No California Dreaming for Jerry→

California Common Sense has launched a new website, PolicyNook, as a platform for discussion of California’s big issues. My initial contribution discusses the paradoxes of Jerry Brown.

Cops Versus the Schools

In an excellent analysis over at EdSource, Robert Manwaring, a veteran California school policy wonk, asks a deceptively simple question: “If K-12 matters most, why doesn’t state budget reflect this?” Unfortunately, as newspaper folk put it, he buries the lede.

Having been guilty of the same crime here in the past, let me remedy that error for both of us:

California is 47th in school spending because cops, fire fighters, and prison guards have sucked up all the money.

California elected officials say that schools are their highest priority. So do the voters in polls. But that’s not how they act.

And until, as Joe Mathews nicely puts it, “you walk into a police station, and all the cops at the desks are 65,” all that political talk about schools being our highest priority is just hot air.

High-speed rail: A green light for Molly Munger

The morning after the California Senate approved funding for high-speed rail, the Sacramento Bee carried a front-page photo of Senate president Darrell Steinberg giving a double fist pump of victory. As glad as Steinberg appeared to be, though, it’s hard to imagine that Molly Munger, the Pasadena civil rights attorney, wasn’t even happier. By approving high-speed rail, legislative Democrats and Jerry Brown have just given away their best argument against her school-funding measure on the November ballot.

To understand why, you have to get beyond the media’s careless habit of lumping Munger’s proposal with Jerry Brown’s rival budget measure as competing “tax measures.”

Yes, both measures do temporarily raise taxes — Brown’s on everyone, Munger’s on households in the upper half of incomes, both with the heaviest increase put on the very wealthy. But the measures differ sharply in purpose and aspiration.

Brown’s measure is about eating your spinach. It raises taxes temporarily in the hopes of stabilizing the budget at the current austerity levels of state spending. It aims at keeping things from getting worse.

Munger’s measure, on the other hand, injects only a part of the revenue it raises into Sacramento — to help pay down debt and relieve some of the pressure of interest payments on the state budget. Mostly it aims to work a revolution in school funding for the purpose of closing the achievement and opportunity gap that is California’s most pressing challenge.

Munger’s measure would route the new money around state and district bureaucracies, keeping it off the bargaining table, and give it directly to schools, where parents would be given a larger role in deciding how to spend it to benefit their own children. Munger is inviting California, after years of austerity and muddling, to think big.

For months Brown and his union allies have been bashing Munger for irresponsibility. California needed to put first things first, they said. New tax dollars should go to putting the state’s budget house in order, not tackling problems in big and bold ways. Munger’s measure came at the wrong time, they charged, threatening confusion and the defeat of Brown’s more responsible approach.

And now, after the high-speed rail vote, Californians understand they didn’t mean a word of it.

By any reasonable reckoning, the high-speed rail plan approved by the Legislature is not ready for prime time. As both the Legislative Analyst and independent observers have pointed out, the state doesn’t have a clue about how to finance the project. High-speed rail, which will raise greenhouse gas emissions over the next several decades, will compete for funding with the urban transit projects of greater economic and environmental value that California so badly needs to deal both with congestion and its climate goals. It tells you all you need to know about the viability of the plan that the senators most knowledgeable about high speed rail (and among its biggest boosters for years) voted against it.

But reasonable reckoning did not win out. Nor did Brown’s previous call for “a modicum of stoicism.” What carried the day, at least rhetorically, was the injunction to think big.

“I think what we did today,” Steinberg declaimed, “is going to be seen over many years, and many decades, as a turning point in California, a time when we decided to say ’yes’ to hope, ’yes’ to progress, ’yes’ to the future.”

If California can put aside caution and budget restraint to pursue a big and expensive frill like high-speed rail, can there be any doubt about the message the state’s leaders are implicitly sending when it comes to dealing with schools, the state’s (and voters’) highest priority, and to Munger’s call to revitalize them?

To the future! they are saying. Go, Molly, go.

Round 2: What Are We Waiting For?

