Brown to Unions: Thanks for Cash, Now Piss Off

[Modern School]

California Governor Jerry Brown beat billionaire Meg Whitman thanks in large part to the generous financial backing of large unions, especially the California Teachers Association (CTA). Yet during his inauguration, he walked right through a party hosted by the Orange County Employees Association without stopping to give a speech at the podium they had erected for him, leading many supporters to boo him. Then, during his inaugural address, he told unions they should not expect any favors.

While this was seen as offensive by many union activists, it should not have come as a surprise. Jerry Brown has a sordid record of union busting and supporting brutal police attacks on ILWU members. The real question is why unions supported him at all instead of using their resources to organize for the kind of massive strikes and protests necessary to make him and the feds back off.

To Read the rest of this article, please visit http://modeducation.blogspot.com/2011/01/brown-to-unions-thanks-for-cash-now.html

[notesdev]

1. LOL

What part of "California is flat broke" do these people not get?

All these morons are not only not going to get what they want - and not due to lack of will, simply as a function of the insurmountable fact that the money doesn't exist - but if they keep this up they're going to get hundreds of thousands of union jobs privatized.

The two most useful things a union can do right now:

1) Cut any deal necessary to preserve union jobs; and
2) Go after the crooks on Wall St. who made off with much of what used to be in your pension funds.

Any union clamoring for more pay, more benefits, etc. at this point in time is insane.

[Hannah Bell]

3. lol. california is anything but flat broke. the money in fact, exists;

the rich don't want to spend it on workers.

[notesdev]

5. Tell me more about this imaginary world where the money exists

I'm sure the vendors who serve the state and have been getting IOUs for 2 years would be very interested.

I really don't see how you get around the basic fact that you cannot indefinitely spend more than you make, whether you are an individual or running a government. California's burn rate is twice its revenues... it's a dead state walking. The only questions at this point are which promises get defaulted on, and when.

[Hannah Bell]

8. according to you, it hasn't paid vendors for two years; thus it has already defaulted on promises.

but i'm very surprised that anyone would continue to supply the state after not being paid for two years.

california is home to 10% of the world's billionaires.

In 2010 California & Texas leads were #1 in number of Fortune 500 headquarters: 57 companies each.

california's GDP is 1.85 trillion, the 8th-largest economy in the world & 13% of US GDP. Per capita GDP about $42K.

The exports of goods made in California totaled $134 billion in 2007. $48 billion of that total was computers and electronics, followed by transportation, non-electrical machinery, agriculture, and chemicals.

http://en.wikipedia.org/wiki/Economy_of_California.

**

California Proposition 24, Repeal of Corporate Tax Breaks ballot proposition was on the November 2, 2010 ballot in California as an initiated state statute, where it was defeated.

The goal of Proposition 24 was to stop several corporate tax breaks that were slated to go into effect in 2010 and 2012. The breaks were approved by the California Governor Arnold Schwarzenegger.

Proposition 24 would have prevented eligible corporations from receiving about $1.3 billion in tax breaks per year.<1>

The tax breaks unsuccessfully targeted by Proposition 24 were agreed to by California lawmakers as part of budget agreements in late 2008 and in what capitol reporter Steve Harmon refers to as "secret negotiations in February".<2> The Silicon Valley Leadership Group, according to the New York Times, "lobbied hard" to get the corporate tax break enacted.<3>

http://ballotpedia.org/wiki/index.php/California_Proposition_24,_Repeal_of_Corporate_Tax_Breaks_(2010)


On July 29, the opponents of Proposition 24, the November ballot measure that would repeal a trio of tax breaks for businesses enacted as part of the February 2009 budget, received a $1 million contribution from biotech giant Genentech.

While other companies benefiting from the changes in state tax law Proposition 24 would repeal have each contributed $100,000 to the “no” side – Amgen, Cisco Systems, Abbot Laboratories, Hewlett-Packard, General Electric, Viacom and Time Warner – Genentech has kicked in 10 times that amount.

http://californiascapitol.com/blog/?p=3580


The CBP report uses Franchise Tax Board estimates to show how just one of the tax reductions, the elective single sales factor apportionment (SSF), would benefit a very small number of very large corporations. Their analysis also demonstrates that the other two tax breaks benefit small numbers of companies as well. According to the report:

Only 1.2 percent of the state’s corporations would benefit from elective SSF at a cost of $850 million in 2015-16.

Nine corporations – 0.001% of all California corporations – would receive tax cuts of more than $20 million…

SSF apportionment would overwhelmingly benefit California’s largest corporations; 80 percent of the benefits would go to companies with gross receipts in excess of $1 billion. These beneficiaries account for just 0.1 percent of all California corporations.

Ninety-five percent of the benefits would go to 0.3 percent of the state’s corporations.

Twenty-eight utility corporations would receive tax cuts averaging $1.5 million per firm. This is significant since these firms are tied to California by virtue of the service they produce and the customers they serve.

http://californiascapitol.com/blog/?p=3580


Half of the shortfall next fiscal year is the result of temporary fixes put in place in the past two years, including $8 billion in tax increases set to expire.

http://www.businessweek.com/news/2010-11-10/california-gap-may-rise-to-25-4-billion-report-says.html


I repeat, there's plenty of money in California. The legislature recently voted in more corporate tax breaks, & the voters approved that policy.

[notesdev]

9. add all that up

then drop it in the $7 bil hole that CALPERS alone is costing the state. Poof it's gone.

Seriously, CA's budget problems are on the order of magnitude of $25B. Let's say for argument's sake, everything you mention comes to pass. Fine now it's a $24B hole.

You wonder why businesses continue to do business with the state after receiving IOUs? It's because many of these businesses are utterly dependent on the state as a customer in order to be in business in the first place - they have no choice. Take a look at Illinois, which amazingly managed to get one step ahead of California in this, you have state legislators being evicted and businesses going out of business left and right because the state can't pay.

There's a lot of money in Illinois still, too - because of its size it is still among the top 10 overall states in total wealth. That doesn't mean a thing, because that money can't be leveraged into paying off the state's bills when it's private wealth owned by individuals. How would you get at that money? Steal homes, cars, pension funds?

Keep in mind that CA is still receiving stimulus funds - and quite a bit. And those stimulus funds will run out soon, leaving a hole that is alone bigger than the dirt you brought to fill it.

It has only been three weeks since the state Comptroller warned that there is a big time cash crunch that will hit them by this summer, and two months since the state legislative analyst gave a similar warning.

California, like all other states and the federal government as well, will need to adjust its spending to be in line with the decreased revenues from an economy in depression. There's no getting around it, and ignoring the problem will guarantee a default not only on promises made internally within the state, but also on those who placed their faith in the state's ability to repay the money it has been borrowing.

[Hannah Bell]

10. Gee, I wonder how businesses whose only client is the state of california stay in business

when they don't get paid for two years?

Please link me to these vendors who haven't been paid for two years. I bet they're mad.

As for CALPERS, all state employees, including teachers, get 5-10% of their checks taken (similar to SS) to pay into their retirement fund, assets of which are currently about $180 billion, down from $260B thanks to the financial crash, brought to you by the financial class.

Payout in 2008 was about $10B, which was about 5.5% of assets, which should have been covered nicely by investment gains. At least, if CALPERS is investing in the same kind of vehicles the 95 billionaires living in California are:

"World’s billionaires grew 50 percent richer in 2009"

The combined net worth of these 1,011 individuals increased to $3.6 trillion, up $1.2 trillion from the year before. On average, each billionaire had his or her wealth increase by $500 million.

