Governor Schwarzenegger

October 13, 2009

California sours on Schwarzenegger

With a long history of bad moves and missed opportunities, California has soured on Governor Schwarzenegger. In spite of his “nice guy” image, a field poll just released shows that only 27 percent of residents approve of Schwarzenegger’s job performance while 65 percent disapprove. This is That’s the lowest approval rating for any California governor in 50 years – except for Gray Davis who registered a 22 percent approval rating in 2003 just before voters recalled him. Voters are even more disgusted with the State Legislature with only a 13 percent approval rating – the lowest in 25 years. “It’s brutal,” Field Poll director Mark DiCamillo said to the San Francisco Chronicle. ” ‘How low can we go?’ is an open question. Voters don’t think we’ve bottomed out yet.”

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May 18, 2009

Economist magazine calls California “ungovernable”

The respected publication “The Economist” has called California “the ungovernable State”. They certainly have a point- the Goverment here is a total mess, and voters are in a foul mood about tomorrow’s special election – and they should be, our government has failed us, and has many, many structural problems, but our leaders have failed us also. We have a government with absolutely no foresight, and Arnold Schwarzenegger, our part-time Governor, deserves his share of the blame. With all of California’s problems, our “lack of leadership” is certainly the most serious. Here are an excerpt and the full article can be read here:

ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis… A good outcome is no longer possible. California now has the worst bond rating among the 50 states. Income-tax receipts are coming in far below expectations. On May 11th Arnold Schwarzenegger, the governor, sent a letter to the legislature warning it that, by his latest estimates, the state will face a budget gap of $15.4 billion if the ballot measures pass, $21.3 billion if they fail. Prisoners will have to be released, firefighters fired, and other services cut or eliminated. One way or the other, on May 20th Californians will have to begin discussing how to fix their broken state.

Only a minority of Californians bother to vote, and those voters tend to be older, whiter and richer than the state’s younger, browner and poorer population… Those voters, moreover, have over time “self-sorted” themselves into highly partisan districts: loony left in Berkeley or Santa Monica, for instance; rabid right in Orange County or parts of the Central Valley. Politicians have done the rest by gerrymandering bizarre boundaries around their supporters. The result is that elections are won during the Republican or Democratic primaries, rather than in run-offs between the two parties.
Representative democracy is only one half of California’s peculiar governance system. The other half, direct democracy, fails just as badly. California is one of 24 states that allow referendums, recalls and voter initiatives. But it is the only state that does not allow its legislature to override successful initiatives (called “propositions”) and has no sunset clauses that let them expire. It also uses initiatives far more, and more irresponsibly, than any other state.

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March 3, 2009

Chancellor Merkel and Governor Schwarzenegger open German trade show

Chancellor Angela Merkel of Germany and California Governor Arnold Schwarzenegger jointly inaugurated CeBIT, one of the top annual fairs in the technology industry. CeBIT exhibits computers, software and communications products, mainly for corporate and manufacturing buyers. At the event this year, California has been declared ‘partner,’ an honorary status usually awarded to entire nations.  Schwarzenegger, speaking in both English and German to an invited audience, highlighted California’s advanced computer technology.  “Technology is really our great hope for creating extra revenues and stimulating the economy — especially green technology is where the action is,” said Schwarzenegger.  Speaking in English, our Austrian-born governor said environmental-technology companies represent the only sector of California’s economy that is creating jobs.  Schwarzenegger praised Germany’s commitment to renewable energy and the reduction of greenhouse gas emissions, and attacked economic protectionism. “The world is the marketplace … and the only way we can protect the consumer is if we let the consumer choose from products all over the world no matter where they come from,” he said. The Governor also tried to encourage the executives attending to be more upbeat, “”Losers whine but winners move forward in a strong and powerful way and I know that everyone who is here at the CeBIT is a winner!” In spite of the upbeat speeches, to mood at CeBIT was reported to be gloomy as a result of the worldwide economic slowdown and slump in the computer industry.  This year’s CeBIT has suffered a 25-per-cent slump in exhibitor numbers to 4,300.

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November 18, 2008

California Ordered To Prepare For Sea-Level Rise

Governor Schwarzenegger has ordered ordered preparations for rising sea levels from global warming, according to a report in Reuters News Service.  Recorded sea levels rose 7 inches (18 cm) during the 20th century in San Francisco, Schwarzenegger said in the executive order for study of how much more the sea could rise, what other consequences of global warming were coming and how the state should react.  California is considered the environmental vanguard of government in the United States, with its own standards for car pollution and a law to cut emissions of carbon dioxide, the main gas contributing to global warming, the report noted.  “The longer that California delays planning and adapting to sea level rise the more expensive and difficult adaptation will be,Schwarzenegger said, ordering a report by the end of 2010.

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October 2, 2008

California to attend CeBIT and launch Germany-California ICT Summit

California will be officially represented at CeBIT, a trade show for information and communications
technology (ICT) that will take place in March 2009 in Hannover, Germany.  According to Governor Schwarzenegger’s press release:

Governor Arnold Schwarzenegger today announced California will be the first state to be the official partner of CeBIT, the world’s largest trade fair for digital business solutions and information and communications technology (ICT). In previous years, CeBIT has partnered with other nations
including the United States, France, Russia, India and Canada. As the Partner State, California businesses will be highlighted above all others, providing a great opportunity for business matchmaking and networking for California businesses “I am excited to officially announce that California will be the 2009 CeBIT partner state, a role previously reserved only for nations, and we look forward to demonstrating California’s global leadership in information communications technology,” said Governor Schwarzenegger. “Not only does CeBIT provide California with a venue to showcase our innovative spirit, it is a tremendous opportunity for California companies looking to promote their
products in the global marketplace. I urge businesses across California to showcase
their innovation at CeBIT 2009.”

At CeBIT 2009, California will spotlight the state’s innovative ICT technologies in several key industries including green IT, entertainment, Internet-based services, TeleHealth, security, consumer
electronics, digital content generation and distribution, aerospace, and research and technology. The star attraction of the Partner State program will be the Germany-California ICT Summit. The two entities will use this opportunity to step-up collaboration and stimulate more bilateral business. “It is fitting that we are in the Silicon Valley today since it is a major source of global information, communications technology and venture capital. The region has garnered a lot of well-deserved attention over the years,” said Dale E. Bonner, Secretary of California’s Business, Transportation & Housing Agency. “But there are also many other innovative information and technology companies located in places like Los Angeles, San Diego and regions throughout California
that will play an important role in CeBIT 2009.”

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June 17, 2008

Wells Fargo gives $100K to Hispanic chamber

Wells Fargo made a $100,000 grant to the California Hispanic Chambers of Commerce, of which $25,000 will be used to start a CHCC Foundation. Since 2000, the bank has given more than $1 million to the chamber. The CHCC says it represents the interests of more than 600,000 Hispanic-owned businesses and more than 60 Hispanic chambers and business organizations throughout California.

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May 19, 2008

More corporate gifts for Schwarzenegger and his associates

In the most recent in a series of endless reports about Corporate gifts being given to our Governor and his associates – ostensibly in the “public interest”, the LA Times has reported that General Electric will be sponsoring a glitzy Governors Conference this August at Universal Studios in Hollywood.

The event could cost more than $3 million between GE and other private sponsors, according to participants in the planning of the conference, who requested anonymity because they were not authorized to discuss the arrangements. That would make it an expensive example of a technique Schwarzenegger has embraced to bring the glitzy style he appreciates to ceremonial state functions: getting corporations and wealthy supporters to pay for them. The governor’s aides say the practice saves taxpayers money.

