Cities at the Fiscal Brink

A year ago, facing falling revenues and saddled with overly generous employee pension obligations, the city of Vallejo declared bankruptcy. As we suggested at the time, other California towns are being dragged down by the same set of problems.

Vallejo (and potentially other local governments) sought bankruptcy to restructure its employee contracts, which included pension obligations the city can no longer afford. The state Assembly, however, responded to the possible coming wave of municipal bankruptcies by proposing legislation pushed by public employee unions that would require local governments to obtain the state's approval for bankruptcy filings.

The municipal bankruptcy bill (AB 155) is sponsored by Tony Mendoza (D-Artesia). Local governments and their representatives have lined up against the bill, according to a Sacramento Bee article published today.

The Bee article observes that the recession has pushed more local governments to the brink of bankruptcy, and some of those same agencies have apparently been using the fiscal crises as bargaining chips with their employees' labor representatives. The article says:

The fiscal crisis "raised alarm bells," said Carroll Wills, spokesman for the California Professional Firefighters.

"Municipalities up and down the state have either spoken publicly about bankruptcy or have contacted the bankruptcy attorney representative for Vallejo," Wills said.

But the issue goes well beyond Vallejo, he said.

"There's a central issue of the sanctity of the negotiated (labor) contract at stake," he said.

"Some of our local affiliates have been given this back-channel nudge (from management): 'If you guys don't respond (and make contract concessions), we're going to pull a Vallejo,' " Wills said.

Assemblyman Adams Defends Vote

Our area's State Assemblyman, Anthony Adams, spoke before the local Mountain View Republican Club last night at Harvard Square restaurant and explained his reasons for supporting the state's budget compromise in February. The agreement, which included a mix of budget cuts, tax increases, and borrowing, was supposed to balance California's then-$42 billion budget deficit.

The budget fix didn't last very long, as you know. Two things quickly threw the budget back out of balance. First, state tax revenues declined more than expected because of the ongoing recession. Second, the ballot propositions that were supposed to have provided the final pieces of the budget puzzle failed in the May 19 special election.

Adams said that by June 15th the State needed to come up with some $17 billion in cuts against a projected $23 billion deficit. He argued that there is no legal provision to allow California to go bankrupt and thus renegotiate its contracts and write down its debt; instead, he invoked the specter of insolvency and Federal receivership, accountable to no one, similar to the prison health care receiver J. Clark Kelso who under the aegis of the district court is demanding $7 billion of the $9 billion California corrections budget for prisoner healthcare.

Adams defended his vote last February by saying that California would not have qualified for "payday" loans--tax "revenue anticipation notes" that had become SOP in financing State operations between tax collection dates. (This sounds more than a little suspect to us; don't most of our readers match their expenditures to their income cash flow? Why can't the State do that? And doesn't your employer withhold state tax weekly?) Adams claims that Wall Street made him break his "no tax" pledge.

This sounds a lot like our Congressman David Dreier who kept saying he hated his votes even as he supported the huge stimulus packages last fall--"Somebody stop me before I vote again"

In any event, the state's Republicans were incensed at Adams and five other Republican State legislators who supported the February budget agreement. Adams was berated on KFI AM 640's John and Ken Show (recall the head-a-stick business), and he is now the target of a recall petition campaign.

The Daily Bulletin covered Adam's remarks:

Adams admitted Thursday that he knew his vote was unpopular and "dangerous."

"I have no allusions [sic, Bulletin error] about that," he said.

"I made a decision to keep my state alive."

Adams said passage of the state budget was vital to generate new tax revenue in order to keep credit available to the state.

"I did not raise taxes because I thought it would stimulate the economy," he said.

"If we cannot make our state run, we run the risk of having the federal government take over."

More State Capitol News

State Assembly Speaker Karen Bass has a video posted on YouTube in which she addresses the state's budget problems. There's more than a little buck passing as she lays the blame strictly on the recession and the failure of the budget initiatives in the May 19 special election. Bass also warns of coming cuts in public services.

The fault, dear Karen, is not in our stars, but in ourselves. We are masters of our fate, Republicans, Democrats, and voters of all ilk. Voters want the services we want, but we don't want to pay for those services or take responsibility for the gridlock our voter initiatives have created. Nor do we want to acknowledge the level of idiocy we've allowed to rise to leadership levels in both major parties.

The day of fiscal reckoning is at hand. On the local level, that means a $2 million Claremont municipal budget deficit for 2009-10 automatically grows by a third.

Here's Assembly Speaker Bass: