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post #81 of 83 (permalink) Old 03-13-2009, 01:54 PM Thread Starter
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Here we go again...

California Budget Runs $8 Billion Short, Analyst Says (Update1)
By Michael B. Marois

March 13 (Bloomberg) -- California’s revenue over the next 16 months will fall at least $8 billion short of what Governor Arnold Schwarzenegger and lawmakers assumed when they passed a budget in February, the state’s fiscal analyst said.

The shortfall would leave California with a $6 billion deficit by June 2010, after a $2 billion budget reserve is spent, state Legislative Analyst Mac Taylor said in a report to lawmakers today. The shortfall would grow to $12 billion in the fiscal year that begins July 1, 2010, he said.

The new forecast shows how quickly the state’s finances are being upended by the worst recession since the Great Depression. Just three weeks ago, Schwarzenegger and lawmakers agreed to close a record $42 billion deficit with a package of tax increases, spending cuts and borrowing plans that were supposed to leave the government with a surplus 16 months from now.

“Unfortunately, the state’s economic and revenue outlook continues to deteriorate,” Taylor said in the report. “Even in the few weeks since the budget was signed, there have been a series of negative developments.”

The Legislature and governor will need to adopt “billions of dollars in additional solutions” to rebalance the budget, Taylor said.

Schwarzenegger’s budget anticipated an unemployment rate of 9.1 percent this year, a figure that has already been eclipsed as businesses continued to fire workers. In January, the rate reached 10.1 percent.

Rising Taxes

The $130 billion budget signed in February raised the state sales-tax rate to 8.25 percent from 7.25 percent and boosted vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile.

The spending plan also added 0.25 percentage point to all personal income tax brackets for two years, so that a resident taxed at 8 percent will face an 8.25 percent levy. That increase may drop to 0.125 percentage point depending upon how much money California receives under the economic stimulus measure signed by President Barack Obama. The budget anticipates at least $7.8 billion in such federal funds.

The spending plan also cut $15 billion of spending, half from schools and colleges, and anticipates issuing $5 billion of bonds backed by the state’s lottery, though voters must approve the debt in an election in May.

“Our year of shared sacrifice isn’t over,” said Noreen Evans, a Napa County Democrat and chairwoman of the Assembly Budget Committee. “As grim as it is, this forecast is not even the worst-case scenario facing California. We must be prepared for more bad news to come.”
“Our updated revenue forecast projects that revenues will fall short of the assumptions in the budget package by $8 billion,”
“Moreover, a number of the adopted solutions — revenue increases and spending reductions — are of a short–term duration. Thus, without corrective actions, the state’s huge operating shortfalls will reappear in future years — growing from $12.6 billion in 2010-2011 to $26 billion in 2013-2014,”

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post #82 of 83 (permalink) Old 03-13-2009, 09:25 PM Thread Starter
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Yes, these are vital expenditures indeed.
A 180 mile commute !?!

California paid for top officials' free rides - Los Angeles Times
California paid for top officials' free rides
Gov. Schwarzenegger banned nonessential travel, but records show members of his administration have racked up miles at taxpayers' expense.
By Michael Rothfeld
March 1, 2009
Reporting from Sacramento -- John Cruz, the appointments secretary for Gov. Arnold Schwarzenegger, lives hundreds of miles from the state Capitol, where his staff scrutinizes candidates for California's many boards and commissions.

When Cruz works there, he goes by plane. He has charged taxpayers for his flights and for hotel bills of up to $382 a night on regular trips between his Orange County home and Sacramento, records show.

Carrie Lopez, director of the Department of Consumer Affairs, charged taxpayers to fly from Sacramento, where she works, to Los Angeles, where she lives, to attend a Justin Timberlake concert with her daughter. She listed the trip on her expense report as a meeting with the energy company that paid for the concert tickets. Lopez also billed the state for meals on days she received those meals for free from corporations, according to state records.

Rosario Marin, head of the State and Consumer Services Agency, blamed a miscommunication for her failure to repay $582 the state spent to fly her to Washington in July to speak at the Woodrow Wilson International Center for Scholars, an appearance for which she received $1,000. She reimbursed the state for the airfare after The Times inquired about the trip last month.

Over the last two years, as California has slashed services and scrambled to pay bills, top administration officials have made free use of government expense accounts with little oversight and, in some cases, no documentation, The Times has found.