Four hundred and three billionaires reside in the United States. They constitute just 0.00014 percent of the country’s total population, but control 8 percent of the national wealth. Each of these individuals holds over 300 million times more wealth than the average US resident.
http://www.wsws.org/articles/2010/mar2010/forb-m12.shtml

and they got even richer & more numerous in 201o. Bill Gates' assets increased 50%, for example:

http://www.forbes.com/2010/03/09/worlds-richest-people-slim-gates-buffett-billionaires-2010-intro.html

Those California billionaires sure have a lot of spare cash to play politics with:

http://blogs.forbes.com/clareoconnor/2010/10/28/billionaire-berggruen-pledges-20-million-to-fix-california-politics/

http://blogs.forbes.com/clareoconnor/2010/11/03/midterm-elections-billionaire-winners-and-losers/


So please link me to documentation for your claim that state taxpayers pay $7B a year to CALPERS.

Finally, CALPERS payout doesn't go into a "hole". It goes into the hands of California citizens & taxpayers & is spent in the state of California, contributing to California businesses & governments.

Now give me your documentation because I'm sick of arguing with made-up "facts" with someone who lives in spook central, fairfax virgina.

[notesdev]

11. Here's your doc

Which you would be wise to review in detail, not just for the data you requested, but as a whole. This is from the state itself, not interpolated or interpreted in any way by any interested third party:

http://www.lao.ca.gov/reports/2010/bud/fiscal_outlook/fiscal_outlook_2010.aspx

Go under "Public Employee Retirement Costs" and add up the state outlays for CALPERS this fiscal year.

CALPERS is a major sucker for Wall Street scams and the state is required to make up its shortfalls.

Amazing how the State of California just happens to agree with my made-up "facts".

Sweetie, I don't know where you have been getting your financial information but whoever is feeding it to you is full of total garbage. The federal government, almost all state governments, and a great many local governments are ALL on track to bankruptcy. You need to get your mind around austerity politics as it is your future no matter how much you prefer to believe otherwise.

[Hannah Bell]

13. 1. I am not your sweetie.

2. "The budget problem consists of a $6 billion projected deficit for 2010–11 and a $19 billion gap between projected revenues and spending in 2011–12."

As I said: $19 billion = 2011 deficit.


3. As i said: "by the end of 2010–11 about $8 billion of temporary tax increases expire"


4. e.g. "End of Temporary Tax Increases Affects 2011–12 Forecast.

We estimate that PIT revenue will increase from its 2009–10 level of $44.6 billion to $46.7 billion in 2010–11. It will then drop off to $44.3 billion in 2011–12 as the temporary 0.25 percentage point rate increase and dependent credit reduction enacted in February 2009 expire at the end of calendar year 2010. These temporary tax increases contribute over $2 billion to PIT revenues in 2010–11.

Capital gains are important for PIT projections because these gains are concentrated among taxpayers who pay the highest marginal PIT tax rates."

Obviously, the legislators COULD reenact that .25 tax on the rich that netted over $2 billion. But they prefer to let it expire & steal from pensioners.


5. As for CALPERS, I don't find anything like your $7 billion figure. I find:

"The state’s required contributions to CalPERS for state and CSU pensions are forecasted to be about $3.6 billion (all funds) in 2010–11, growing to $3.9 billion in 2015–16."

$3.6B is the employer contribution, similar to the SS system of employee/employer contribution. The employees get an equivalent amount taken from their paychecks -- that's where your bogus $7B comes from.


6. I find that California corporations kick in only $10B in total taxes. That's from ALL corporations, not just giants.


7. BTW, corporations were by far the BIGGEST beneficiaries of Prop 13.

Will Californians Finally Reform Property Tax Loopholes for Corporations?
Share

On June 6, 1978, Proposition 13 passed in California with 65 percent of the vote.... When a change of ownership does occur, corporations are able to avoid property tax hikes because reassessments only apply if a single entity acquires more than 50 percent of the asset.