Government watchdog groups argue that it may compromise the administration’s independence from corporate interests. Schwarzenegger’s phone call with Immelt was arranged by a GE executive, formerly an advisor to the governor, who oversees the company’s lobbyists in Sacramento.

“It’s a governmental conference, with governmental officials,” said Robert Stern, president of the Center for Governmental Studies in Los Angeles. “If GE is paying for it, the question is what does GE expect for their contribution? And they are certainly going to expect good will.” A spokesman for General Electric said the size and nature of the company’s contribution have not been finalized, and administration officials said there is no budget yet. Schwarzenegger’s office has accepted millions of dollars in private gifts for things such as state dinners, international travel and ornaments on state Christmas trees.

The cross-border conference, held each year in one of the 10 participating U.S. and Mexican states, is an important event for Schwarzenegger because it is the first to be hosted in California in eight years, and the only one while he is governor. “We are going to take this important annual event to a whole new level,” Schwarzenegger said last month in a statement announcing the partnership…

The bulk of private support received by Schwarzenegger’s office has come from the California Protocol Foundation, a nonprofit group affiliated with the California Chamber of Commerce that does not disclose the names of its donors or the details of specific expenditures.

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May 12, 2008

Schwarzenegger calls for more junkets

Governor Schwarzenegger, who has displayed incredible ineptitude in developing international trade and economic development policies for California, has brazenly called for State officials to take more junkets with Corporate money. As reported in a L.A. Times article entitled “See the world, let special interests pay”:

Gov. Arnold Schwarzenegger on Wednesday encouraged lawmakers — especially those from small towns — to do more globe-trotting on the dime of special interests. Speaking at a forum on global economics held by the nonprofit Milken Institute, the governor suggested lawmakers would be more willing to embrace his plans to privatize the building of roads, schools, high-speed rail systems and other public works if they could see how effectively it has worked in other countries.

“Some of them come from those little towns, you know what I am saying, they come from those little towns and they don’t have that vision yet of an airport or of a highway that maybe has 10 lanes or of putting a highway on top of a highway,” Schwarzenegger said. “They look at you and say, ‘We don’t have that in my town. What are you talking about?’

“So they are kind of shocked when you say certain things. So I like them to travel around.” Such travel is typically paid for by a combination of special interests with business before the Legislature and foreign governments.

It usually involves stays at luxury resorts, high-end dining and the option of bringing a spouse along. Schwarzenegger has jetted around the world on “trade missions” paid for by donors whose identity is not disclosed. Campaign finance reformers are troubled by the ethical issues raised by such trips. Schwarzenegger said he is not.

“I am always against when the media beats up” on lawmakers “for traveling around because someone else is paying for their trips,” he said. “I mean, so what. If they were to take the money from the taxpayers,” then the media “would complain about using tax dollars to travel around the world and live in luxury and all this stuff.

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March 10, 2008

A part time Governor?

Does California have a part time Governor? Some people apparently think so, and given the Governor’s commute times the evidence is on their side. When Governor Schwarzenegger was first elected, there were a few raised eyebrows because he was so slow in moving to the State capital. Then the press coverage on this just faded away and I think most people assumed the Governor keep a home or some kind of residence in Sacramento. It turns out he does not and in fact has been commuting on a daily basis to his mansion in Brentwood on his private jet. Other officials and politicians have apparently been grumbling about this for some time but have been “reluctant to risk alienating Schwarzenegger by publicly criticizing him for it”. As the Los Angeles Times reports “there have long been complaints in Sacramento that his attention is too often focused elsewhere”:

Like many of the Californians he represents, Gov. Arnold Schwarzenegger now spends more than three hours commuting because he lives so far from the office. But his ride is a private jet. After flirting briefly with buying a Sacramento abode for his family, then living alone for a while in a 2,000-square-foot hotel penthouse across from the Capitol, the governor has decided to stay nearly every night at his Brentwood mansion.

