4:42pm

Tue January 3, 2012
Economy/Labor/Biz

Sac Bee columnist Dan Walters talks taxes, redevelopment, and Jerry Brown

It’s a new year, and time for a new legislative session – and that means a new debate over how to address California’s budget problems. When they reconvene this week, lawmakers will try out solutions involving everything from legalizing online poker to scuttling high-speed rail. Last week, the California Supreme Court ruled that the state can eliminate redevelopment agencies. It’s a controversial move, but Governor Jerry Brown says it will raise close to $2 billion this year alone.

KALW's Ben Trefny asked Sacramento Bee political columnist Dan Walters to talk through some of the new developments in California’s budgetary thinking.

DAN WALTERS: Apparently this guy, he and the Democrats, wanted to do a budget that said: "If you pass the taxes we will do this, this and this," and "If you don't do the taxes, we'll do this, this, and this."

BEN TREFNY: So what are some of those triggers, those things that will be taken away?

WALTERS: We don't know what those triggers are going to be for another week. But undoubtedly, it will involve schools and public safety because those are the things he says are most important, because they are also the things that are most popular with the voters and now the triggers will involve those issues particularly.

TREFNY: And you've found California has the fifth highest state taxes already, about 9.5% of percent of personal residents' income.

WALTERS: You have to keep in mind that different states divide up responsibilities differently. And if the governor's proposal would pass, the $7 billion would add, give or take, half a percent to that 9.5%, to bring it up to 10%. That would bring it up to the big boys, like New York and New Jersey and Connecticut.

TREFNY: There are only four of those "big boys."

WALTERS: Yeah.

TREFNY: One of Jerry Brown's recent victories was shutting down redevelopment industries from around the state. What kind of impact is this going to have in different regions?

WALTERS: Well, it is particularly hard on localities that have relied heavily on redevelopment. So some of those cities that are heavily invested in redevelopment will find it extremely hard.

TREFNY: One of those cities is Oakland. Oakland could apparently lose up to 171 workers, including police officers.

WALTERS: That's entirely possible. I haven't looked at a city-by-city survey, but I know San Bernardino has a heavy reliance on redevelopment as well. Those cities that have no redevelopment, or where the redevelopments are small in terms of the structure of the city, the effect is going to be quite minimal. It's really going to vary a lot from community to community.

TREFNY: And of course this isn't going to mean the end of redevelopment, it just means the end of the agencies.

WALTERS: No, it means the end redevelopment, probably! Unless it's reconstituted. As it stands, there is no legal authority or continued redevelopment on operations in California as of this moment.

TREFNY: What about all of these areas that have been considered to be blighted in different cities?

WALTERS: The existing projects will continue until they expire. Of that $5 billion, the state is probably going to recapture less than $2 billion of it. The rest of the money is going to be used to pay off the incredible amount of debt – the agencies have racked up over $100 billion dollars worth of debt. That's double what it was 10 years ago. It's going to be very traumatic for these cities. They are heavily involved in development. You mentioned Oakland, and it's kind of ironic they will be hit so hard. When Jerry Brown was the mayor of Oakland he was a big fan of redevelopment, but now that he's governor he's against it.

TREFNY: How do you find the legislature working under Governor Brown? Obviously he still uses tax measures by the voters, so there's a stalemate with Republicans on that front. How about otherwise?

WALTERS: That question presupposes that the legislature is working, doesn't it? I'm not sure that's a valid assumption to tell you the truth! One could make the argument of just the opposite. It's not functioning any better than it did with Arnold Schwarzenegger. Yes, the Democrats have a bit more authority because they have a Democratic governor. Some of the Democratic interest bills, particularly for unions, were signed or weren't signed before. But in the macro sense, in terms of a functioning body, legislature isn't any more functional than it was under Schwarzenegger, or Grey Davis. Maybe Jerry Brown the first time around. It is a troubled and dysfunctional body for systemic reasons.

TREFNY: Well, recently you gave Jerry Brown an "A" for engagement and effort, and a "D" for results. You also, for that matter, gave that to Arnold Schwarzenegger when he was in office.

WALTERS: Yes, their first year. They came into office with similar expectations, which is "Gee! I'm here. Everything changes." Well, just because you're here, Jerry, doesn't mean anything changes. It's basically a recipe of, "Hey, we've taken the idea of checks and balances in California and put it on steroids, and effectively have given every stakeholder and every issue of veto-power."

TREFNY: Well, because of the systemic problem with state government – and you've spoken about that for many years – it must be pretty frustrating for you.

WALTERS: Yeah, 20-some odd years now, I've been writing about that.

TREFNY: Is there anything Governor Jerry Brown in 2012 could do for a better grade?

WALTERS: I think he needs to acknowledge the dysfunction and say, "I will devote my governorship to making it functional." He's trying to get around the dysfunction, essentially, by going through the voters. That's what Arnold Schwarzenegger tried to do as well. Jerry, in some ways, has a more limited vision than Schwarzenegger. Schwarzenegger really wanted to change the world. He had these big ideas, big ideas of change. Jerry Brown just wants to balance the budget and escape with his life, I think.

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