One of the most well-known examples involves E&J Gallo's purchase of the Louis M. Martini Winery in 2002. The second largest winery in the world, with annual sales of approximately $2 billion, E&J Gallo acquired over 1,300 acres of some of the most beautiful vineyards in Sonoma and Napa counties, worth an estimated $75 million. Because Gallo split the purchase among 12 families members - no one person obtained more than 50 percent of the Martini property - it wasn't reassessed for tax purposes.

Napa County tax assessor John Tuteur told The Bay Citizen that he "realized from the beginning how smart they were. They used loophole in the law to manage to avoid reassessment," which would have been in the "tens of millions of dollars."

http://www.closetheloophole.com/news/truthout


There is nothing in that link that supports your assertions, to wit:

1. The state of California sends $7B a year into a black hole at Calpers/Calpers costs taxpayers $7B a year

2. There is no money in California


In fact, the paper reinforces the contention that the fiscal crisis, brought to you by the ruling class (which you evidentally work for over there in fairfax?), is the cause of california's budget woes, together with the lack of balls to tax the 95 billionaires, countless millionaires, & big corporations that own california.

But I notice you do have the balls to proclaim loudly that austerity is indeed what the rulers have in mind for the peons.

[notesdev]

16. Of course you are

You are very sweet in your pervasive naivete. I find it charming, though distinctly unhelpful in seeking a solution to real world problems.

Look, the very first line of the report announces in headline font that the immediate fiscal hole that needs to be dealt with this year is $25 billion. It doesn't matter that $6B comes from last year's problem, because it's a here-and-now problem for California. It doesn't go away just because they failed to make actual payments to parties to whom the state owes money from the previous fiscal year.

I'm glad at least that we can agree on a common source of information for a topic, that is progress.

But you have to actually read it, honey. And if you do read it, there's no way in the world you are coming out of that experience with a positive outlook for California's ability to spend money on new things, or even maintain the old things. Do you even see the assumptions made by the report? This is the best case scenario for California, and it's awful. It assumes zero COLA, winning all outstanding court cases that have budget impact, and 5-6% revenue growth y/o/y for the next four years.

I'm a bit disturbed by the fact that you read only page 1, when you really need to read everything before the department-specific detail in order to get a complete picture on California's fiscal position, and still missed the headline number. It is as if you have been trained to take any measure possible to avoid confronting the truth that California is simply out of money, as if it is an article of belief that there's always more money somewhere to be had, if only the government can find it and exploit it. No, I'm afraid they've already done that to every degree that they could effectively do so.

We are at the wall now. There's no more ability to kick this can into the future. All the putting off solving these problems for another day already happened and is over. Now is the "another day" when the bills are due.


You wrote:
> But I notice you do have the balls to proclaim loudly that austerity is indeed what the rulers have in mind for the peons.

If you hadn't noticed (and as I noted above, you seem to have been trained not to), the rulers have been doing the very opposite of austerity. They find any reason to spend as much as possible. Good economy? Great! We can spend more! Bad economy? Oh no! We need to spend more or we won't recover!

Your rulers have already spent all of your money. Austerity is coming no matter what because the unsustainable cannot be sustained. Your other option is the Pritchard route, where they just stopped sending out checks completely when they ran out of money. Would you rather a hard stop and an all-out collapse of the government, or would you at any point be willing to consider the responsible fiscal approach that any household has to take in order to survive, spending no more than gets taken in.

I really feel this is the key point where I can't agree with your approach. Your approach depends on indefinitely spending more than we take in. It doesn't work that way! At some point the credit card gets declined - then what?

[Hannah Bell]

19. You still haven't linked me to documentation of your claim that vendors

haven't been paid for 2 years.

Or to your claim that there's no money in california.

$1 billion in new tax breaks were given to california corporations in 2009-2010.

Your claim about CALPERS is false also.

I am not naive. The ruling class lies constantly; historically, they make their profits, and their own losses good off the hides of the working class. The state is the executive committee of the ruling class.

Jerry Brown is no liberal.