The commute costs hundreds of thousands of dollars a year, which aides say the governor pays for himself. Some environmentalists say the trips expand his carbon footprint enough to undermine his image as a crusader against global warming, despite the pollution credits he buys to offset the damage.

Abandoning more glamorous parts to settle in Sacramento has long been a trade-off governors made for the privilege of running the state. But Casa de los Gobernadores, the 12,000-square-foot suburban ranch home that Ronald Reagan and his family had built when they ruled the town, did not lure Schwarzenegger and kin, despite five visits to the home by California first lady Maria Shriver and a Realtor.

“I just don’t have a home in Sacramento,” Schwarzenegger said in a recent interview at a Starbucks in Washington, D.C., where he had flown — by private jet — to attend the winter meeting of the National Governors Assn. “The question is how can I be with my family, because that is extremely important, to be with my kids. They are all growing up. They are in their teens. They need their father around,” …

Schwarzenegger has used his vast financial resources to create a kind of roving governorship, with almost constant travel in and out of California. He spent more than $591,000 in campaign funds, donated mostly by special interests, for travel in 2007 — a year in which he was not running a major campaign.

The governor rarely sleeps now in the $62,000-a-year hotel penthouse paid for by a tax-exempt charitable foundation. But in the early years of his administration, Schwarzenegger spent most weeknights there, working late, receiving visitors and playing chess, former aides said.

“When I worked for him, he was there almost every night,” said Donna Lucas, a public relations consultant who was a senior advisor to the governor and first lady during Schwarzenegger’s first term. “We were working so hard, I can’t even tell you. I know it was important for him to have an opportunity to be up here in Sacramento.”

When he went out, his security detail would knock loudly on the door of the hotel garage where his caravan of SUVs was parked, wave to the workers and bring the governor down from his suite, as garage and hotel employees took pictures. Now he is rarely sighted. “I didn’t see him in a very long time,” a cashier said from inside a booth at the garage, speaking on condition of anonymity out of fear of losing the job.

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March 4, 2008

Governor upbeat about Economy

Our famously optimistic Governor thinks we are being too negative about the economy, and that everything will be fine. As reported in the San Francisco Chronicle:

At a time when Sacramento is struggling to balance its checkbook, Gov. Arnold Schwarzenegger gave a robust assessment of the state’s economic strength Thursday and claimed the media is overstating the depth of the national slowdown.

“I don’t like the coverage that I see, because it’s a little bit too negative,” the celebrity-governor said in a speech to a civic group, Town Hall Los Angeles. “The reality of it is, it’s not that bad,” Schwarzenegger said. State finances “did go down with the economy, but we are going to be OK in California.”

Schwarzenegger’s remarks echoed in part an assessment of the national economy by President Bush, who expressed concern Thursday about slowing growth but predicted the nation is not bound for recession. “I believe that our economy has got the fundamentals in place for us to … grow and continue growing, more robustly hopefully than we’re growing now,” Bush said in Washington.

Faced with a troubled housing market and the largest projected budget gap in the nation, Schwarzenegger has called for across-the-board cuts to most state programs and said Thursday his administration “should go after” so-called tax loopholes. There are “tax loopholes out there that we can close that will give us additional money for our budget, so we don’t have to make just cuts,” the governor told reporters after his speech, without committing to specific steps.

The governor argued that the state is better positioned than many others to rebound, because of the diversity of California’s economy, which includes the entertainment capital in Los Angeles and high-tech powerhouses in the Silicon Valley. State income is higher than at this time last year, he said, but falling below projections for growth. But the state’s financial condition is nothing like 2003, he argued, when he was elected in a historic recall election. “We have turned things around,” he argued.

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February 27, 2008

Schwarzenegger wants Pentagon to return equipment

As reported in the San Francisco Chronicle, Governor Schwarzenegger told Bush administration officials that he is tired of the Pentagon treating the California National Guard like a stepchild by using its equipment in Iraq and Afghanistan without returning or replacing it.