The June 5 test of California’s reformy new election system, as Joe Mathews points out, didn’t live up to the hype. There’s more to write about it in the future, after all the results come in. But a couple of stray thoughts.

First, let’s settle on a name to call the thing, one that accurately conveys to voters what they are doing.

“Please, do not call it a primary, because it isn’t,” writes Matthew S. Shugart, the UC San Diego political scientist and leading scholar of electoral systems. “In a primary, a political party permits voters to select its candidate for the general election.” But in California’s new system, Big Government now prohibits parties from presenting their nominees to voters in the general election, as they have throughout American history.

So if it’s not a primary, what is it? When I looked at my ballot (image below), one name jumped instantly to mind:

Clusterfuck.

But that name wouldn’t be adopted by the media, for obvious reasons, and Jon Stewart and his Daily Show crew probably hold the trademark.

So we are stuck with something more prosaic. Since the system is a two-round election, with the first round narrowing the field to two candidates to compete in a majority runoff, it makes sense to call the first round the general election, since it is the moment when voters have the most choice, and the second round the runoff. Millions of California voters will be surprised come November to discover that they have only limited party choices—no minor party candidates, and in many legislative and congressional districts, only candidates from one of the major parties. The big choices, they will find, have been made in June, in the low-turnout first round.

Unless the goal of the reformers is narrowing the effective choices of the electorate, it behooves them to campaign for having the first round of California’s system be called the general election, and its date relocated to November, the traditional date for presidential elections, with the runoff to follow soon after.

Since the California system bears some resemblance to the French system of having a majority runoff (although France, being more realistic about the essential role of parties in the life of a democracy, grant them a larger role), it’s instructive to note that France will conduct the runoff in elections for the National Assembly on Sunday, June 17, one week after first round was held.

Not so in California. We will have to wait a crazy 154 days between the June 5 general election first round and the runoff. Voter attention and knowledge about the candidates will wane, and will have to be refreshed with a huge new infusion of campaign cash collected from boodlers, bundlers, and PACs. If the French can figure out how to conduct elections in back-to-back weeks, sparing their democracy a deluge of fund-raising and endless campaigning, why can't we?

Politics is Hard

If it’s not one damn thing, it’s another. Second-day analysis of the June 5 jungle primary from Rough and Tumble:

Take your pick.

How to Fix Prop 29

Proposition 29, the tobacco tax measure on the June 5 ballot, makes for a hard choice. I have no problem with raising tobacco taxes. California needs the revenue, and higher tobacco taxes would save lives by discouraging smoking. But using the new revenue for cancer research makes no sense at all. America already spends billions on that research, and California has higher priorities.

What to do? Here is where the Legislature could help us out, and at the same time show a bit bipartisanship.

Lawmakers may disagree about taxes, but I doubt a single member of the Assembly or the Senate believes that cancer research is a higher priority than funding schools and colleges. After all, what is the sense of funding cancer research in a state where you can't even educate children about science or produce the next generation of scientists?

So let the Legislature put a new measure on the November ballot. Call it the Tobacco Tax Recovery and Education Restoration Act of 2012. Let it provide for shifting all of the tobacco taxes enacted in the three initiatives of the last several decades—Props 88, 10, and 29—to the general fund. Let it state the Legislature’s intent to use the money to restore funding for schools and colleges cut over the last several years.

Such a measure would have several important effects.

First, it would let voters have the choice Prop 29 doesn’t provide: of raising tobacco taxes but sending the money to their most important priority.

Second, it would send a cautionary message to potential sponsors of ballot-box budgeting initiatives. It would tell them that they cannot loot the California revenue base with impunity, that the Legislature will fight back to assure the voters have a choice about how new revenues should be used. That’s a message that should appeal to Republicans and Democrats alike.

Radio Whisperer

For people within radio listening distance of San Jose, I’ll be talking about California’s various crises on Friday night, May 4, 7:00 p.m., as Russell Hancock, President and CEO of Joint Venture Silicon Valley, interviews me on Inside Silicon Valley on KLIV 1590. The show repeats at noon on Sunday, May 6.