Your post is a lot of blather to disguise the fact that you have no evidence for your claims.

[Hannah Bell]

12. Page 1:

The budget problem consists of a $6 billion projected deficit for 2010–11 and a $19 billion gap between projected revenues and spending in 2011–12.


As I said: $19 billion = 2011 deficit.

As i said: "by the end of 2010–11 about $8 billion of temporary tax increases expire"

"End of Temporary Tax Increases Affects 2011–12 Forecast.

We estimate that PIT revenue will increase from its 2009–10 level of $44.6 billion to $46.7 billion in 2010–11. It will then drop off to $44.3 billion in 2011–12 as the temporary 0.25 percentage point rate increase and dependent credit reduction enacted in February 2009 expire at the end of calendar year 2010. These temporary tax increases contribute over $2 billion to PIT revenues in 2010–11.

Capital gains are important for PIT projections because these gains are concentrated among taxpayers who pay the highest marginal PIT tax rates."


Obviously, the legislators COULD reenact that .25 tax on the rich that netted over $2 billion. But they prefer to let it expire & steal from pensioners.


As for CALPERS, I don't find anything like your $7 billion figure. I find:

"The state’s required contributions to CalPERS for state and CSU pensions are forecasted to be about $3.6 billion (all funds) in 2010–11, growing to $3.9 billion in 2015–16."

$3.6B is the employer contribution, similar to the SS system of employee/employer contribution. The employees get an equivalent amount taken from their paychecks -- that's where your bogus $7B comes from.


I find that California corporations kick in only $10B in total taxes. That's from ALL corporations, not just giants.

BTW, corporations were by far the BIGGEST beneficiaries of Prop 13.

Will Californians Finally Reform Property Tax Loopholes for Corporations?
Share

On June 6, 1978, Proposition 13 passed in California with 65 percent of the vote.... When a change of ownership does occur, corporations are able to avoid property tax hikes because reassessments only apply if a single entity acquires more than 50 percent of the asset.

One of the most well-known examples involves E&J Gallo's purchase of the Louis M. Martini Winery in 2002. The second largest winery in the world, with annual sales of approximately $2 billion, E&J Gallo acquired over 1,300 acres of some of the most beautiful vineyards in Sonoma and Napa counties, worth an estimated $75 million. Because Gallo split the purchase among 12 families members - no one person obtained more than 50 percent of the Martini property - it wasn't reassessed for tax purposes.

Napa County tax assessor John Tuteur told The Bay Citizen that he "realized from the beginning how smart they were. They used loophole in the law to manage to avoid reassessment," which would have been in the "tens of millions of dollars."

http://www.closetheloophole.com/news/truthout


There is nothing in that link that supports your assertions, to wit:

1. The state of California sends $7B a year into a black hole at Calpers/Calpers costs taxpayers $7B a year

2. There is no money in California

[notesdev]

14. What part of this paragraph don't you understand?

Public Employee Retirement Costs

Our forecast reflects current–law increases in the state’s annual payments to four major public employee retirement programs: pension programs for state and CSU employees, the teachers’ pension program, state and CSU retiree health benefit programs, and pension programs for judges. (The teachers’ pension program is administered by the California State Teachers’ Retirement System , and the other three programs are administered by CalPERS.) The state’s required contributions to CalPERS for state and CSU pensions are forecasted to be about $3.6 billion (all funds) in 2010–11, growing to $3.9 billion in 2015–16. (This figure reflects estimated savings due to recent collective bargaining agreements that increase some employees’ pension contributions.) The General Fund pays just under 60 percent of these costs. The state’s required payments to CalSTRS—paid entirely from the General Fund—are estimated to be $1.3 billion in 2010–11 and grow to over $1.5 billion in 2015–16. The state’s “pay–as–you–go” retiree health benefit contributions to CalPERS are forecast to grow from $1.4 billion in 2010–11 to over $2 billion in 2015–16.