The Republican governor, in a visit to Washington for the annual meeting of the National Governors’ Association, said the California National Guard is missing about half of its equipment – from humvees to radios. That could leave California at risk in an earthquake, fire or other emergency, Schwarzenegger said. “It’s not fair to the states for the federal government to go into a war and then to take from us the equipment,” he said after meetings Monday with President Bush and Cabinet officials. “Every time our National Guard leaves, they take with them equipment but they don’t bring it back.”

Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, told Schwarzenegger and other governors that the Pentagon plans to pay to replace some of the equipment that is damaged or destroyed, but the compensation could take several years because of budget constraints. Schwarzenegger said states also face budget shortfalls and can’t shoulder the burden indefinitely.

During the Southern California fires in October, some local officials complained about a lack of air support to contain the blazes, while state and federal officials criticized the U.S. military for failing to deploy some of its C-130 planes immediately after the fires broke out….

The state estimates that $1 billion worth of equipment is being used, from diesel generators to trucks to GPS devices. The California National Guard is also stretched thin because about 1,400 guardsmen are helping the federal government to secure the border with Mexico. “There’s only so long you can do that,” the governor said. “We now are missing 50 percent of the equipment – the equipment also (used) to train the National Guard.”

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February 25, 2008

California Budget Deficit is up to $16 billion

California’s budget deficit has risen to an eye popping $16 billion. What seems to be going mostly unreported in this, is that Governor Schwarzenegger has been repeatedly wrong in his budget projections. Wasn’t that one of the major reasons we recalled his predecessor? We haven’ t heard the last of this- not by a long shot. As reported in the San Diego Union:

California’s nonpartisan fiscal watchdog on Wednesday said the state’s budget shortfall has grown to $16 billion and offered an unprecedented and competing plan to close the gap by imposing both spending cuts and tax increases.

Legislative Analyst Elizabeth Hill said Gov. Arnold Schwarzenegger’s proposal for the 2008-09 budget year is flawed because it fails to set funding priorities and correct the state’s chronic imbalance between spending and revenue. “A decline in revenue means we have a larger shortfall than the governor projected,” she said. “Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run.”

Last month, Schwarzenegger pegged the shortfall at $14.5 billion through June 2009. A continuing decline in the housing market that has created ripple effects throughout the economy has contributed to a sharp drop in tax revenue. Hill criticized the across-the-board budget cuts to most state agencies that Schwarzenegger proposed. Instead, she called for targeting and eliminating nonessential state services and raising tax revenue by cutting personal and corporate tax credits for families, businesses and motorists. She also advocated a higher gasoline tax.

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January 23, 2008

California unemployment rate jumps to 6.1 percent

As reported in Los Angeles Times:

California’s jobless rate jumped to 6.1% in December, up from 4.8% a year earlier, prompting Gov. Arnold Schwarzenegger to move to expedite public works projects in an effort to stimulate the economy. The surge in unemployment, up from 5.6% in November, was the latest sign of the toll of the housing slump, the sub-prime mortgage debacle and production shutdowns during the Hollywood writers strike.

The job figures released Friday by the state Employment Development Department also suggested that the malaise had spread to the retail sector, in which employers shed 2,200 positions in December. That loss in a month when merchants typically post gains brought the total decline in retail jobs for the quarter to 12,200. Some economists said the report was another harbinger of recession; others thought the figures were likely to improve somewhat when more data were available. Most agreed that the state’s budget problems had just begun.

“We’re headed for probably a sharper slowdown than any of us expected two months ago,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, adding that it could tilt into a “mild recession.” “That’s going to put a lot of pressure on state and local government budgets,” he said.

Schwarzenegger announced his response to the weakening outlook about the same time the job figures were released, saying he wanted to spur the economy and “keep more people working.” The governor held an emergency Cabinet meeting Thursday, when he told agency and department heads to work to speed the release of $29 billion in 2006 bond fund money for road and school construction and levee repairs.