Together, they have spent tens of thousands of dollars on state-funded trips between Sacramento and the areas where they live, justifying the travel as necessary for state business. Some built weekend trips around one short meeting, and some charged the state to attend events with no apparent connection to their jobs.

Often their expense reports were approved by subordinates. Many of the costs were incurred after the governor issued an executive order a year ago that state agencies avoid all nonessential travel due to California's fiscal emergency.

Long commutes to the Capitol

State law allows employees to charge taxpayers only for activities on behalf of the public, which do not include commuting or events related to their personal lives.

"Is anybody at the wheel here?" said Michael Josephson, president of the nonprofit Josephson Institute of Ethics in Los Angeles.

"The best possible case for this, which is still not a good case, is [that] nobody is providing oversight. . . . The worst case is that you have some people who are knowingly taking advantage."

After Schwarzenegger took office in 2003, his administration required senior officials to live in Sacramento, but that policy has changed. The governor himself rarely spends a night in the capital now, but he pays for his commute home by jet to Los Angeles.

His chief of staff, Susan Kennedy, drives nearly 180 miles between her Marin County home and the Capitol almost every work day in a state car, using state gasoline. She paid income taxes on the car's estimated $14,000 value last year, according to Schwarzenegger spokesman Aaron McLear.

The Times examined expense reports and calendars for 10 high-ranking administration officials from Southern California -- including three members of Schwarzenegger's Cabinet and three people on his senior staff -- most of whom were appointed in 2007, the first year of his second term.

A few of the officials said they had received permission, when they took their jobs, to continue living in Southern California and to travel to Sacramento as needed. The others are supposed to be based in Sacramento except when traveling on state business.

Some said the governor's office ordered them to appear at some of the events they attended.

David Nolte, a Los Angeles accountant, said employees can be liable for income taxes if they orchestrate business meetings in order to be reimbursed for what otherwise would be personal costs, such as commuting.

"That's really no different than saying, 'I'm going to Hawaii for a vacation,' and spending 10 minutes at a meeting in Hawaii, and having my employer pay for a round-trip airfare," Nolte said.

McLear said after Times inquiries that the governor's new Cabinet secretary, Victoria Bradshaw, would take over the task of reviewing travel expenses.

Places to go, people to meet


A minimal number of officials travel extensively, McLear said, adding that despite their travel, the governor's office has cut its budget and staff over the last year.

The expenses officials charged were on top of state salaries of more than $120,000 a year. The three Cabinet members earned $175,000 a year.

The state paid $2,110 in January 2008 for then-Secretary of Education David Long to travel up and down the state for meetings that brought him back home to Riverside County before every weekend. The next month, Long, a Republican, charged taxpayers to travel home from Sacramento for the weekend so he could speak to the Lincoln Club of Riverside County, a political action committee that raises money for GOP candidates.

State funds cannot be used for political purposes. Long said the event focused on legislation, not politics.

Now an education consultant, Long said 60% of California's school students live in Southern California, "so I spent, of course, time in those areas."

He said he took the secretary job as a public service despite an "extremely substantial" pay cut from the $240,000 he had been earning as superintendent in Riverside County.

In the 2 1/2 months after the governor's order to cut travel was issued, Brian McGowan, a deputy secretary for economic development and commerce, flew round-trip 15 times between Ontario airport, 40 miles northwest of his Canyon Lake home, and Sacramento.

He booked hotel rooms to attend "various meetings" at his agency, his expense reports say.

The state spent about $7,000 on his travel during that period.

McGowan has had to be in Sacramento to help formulate policy and in the field to talk with local business interests, said his boss, Business, Transportation and Housing Secretary Dale Bonner.

"I don't think the taxpayers would appreciate it if we said an agency with our responsibility was pulling back and doing less," said Bonner, who travels to Los Angeles, where he lives, multiple times a month.

Marin, of the State and Consumer Services Agency, spent more than $21,000 in two years traveling between the Los Angeles area, where she lives, and northern California.

One weekend, for instance, she charged the state for a trip from Sacramento to Los Angeles so she could interview candidates for the state geology board. Marin said she has attended meetings of every regulatory board in the Department of Consumer Affairs, one of the agencies under her oversight.

"The chairmen would say, 'You're the first secretary that ever has come and visited with us!' " she said.