Update on 2012-05-07 19:31 by Mark Paul

The interview is now available as a podcast at Joint Venture Silicon Valley’s website.

Talking Head

I’ll be joining David Watts Barton on Capital Public Radio’s Insight, Wednesday, February 29 at 10:00 a.m. and 8:00 p.m, 90.9 FM on the Sacramento area radio dial, to talk about the arena deal and Sacramento’s fiscal crisis.

UPDATE: They switched hosts on the show; Beth Ruyak took the microphone (you can hear the podcast here). And if we needed any evidence of the stakes as I explained them, take a look at what I ran across in the neighborhood on the way home.

The police wouldn’t come

The owner lost a couple of thousand worth of tools and some new, uninstalled appliances. When he reported the crime, the police told him it’s policy not to investigate unless guns or explosives were stolen. And remember, this is before a financially strapped city spends $250 million to subsidize the NBA.

Sports Extortion (Cont'd)

The Sacramento Bee asked me for my take on the question of whether Sacramento ought to spend $200 million to subsidize a new arena for the Sacramento Kings and the National Basketball Association. You can read my answer on the Bee’s site.

The Bee gave me only 800 words, so I wasn’t able to flesh out the argument as well as I would have liked. Fortunately, we have the web for that.

If you want to understand the economics better, you can check out the longer reporting piece I wrote for the Bee when I worked there. The most accessible book on the subject is Neil deMause and Joanna Cagan’s splendid Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit. Neil deMause also runs a companion web site, Field of Schemes, where he tracks and analyzes the money grabs of welfare-seeking sports owners around the country.

Given more space, I would have also repeated what I wrote here last spring: The best way to limit the extortion game is for the California Legislature to prevent the billionaire sports owners and their leagues from playing city against city. It should ban any local jurisdictions from using public funds to subsidize professional sports teams.

California is at a critical moment on this issue.

The extortionists are on the attack right now all over the state: Sacramento, San Diego, Santa Clara, Anaheim, Los Angeles. But as we all know, from the news and daily life, core California public services reducing the state’s quality of life. Every public dollar extorted today steals from California’s future.

Ideally, local politicians would do the right thing. But there’s something about sports that makes them go weak in the knees and soft in the head. (My wife blames it on testosterone poisoning.) They need to be saved from themselves with a law that protects them against their worst instincts.

That law would set budget priorities right at a time when we need to be putting first things first. But it would also send a bracing message to the rest of the country. If California cities, home to one in eight Americans, can no longer be used as leverage in the extortion game, other states will gain some protection, and perhaps even be encouraged to protect their taxpayers as well as California does.

Contrary to the moans of the extortionists, that wouldn’t mean the end of pro sports. As Scott Lewis points out, at Voice of San Diego, we would then be on track to replace sports socialism with true sports capitalism. And who can disagree with that?

The Facebook Effect?

Over at The Reality-Based Community Matthew Kahn has a post suggesting that the Facebook IPO and the minting of a thousand new millionaires will make property tax revenues “soar” in Silicon Valley and help local schools. Matthew Yglesias picks up the theme on his blog. They both seem to forget that, in California, public finance is, well, different.

Even if the demand created by Facebook employees were to raise housing prices in the Bay Area, the effect on property tax revenues would be small. Under Prop 13, increases in the assessed value of existing homes are limited to 2 percent a year. The Facebook effect would be limited to houses at the margin—either those newly built (which Kahn sees as unlikely under the Bay Area’s restrictive housing policies) or those existing homes whose sale would not have happened in the absence of the Facebook IPO and whose new and higher value would result in a higher tax on the property.

How big would that marginal effect be?