“The people of California are feeling the hit of the sub-prime mortgage crisis and housing slump,” he said in a statement. “While other sectors of our economy remain strong — creating more than 15,000 new jobs last month — it’s clear that California and the rest of the nation will have to weather this disruption for a while.”

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January 2, 2008

Governor proposes program to train more engineers

Governor Schwarzenegger has proposed an education initiative that is intended to boost the number of California-trained engineers during the next decade by building new partnerships with schools, the military and businesses. The goal of the Engineer Initiative is to bring 20,000 to 24,000 new engineers into the state’s workforce. There are currently too few graduates to meet the demand for civil, electronics, mechanical, aerospace and industrial industries, according to the state’s Labor and Workforce Development Agency. The proposal would establish a program with the California State University and University of California systems that would speed certification of veterans with engineering backgrounds, sending them more quickly into open jobs. It also would send $1 million in federal funds into an apprenticeship program for community college students, expand K-12 charter school high-tech engineering preparation programs and launch the Engineering Education Council, which is designed to attract private funds to help guide math and science students into engineering programs at colleges and universities.

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December 28, 2007

Governor plans to sue federal government over auto standards

Governor Schwarzenegger has announced plans to sue the federal government over its decision not to allow a California plan to reduce greenhouse gas emissions. The Environmental Protection Agency refused the state’s request for a waiver that would have allowed it to cut emissions faster than a new federal plan that President Bush had signed into law. “It’s another example of the administration’s failure to treat global warming with the seriousness that it actually demands,” the governor said at a news conference. “Anything less than aggressive action on the greatest environmental threat of all time is inexcusable,” he said.

It has subsequently been reported that the EPA head ignored his own staff recommendation in making the decision: “California met every criteria … on the merits,” an anonymous member of the EPA staff told the Los Angeles Times. “The same criteria we have used for the last 40 years … We told him that. All the briefings we have given him laid out the facts.” It has also been reported that Vice President Cheney may have been behind the controversial decision.

Staff at the EPA said the agency’s chief went against their expert advice after car executives met Cheney, and a Chrysler executive delivered a letter to the EPA saying why the state should not be allowed to regulate greenhouse gases.

EPA staff members told the Times that the agency’s head- Bush appointee Stephen Johnson, ignored their conclusions and shut himself off from consultation in the month before the announcement. He then informed them of his decision and instructed them to provide the legal rationale for it.

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December 14, 2007

State budget deficit now $14 Billion, Governor plans across the board cuts

Just four months ago in August, Governor Schwarzenegger submitted what he called a “balanced budget” to the State Legislature. Apparently his projections were pretty far off, as State finance officials have now determined that the state is facing a $14 billion deficit over the next 18 months, even more than the $9.8 billion projected by Legislative Analyst Elizabeth Hill. As reported by the Sacramento Bee:

Faced with what his staff now estimates as a $14 billion budget hole, Gov. Arnold Schwarzenegger has decided to seek across-the-board cuts to state operations. The administration last month asked departments to prepare hypothetical budgets based on 10 percent reductions for the fiscal year beginning July 1 in case such a move was sought. But now, as the fiscal outlook has worsened, the Republican governor has decided to go forward, according to advocates for social services and local government the governor has summoned in recent days for budget discussions. “Our goal is to be able to spread this as equitably as possible,” said Department of Finance spokesman H.D. Palmer, who would not say what percentage cut the governor will seek or whether it would apply to current year spending.

Schwarzenegger is planning to ask the Legislature for a 10 percent across-the-board reduction in state spending next year, according to sources who have met with the governor this month. The 10 percent figure is a target for all departments, intended to impact every sector of state government equally, the governor told social service advocates this week. Schwarzenegger remained resistant to new tax increases, however, insisting that not enough support exists among legislators and voters.