When you get your information from parties who have a vested interest in a particular outcome, you should not be terribly surprised when they mislead you.

As you noted, I'm from Virginia (now anyway, originally from NY), so in terms of my own personal interest, I could give two squats if CA went belly up tomorrow, and I have absolutely no motivation or reason to mislead you. I have no skin (directly) in this game. My interest is purely a matter of trying to understand what is going on in the big picture and extrapolating from there what the future looks like, so I can plan appropriately.

I may be a minority voice now, but I was also a minority voice back in 2005-2006 when I asked stupid questions like what if house prices go down? This time the question I've been asking is where the money to pay for all the things that are being promised is coming from. It is incredibly easy to make a promise, yet much, much more difficult to make good on them.

[Hannah Bell]

18. What part of this don't you understand?

The teachers’ pension program is administered by the California State Teachers’ Retirement System.

The other three programs are administered by CalPERS.

The state’s required contributions to CalPERS for state and CSU pensions are forecasted to be about $3.6 billion (all funds) in 2010–11, growing to $3.9 billion in 2015–16.

The state’s “pay–as–you–go” retiree health benefit contributions to CalPERS are forecast to grow from $1.4 billion in 2010–11 to over $2 billion in 2015–16.


$3.6 + 1.4 = 5 (2010) PENSIONS

3.9 + 2 = 5.9 (2015) MEDICAL

I make this about 5.5% of the state budget. You think that's unreasonable for retirement & medical to all present & past state employees? I don't.

Again, employees pay an equivalent amount from their checks.

That is, public employees covered under CALPERS pay 5 billion a year to support their own pensions & medical care. CALPERS assets theoretically appreciate ~7% a year on average.

State employees pay state taxes.

Corporations, otoh, paid $11B billion in taxes, period, 9.2% of the total budget in 2008-09.

http://www.dof.ca.gov/budget/historical/2008-09/governors/highlights/documents/HSUM.pdf

Cigarette taxes collected (assessed disproportionately on low-income people) equalled about 10% of amount assessed on corporations.

The 2009-2010 budget gave more than $1 billion in new tax breaks to corporations while the state was supposedly on the brink of financial disaster.

Also, you didn't link me to documentation of your claim that state vendors haven't been paid for two years.

PS: 10% OF CALIFORNIA'S BUDGET = DEBT SERVICE on THE DEBT ACCRUED BY THE TERMINATOR.

[AndyTiedye]

6. Unfortunately, We Can't Get At the Money in Enron Officials' Offshore Secret Bank Accounts

That's where a bunch of it went.

[ProgressiveProfessor]

17. But the California governments (all levels) pretty clearly are

Tax and fees increases can not happen without a vote, and even if he gets one on the next ballot, it may well not pass. He did not win by a super majority. No state court can over ride the propositions restricting taxes and fees.

The other thing to consider is that given the lack of maneuvering room at this point, Brown may well do pretty much what his predecessor tried and will be successful at getting it through since he has a D next to his name.

[Hannah Bell]

2. I think Brown's reign in california isn't going to be what a lot of the folks who voted for him

hoped.

[tabatha]

4. From what I have read, it may be that

Brown wants to piss people off enough to vote for tax increases (hopefully on the rich).

[Starry Messenger]

7. Well, that didn't take very long.

lol. Let's just say I voted for a lot of Democrats in CA this November, but he didn't end up being one of them. If the election had looked more like a Meg victory, I would have, but at the end I felt comfortable with a third party protest vote. If Brown is serious about raising the car taxes he might find himself in Gray Davis' shoes. We need to start taxing the rich fucks like Larry Ellison instead of giving them sweetheart deals like waterfront property rent-free in exchange for the America Cup, etc.

[ProgressiveProfessor]

15. All the gold in California is in a bank in middle of Beverly Hills in somebodyelses name...

http://www.youtube.com/watch?v=0nGgvFt2OVQ

Old Gatlin Bros classic.