Let’s assume all thousand Facebook millionaires buy a house and each sale (both new construction and upward assessment of an existing house) results in an increase in assessed valuation of $500,000. The resulting annual increase in property tax paid would be 1 percent of $500 million, or $5 million. (There would be some extra in jurisdictions that have passed bonds that add an increment over the basic 1 percent rate.) Even if we assume that all the Facebook millionaires buy their houses in Santa Clara and San Mateo counties, the increased property tax revenue amounts to only one-tenth of 1 percent of the roughly $5 billion a year in property tax collected by those two counties, of which about 60 percent goes to schools.

But because this in California, not even that $3 million necessarily helps the local schools. Under its Prop 13 and Prop 98 school financing system, California imposes revenue limits on school districts. Changes in local property tax revenue collections for schools are offset by increasing or lowering general state aid to districts to maintain the revenue limit. In the typical district, the increase in property tax revenue from a Facebook millionaire will flow to back to the state budget, not the local school.

The exception is for what are called “basic aid districts,” those whose local property tax revenues for schools exceed the statewide revenue limit, permitting them to spend over the limit. Because many of the school districts in Silicon Valley are basic aid districts, they would receive some of that $3 million in new revenue. Their new revenue would be dwarfed, however, by the money they have lost from the state’s new policy of reducing categorical funding for basic aid districts.

If the Facebook IPO will make for “a neat event study,” it will not be for the reasons Kahn suggests. The more interesting story here is how, under California’s strange and radical system of public finance and governance, an event so large in economic terms can have so little effect on the public finances of the local communities in which it is happening.

Sacramento's War on Blight→

Now that California redevelopment agencies, and tax increment funding, look headed to the dust bin of history, Zócalo Public Square asked me what redevelopment looked like on the ground, from the perspective of a single place, and what might replace it.

You can find my answer here, on Zócalo's site.

Redevelopment Greed Backfires

The best thing about the California Supreme Court redevelopment decision isn’t that the justices upheld the power of the Legislature to abolish the agencies that suck up and waste billions of tax dollars. No, the best thing was how the court did it: by picking up Proposition 22—the 2010 measure the redevelopment agencies wrote to exempt themselves from California’s budget crisis—and shooting the agencies with their own gun.

For those who haven’t been scoring at home, here’s the two-minute recap of the issue:

• Redevelopment agencies are devices for grabbing property tax dollars that would otherwise go to schools, colleges, and other useful public services. The agencies instead use them to subsidize development that voters would be unlikely to support if they had to pay for the projects with new tax dollars.

• Faced with diminished revenue and the prospect of deep cuts in essential programs, state lawmakers decide schools are a higher priority than downtown hotels, convention centers, and ornamental street lights. They shift the money grabbed by redevelopment agencies back to education.

• Redevelopment agencies fight back by writing and passing Prop 22, which bars the Legislature from taking away from redevelopment agencies the money they are taking away from schools.

• New Gov. Jerry Brown responds by proposing, in his 2011-12 budget, to abolish redevelopment agencies in their current form and reclaim, once and for all, the money for schools. He proposes a constitutional amendment to allow communities to pursue future redevelopment projects, but using their own money.

• Legislature enacts a two-bill compromise. One bill abolishes redevelopment agencies; a second bill hands them a lifeline, rescinding the death sentence of redevelopment agencies that agree to shift their tax booty to schools.

• Redevelopment agencies sue, arguing that Prop 22 prevents the lawmakers from mucking with their money or their fate.

Not so, the Supreme Court has now decided. The Legislature had the constitutional authority to create redevelopment agencies and likewise has the authority to end what it created. Prop 22 did not change that. But what Prop 22 did change, the justices found, was the Legislature’s power to shift redevelopment property tax dollars to higher priority uses. It therefore found that, under Prop 22, the Legislature no longer has the power to offer them a conditional lifeline.

“The irony of these circumstances concerning Proposition 22 should not be ignored — the very measure that was crafted to protect financing for new redevelopment projects has been broadly interpreted in a manner that effectively ends all financing for new redevelopment projects,” Chief Justice Cantil-Sakauye wrote. “This cannot be a necessary result intended by the proponents of Proposition 22 concerning redevelopment.”