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November 15, 2007

California’s Budget Deficit Skyrockets To $10 Billion

California’s budget situation has deteriorated since the summer and the State is now facing a massive $10 billion revenue shortfall, according to state’s legislative analyst Elizabeth Hill. Her report, made to the legislature said the current fiscal year budget situation had worsened by $6 billion since its passage in August, wiping out a hoped-for $4.1 billion reserve and leaving a $1.9 billion deficit. Turmoil in housing markets and the slowing economy that caused a drop in property taxes, was the reason for the shortfall, but the report also noted that forecasted revenues from Indian casino compacts were over optimistic and would be delayed.

When Governor Schwarzenegger signed the state’s current spending plan in August, he called it “a balanced budget”. Even before then, however, the slumping housing and credit markets had begun cutting into state tax revenue and threatening to make next year’s budget even worse. Economists had warned that thedecline in new home sales and construction, layoffs and bankruptcies in the mortgage-lending industry, and a volatile stock market were erasing revenue that lawmakers thought would materialize to cover California’s $145 billion budget.

“Knowing the challenges that we face, throughout the fall, my administration has been examining a variety of options to close next year’s budget gap,” Governor Schwarzenegger said in a statement. ” I have not made any final decisions yet, but it’s clear that the decisions that will be involved will be tough.”

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November 8, 2007

California facing more huge deficits

This does not bode well for either California or the administration of Arnold Schwarzenegger. Whenever an executive- in the government or private sector, makes “across the board cuts” it is a pretty good indication that they don’t have a handle on the situation. It is also likely that this will table efforts to provide health care for the uninsured, and will probably delay much needed water projects. As the San Francisco Chronicle reported:

The meltdown in the housing market and slowing California economy are likely to create a shortfall in the state budget next year of as much as $11 billion, according to estimates made Tuesday. In response, Gov. Arnold Schwarzenegger has asked department heads to stop spending what they can today and prepare for bigger cuts next year, according to legislative sources. Schwarzenegger won re-election in 2006 in part because of the perception that he had restored order to the state’s chronic spending problems. But the deepening slump in the real estate market, combined with risky assumptions from this year’s $145 billion spending plan, have resulted in a return of the big imbalance between what the state takes in and what it spends. The governor and Legislature will face yet another difficult budget in 2008 that will require either deep spending cuts across the board or perhaps consideration of new taxes – something the Republican governor has resisted in the past…

The current budget, adopted in August after a two-month impasse, was considered by many a victory for conservatives because of its austerity. The plan provided a record reserve of $4 billion and paid off $2.5 billion in bond debt early, while providing for all major services. But some of the plan’s assumptions have not been realized – such as $300 million in income from the expansion of Indian casinos and the $1 billion sale of the state’s EdFund, an agency that services student loans. There have also been unanticipated costs, such as health care and other expenses at state prisons ordered by the federal court. Meanwhile, collection of taxes from the state’s three major sources of income – personal income tax, sales taxes and corporate taxes – have been sliding downward since spring.

The state ended the 2006-2007 fiscal year more than $800 million below forecasts and started the first quarter of the 2007-2008 fiscal year another $770 million short. Administration officials said they are not ready to comment on how big the deficit will be next year except that it will be far higher than the $6.1 billion estimated in August. The meltdown in the housing market and slowing California economy are likely to create a shortfall in the state budget next year of as much as $11 billion, according to estimates made Tuesday. Administration officials said they are not ready to comment on how big the deficit will be next year except that it will be far higher than the $6.1 billion estimated in August.

Some experts, like Stephen Levy, senior economist for the Center for Continuing Study of the California Economy, a nonpartisan research group based in Palo Alto, said it could be as much as $11 billion. “The order that was restored was temporary,” said Levy, noting that the state was saved from similar troubles two years ago when billions of unanticipated tax revenue arrived as a result of capital gains taxes imposed on big tech stock holders who sold out. Insiders at Google Inc., for instance, sold a total of $3.7 billion worth of Google stock in 2006 and $4.3 billion worth in 2005. “We went through the reserves that were built up in the Google years,” Levy said. “And now with the housing market, we have all major tax forecasts going lower.”

