October 28, 2013
Area(s) of Interest: Licensing & Regulatory Issues
CMA Capitol Insight is a biweekly column by veteran journalist Greg Lucas, reporting on the inner workings of the state Legislature.
At 7 p.m. on October 5, Gov. Jerry Brown tied Earl Warren for the longest amount of time served as California’s governor: 3,925 days and nine hours. Warren, elected to a third term in 1950, resigned October 5, 1953, to accept President Dwight Eisenhower’s appointment as Chief Justice of the U.S. Supreme Court, an appointment Eisenhower said he later regretted. Because of Proposition 140, 1990’s term limits initiative, absent a change in the law no future California governor will beat Brown’s record – particularly if, as expected, he runs for yet another term in 2014. Although Brown has logged more hours, Warren is still the only California governor elected to three consecutive terms. Another record that won’t be broken unless the law changes.
Of the 896 bills lawmakers approved in 2013, Gov. Brown vetoed 96 of them – just under 11 percent. That’s the lowest percentage since he took office in January 2011, according to How Often Do Governors Say No?, an annual tabulation by the Senate Committee on Governance & Finance. In 2012, the Democratic governor was sent 996 bills, of which he vetoed 120. Of the 870 bills sent to him in 2011, he vetoed 125 – a 14.4 percent veto rate. During his first two terms as governor, from 1975 through 1982, Brown’s veto rate was 4.4 percent compared to 12.4 percent for the last three years. Brown has signed 13,299 bills during his 11 years as governor. From 1975 through 1982, Brown vetoed just 528 bills – less than one-third of the 1,970 vetoed by Gov. Arnold Schwarzenegger during his seven years in the Capitol’s corner office. Schwarzenegger’s veto total is more than twice that of Ronald Reagan when he was governor from 1967 through 1974. Schwarzenegger also set the highest annual veto rate – 35.2 percent. In 2008, the former governor vetoed 414 of the 1,177 bills lawmakers sent to him. Brown set the record for the lowest number of vetoes in a year back in 1982 – 30 bills out of 1,674. That’s also the lowest veto rate – 1.8 percent. Gov. George Deukmejian holds the record for most vetoes, dispatching 2,298 bills over eight years, an average of 287 vetoes per year. Deukmejian, a Long Beach Republican, also holds the modern record for vetoes in one year – 436 in 1990. That year was also when the Legislature approved a record 2,143 bills – the largest annual tally since 1967, keeping “Duke” from winning the highest veto rate. The Democratic majority Legislature sent Deukmejian 14,828 bills during his two terms. His predecessor, Brown, was sent 11,406 bills over eight years, also by a Democrat-controlled Legislature. During the past five years, lawmakers have approved 4,684 pieces of legislation – the smallest number of bills in any five-year period since 1967. Polls show a majority of Californians believe this to be a positive trend. As Brown famously said when he was governor 35 years ago: “Less is more.”
Speaking of Changes in the Law…
Of the 26 states that allow voter initiatives or referendums, no other state except Oregon has used the process more than California. Since 1912, voters have placed 354 initiatives on the state ballot – 146 of them since 1990. A number of major policy changes have come through the initiative process, which was created in 1911 to help the electorate break the stranglehold that interest groups – particularly the Southern Pacific Railroad – held on the Legislature and governor’s office. Here’s a few examples of major initiatives: 1978’s Proposition 13 in 1978, which reshaped California government by limiting annual property tax increases; 1988’s Proposition 98, which requires at least 40 percent of the state budget be spent on public schools; and 1990’s Proposition 140, which imposed term limits on state elected officials. In a speech last week in Washington, D.C., Gov. Brown cited five recently approved initiatives as loosening the operational straitjacket constraining California’s government. Not necessarily in order of significance, those initiatives include: stripping lawmakers of the power to draw their own legislative districts; allowing majority vote approval of a budget; raising state income and sales taxes for five years; relaxing term limits; and creating a primary system where the top two vote-getters, regardless of party affiliation, advance to a November run-off. “These five changes in governance have opened up incredible possibilities that have now been seized in California,” the governor said.
Filene’s Bargain Basement It Ain’t
As significant as the policy changes wrought by initiatives might be, it takes major bucks to accomplish. Just hiring firms to get enough valid signatures to win a spot on the ballot is at least a $1 million expense. In the last 13 years alone, total spending on initiatives has been $2 billion – more than half during the 2008, 2010 and 2012 election cycles. Remember June 2012’s Proposition 29 to add $1 to the taxes on a pack of cigarettes? Opponents (the tobacco industry) spent $47 million to defeat it. Spare change compared to November 2006’s Proposition 87, which would have imposed $4 billion in taxes on California oil producers to promote use of alternative fuels and energy. Spending by both sides totaled $154 million – more than any other campaign on any state ballot in the country. On the “yes” side, $49.5 million came from one person – Steve Bing, a real estate heir and film producer. Proposition 32 in 2012 reached $151 million in total spending. It would have prohibited campaign contributions through payroll deductions, anathema to labor unions, which spent accordingly to defeat it. Opponents and supporters dropped $136 million on Proposition 30, one of the initiatives cited by the Democratic governor in his Washington, D.C., speech. It boosts the state sales tax by 0.25 percent and increases income taxes on California’s higher earners for five years. Propositions 30 and 32 are also the proximate causes of the Fair Political Practices Commission’s largest fine in history – $1 million – levied against two groups the commission says were attempting to mask the sources of $15 million in contributions against Proposition 30 and in favor of Proposition 32. Like ol’ Walter Scott says: “What a tangled web we weave when first we practice to deceive.” Pricey, too.
A Wee Bit Better Than Expected
One quarter into the fiscal year that began July 1, Proposition 30’s higher tax rates are giving the state a thin cash cushion. Revenue for September from income taxes – boosted on Californians earning $250,000 or more by Proposition 30 – were $458 million above the month’s estimated $4.8 billion. For the quarter, income taxes are $289 million above estimates. “We always caution that you cannot make a long-term projection based on one month’s worth of receipts,” Department of Finance spokesman H.D. Palmer tells Capitol Insight. That’s probably smart, since even though income taxes might be higher-than-predicted, corporate taxes were $119 million lower than forecast for September. Net receipts of all taxes collected by the state for the quarter ending September 30 are $136 million above the expected $20 billion. In a $138 billion budget, that’s more like walking-around money.
In Honor of the World Series
“The key in life is to figure out who to be the batboy for.” So says Warren Buffett, Oracle of Omaha.