Not the intended result, perhaps. But certainly the result they deserved.

ProPublica: The Anti-Politics Police

Try to imagine Lady Chatterley’s Lover written by the Anti-Sex League. If you can, you’ve grasped the basics of ProPublica’s story on California redistricting, which floats a few morsels of detail in a broth of disgust and ideological loathing that renders it worthless and misleading.

The gist of the (badly edited) ProPublica piece is that, while the Republicans who control the House of Representatives sat helplessly on the sideline, “savvy” House Democrats “fooled” a hapless and self-blinded California Citizens Redistricting Commission into drawing a congressional district map that helped some incumbent Democrats at the expense of the public interest.

I’ll refer you to others more steeped in the intricacies to see show how flimsy the ProPublica piece is in some of its particulars:

1. As Paul Mitchell, a Democratic redistricting guru, notes, it’s “ludicrous” to believe that incumbents and parties wouldn’t take an active role in trying to influence the outcome. (If Speaker John Boehner and House Republicans really ignored the redistricting of the largest state, ProPublica has missed the story here—one of the greatest acts of political malpractice in American history.)
2. If the Democrats “fooled” the commission, as Robert Cruickshank and Calbuzz write, they did it in the odd way of throwing Democratic incumbents into districts with each other. And ProPublica reaches its conclusion that Democrats achieved unnatural gains by simply ignoring the evidence and analysis it received from political scientists Vladimir Kogan and Eric McGhee, who found that the commission maps yield the expected amount of competition.
3. The law creating the commission forbids it from considering the place of residence of any incumbent or drawing maps to help or hurt any party. As John Myers of KQED points out, had the commission done what ProPublica criticizes it for not doing—looking at the partisan effect of its maps—the commissioners would have been criticized too. Damned if they don’t, damned if they do. (I’ll go one step beyond John here. They would not only have been criticized—they would have been criticized by these very same ProPublica reporters, who would have taken the commission’s knowledge of the political consequences of their maps as evidence the commission was in cahoots with the Democrats. The first rule of journalism written from the anti-partisan, anti-political perspective is that the person in the public sphere must always be wrong.)

What interests and appalls me most is the craziness of that perspective—that you can have politics without politics. It pervades the story and explains why it has the elements and all of the subtlety of an old-fashioned melodrama of virtue debauched: wily seducer slips by inept chaperone to ravage the unprotected virgin.

The ProPublica reporters go to great lengths to tell us the villains plotted their debauchery in “secret.” (As opposed to all the times that political or business operators conduct their strategy discussion in public?)

They tell us that Democrats slipped by the commission’s defenses to testify at hearings in the guise of “ordinary citizens.” Such language betrays how deeply ideological is the reporters’ anti-partisan view. The most ordinary and common activity of a citizen in a democracy is to advance his or her partisan political identity by organizing, arguing, contributing, or voting. Yet to ProPublica, that activity is less legitimate than that of the economic and ethnic groups that went before the commission to plead for narrower and more selfish interests.

They tell us how the seducers inveigled the virgins with the sweet words of “communities of interest” that they wanted to hear, when all the seducers really wanted was to get into the commission’s maps.

If the ProPublica reporters had approached the story without anti-partisan ideological blinders, they might have seen the meaning and irony of this. After all, political parties are the largest and most pervasive “communities of interest” in our politics. But the law creating the commission, written from the same anti-politics, anti-partisan ideology that blinds ProPublica, explicitly prohibits treating parties as such. So California was trying a grand experiment: What happens when you piss into the wind?

We can see pieces of the answer to that question in ProPublica’s story. Politics doesn’t go away. Parties and incumbents adapt and jostle for advantage as they always have. Though the law tries to elevate other redistricting criteria over party, the thing that continues to matter most in public discussion—to activists, voters, and journalists, including ProPublica—is how redistricting affects partisan balance and the careers of incumbents.

But someday we’ll get the fuller answer, told by someone competent, who both understands and doesn’t hate politics. In other words, someone other than ProPublica.