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October 22, 2007

Armenia trade office gets axed

Governor Schwarzenegger has vetoed Senate Bill 515, that would have extended the statutory sunset for the privately funded California trade office in Armenia until 2010. This will possibly end California’s experiment with privately funded, but officially sanctioned trade offices in foreign countries. California eliminated all its official foreign trade offices in 2003 after an Orange County Register investigative reporter found them to be greatly exaggerating, and in some cases completely fabricating success stories related to their own performance. At about the same time, a proposal for a privately funded trade office was pushed through the State Legislature by the State’s powerful Armenian community, and a small trade promotion office was established in Yerevan, Armenia. While the office received no State Government funding, it was officially sanctioned and the California Business Transportation and Housing Department was charged with oversight of the program. A recent performance review of the Armenia trade office by this agency found its performance to be mediocre at best and noted that the office had not been able to meet investment targets for its own funding, and could only identify one significant deal it had facilitated.

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July 10, 2007

More on the funding of Schwarzenegger’s luxury junkets

The Los Angeles Times has written still another expose of Governor Schwarzenegger’s use of shadowy “non-profit organizations” funded by “undisclosed donors” to pay for his foreign trips- euphemistically called “trade missions” . The California State Protocol Foundation, one of the most notorious of these groups, is closely associated with the California Chamber of Commerce, and is widely thought to be a vehicle used to curry favor with the Governor by major corporations and others with business before the State.

By giving to this foundation, donors can avoid having their identities made public, because these charities are not governed by the disclosure rules that apply to campaign contributions. And they can donate unlimited amounts to the nonprofit, which is not subject to contribution ceilings the way campaign accounts are, the Times reported. In addition, The protocol organization is a 501(c)(3) nonprofit, also known as a public charity and donations to these groups are tax deductible- which may technically be legal but is a clear abuse of the purpose of non-profit organizations.

Governor Schwarzenegger stays in luxury hotels and flies in top-of-the-line private jets when he travels overseas. “That jet for those international jaunts is extremely expensive,” a source told the LA Times, “China was probably well north of $100,000.” The protocol foundation’s expenditures have exploded since Schwarzenegger began using it — from $55,000 in 2003 to $1.8 million in 2005 and $1.3 million last year. Nonprofit monitors say it is almost impossible to justify routine spending of charitable dollars on aircraft that can cost $6,000 to $10,000 an hour to lease.

A foundation spokesman told the Times that the returns are “sufficient to demonstrate how the foundation pursues its mission of relieving the taxpayers of the cost burden of certain government activities, especially those related to international trade and diplomacy.” That’s all well and good, but aren’t these trade missions supposed to be for the benefit of all California business- not just Schwarzenegger’s business associates and campaign contributors? Remember the guy who was going to be “the Governor for all the people” and who would “shun special interest money”. He now resides over a State government that has grown increasingly hostile to small business interests, and an administration that is almost completely closed to all ideas and input from ordinary citizens.

The times said that “most of Schwarzenegger’s foreign sojourns have been trade missions, though his critics say the trips really are little more than junkets designed to boost his international profile.” Count us now to be among them. While we were ecstatic when Schwarzenegger got elected, in the area of international business development his administration has become more and more corrupt. In fact, this abuse of non-profits to fund junkets is strikingly similar to the corruption scandal of lobbyist Jack Abramoff, now serving time in a Federal Penitentiary for his actions.

The California Governor’s economic development and international trade activities were not supposed to be focused on making Arnold Schwarzenegger the most successful and internationally known person in the world, they were supposed to be for all of us- and in that regard, he is failing miserably. Someone close to him needs to tell him he is on the wrong road- a very dangerous road.

Filed under California Government, Governor Schwarzenegger, Opinion, Philanthropy by

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