On April 4, 2008, Marin bought 12 round-trip tickets on Southwest Airlines so she could fly from Burbank, about 20 miles from her Walnut Park home, to Sacramento at the beginning of every week for the following three months and return to Burbank at the end of the week, records show. The tab: $3,108.

The reasons given for officials' travel are not always straightforward.

The Justin Timberlake concert attended by Lopez and her daughter at Staples Center was paid for by Sempra Energy, according to gift reports she and the company filed with the state.

On her expense report, she attributed her transportation cost to a "meeting" with Sempra executive Debra Reed.

Sempra spokeswoman April Bolduc said, however: "We didn't have any business with them."

The next day, the state paid for Lopez to fly north for a meeting in Oakland.

Lopez, whose agency's mission is to protect Californians from being fleeced, also routinely charged the state for meals while working in Los Angeles, without submitting receipts -- including on occasions when she received the same meals for free, according to her filings with the state's Fair Political Practices Commission.

Lopez collected $40 for breakfast, lunch, dinner and incidentals for June 23, 2007, the same day Bank of America paid $51.64 for her to attend a luncheon; and again on Sept. 2, 2007, when Sempra spent $216.02 on her dinner, refreshments and a ticket to a Beyonce concert.
Sometimes I attend these events and I don't eat," Lopez explained.

She also charged taxpayers nearly $239 for a hotel room and transportation to an event for Hispanas Organized for Political Equality, a nonprofit group for which she has served on the board of directors for about a decade.

'I'd be traveling half the time anyway'

The state has spent thousands of dollars on Sacramento hotel bills so that Cruz, Judicial Appointments Secretary Sharon Majors-Lewis, McGowan and another deputy secretary in his agency, Heather Peters Bonhach, could work at headquarters.

"As the state's chief headhunter, I'm out visiting with folks, interviewing folks, making public speeches," said Cruz, who spent $4,196 traveling in one month. "If I lived here [in Sacramento], I'd be traveling half the time anyway."

Taxpayers reimbursed Cruz for hotel bills more than four times as high as the allowable state rate of $84 after he stayed two nights at the Hyatt in Sacramento for $383 each. He had not obtained the required prior permission to pay that much.

Cruz blamed a former assistant for mistakes on his expense reports.

He also sought and obtained reimbursement for gas mileage to drive regularly from his home in San Clemente to Los Angeles, where the governor has an office.

Cruz said he did not know that under state regulations, employees are not supposed to be reimbursed for gas on trips between their home and office or locations nearby.

Marin, in an interview last month, said the Wilson Center had reimbursed the state for her travel expenses to Washington last summer for a conference called "The Politics of Mexican-Origin Leaders: Implications for 2008 and Beyond."

But Sharon McCarter, a spokeswoman for the Wilson Center, said the group had not covered travel costs; it paid Marin a $1,000 fee for her appearance.

Three days after The Times asked about the trip, Marin said she had mistakenly kept all the money. She repaid taxpayers for the cost of her flight.

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post #83 of 83 (permalink) Old 03-13-2009, 09:31 PM Thread Starter
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More inspired spending programs....

In an effort to stimulate home buying, cities and counties throughout Southern California are rolling out programs that give incentives to first-time buyers.

Among them, Los Angeles County's Housing Economic Recovery Ownership program is set to launch March 17. It offers interest-free second trust deed loans of $50,000 to $75,000 to first-time borrowers who do not already own a home or for those who have not owned a principal residence for three years preceding the purchase.

Single-family foreclosed or abandoned homes are eligible in designated census tracts with a maximum price of $493,000 and foreclosed or abandoned attached homes up to $394,250. No repayment of the second trust deed is required until the home is sold, transferred, refinanced or no longer owner-occupied.

The program requires qualified applicants to complete an eight-hour homeownership course from an approved U.S. Department of Housing and Urban Development counseling agency. The county has set aside $10 million for the effort. More information is available at the website.

In Riverside County, the city of Corona’s Redevelopment Agency has reinstated its Home Owner Assistance Program for first-time buyers. The agency will contribute the 20% down payment to purchase a foreclosed home up to $350,000.

The city has received 28 applications since January and spent more than $750,000 of the $1.5 million allocated to the program.

After the first $1.5 million is spent, Corona Redevelopment Agency spokesperson Jesus Morales said the city may earmark another $1.5 million. Visit the website for more information.

--Scott Marshutz
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