Archives for July 2013

Reality Check: Sacramento arena campaign dirty tricks?

From News 10:

There’s no better quip for those outraged over campaign chicanery than the one uttered by Captain Renault in the 1942 classic, Casablanca.

“I’m shocked, shocked to find that gambling is going on here,” Renault tells Rick, just before he pockets his own gambling winnings.

It’s a fair reaction to those expressing outrage about political sneakiness in the brewing campaign to force a public vote on a new downtown sports arena in Sacramento.

(Read Full Article)

Photo courtesy of Wendy McCormac, Flickr

Photo courtesy of Wendy McCormac, Flickr

California will spend $232.9 billion in new state budget

From Sac Bee:

California will spend $232.9 billion during the 2013-14 fiscal year if the recently enacted state budget is precisely followed.

But the total, outlined in a followup report by the Legislature’s budget analyst, Mac Taylor, is only an educated guess, and if past patterns hold true the real levels of income and outgo will be billions of dollars different.

(Read Full Article)California-budget-crisis-bear-flag

Why Is Washington Talking About a Government Shutdown?

From the Foundry:

Is it that time again already??

It’s not even August, and Members of Congress are starting to buzz about the upcoming budget and debt ceiling fight—which likely won’t happen until later this fall. But the posturing has begun, and the media are happy to oblige.

(Read Full Article)

Photo courtesy Seansie, flickr

Photo courtesy Seansie, flickr

San Diego Sues Mayor Bob Filner

From Politico:

San Diego Mayor Bob Filner is facing yet another lawsuit, this time from his own city.

San Diego is suing its mayor for the costs incurred as a result of the sexual harassment lawsuit filed against him by his former communications director, Irene McCormack Jackson, according to the Los Angeles Times. On Tuesday, the San Diego City Council decided unanimously to file the lawsuit during a closed-door session.

(Read Full Article)bob filner

The NSA’s Secret Data Gathering: Now For The Really Bad News

From Forbes:

The news that the NSA has been secretly gathering and analyzing data about U.S. citizens has raised serious concerns about privacy, and rightly so.  But so far the conversation has only focused on a part of the problem—that the NSA has not been transparent with consumers about what data they collect and how they collect it. This lack of transparency has layers of repercussions for an industry that’s already been searching for ways to increase consumer comfort with data usage meant to better target advertising.

That’s why the NSA news is so problematic.  Indeed, consumer fear that information shared online with a technology company will wind up in the hands of the NSA creates an even more challenging operating environment for technology companies. While the NSA has an important role to play in our national security, it can’t come at the expense of technological advancement and innovation. Fear of NSA spying could curtail tech innovation, and that’s why it’s time for the NSA to be transparent about what data they collect and how they collect it, and allow data to continue fueling technological innovation—not consumer insecurity.

(Read Full Article)

National Security Agency NSA

Senators Grill Obama on Keystone, NSA Surveillance Programs

From The Hill:

President Obama defended his policies on the Keystone XL pipeline and the National Security Agency’s (NSA) surveillance programs at a “lively” meeting with Senate Democrats Wednesday morning.

Sen. Mary Landrieu (D-La.), who is facing a tough reelection in 2014, pressed Obama on approval for the Keystone XL pipeline.

(Read Full Article)barack-obama-sad-3

Could a carbon tax find its way into Obama’s tax reform effort?

From the Daily Caller:

President Obama has called for a “grand bargain” on tax reform, with lower corporate tax rates and more infrastructure funding, but so far he is not signaling an interest in the congressional push for carbon taxes.

Obama’s tax plan involves lowering the corporate tax rate from 35 percent to 28 percent for companies and 25 percent for manufacturers, along with a slew of tax credits including benefits for bringing jobs back home and developing renewable energy.

“We’ll keep creating good jobs in wind, solar, and natural gas that are reducing energy costs, reducing dangerous carbon pollution, and reducing our dependence on foreign oil,” the president said Tuesday while outlining his plan in Chattanooga, Tennessee. “Now is not the time to gut the investments in American technology that have brought us to this point — now is the time to double down on renewables, and biofuels, and electric vehicles, and the research that will shift our cars and trucks off oil for good.”

(Read Full Article)

Field Poll: Californians’ Assessment of Obama Plunges

From The Sacramento Bee:

California voters’ approval of President Barack Obama has plummeted to just over 50 percent, according to the Field Poll released Monday.

Obama’s approval rating fell from 62 to 52 percent since the last survey in February. Before this 10-point drop, the president’s numbers had climbed steadily since November 2011, when 48 percent of voters said they approved of the job he was doing.

(Read Full Article)Barack Obama

Republican civil war on ObamaCare flares

From the Hill:

The Republican civil war on ObamaCare funding is intensifying.

The battle pits powerful rank-and-file freshmen such as Sens. Ted Cruz (R-Texas), Marco Rubio (R-Fla.) and Rand Paul (R-Ky.) against veteran Washington players, including Karl Rove, Rep. Tom Cole (R-Okla.) and Sens. John McCain (R-Ariz.) and Tom Coburn (R-Okla.).

Cole told The Hill it would be “political suicide” for his party to get behind a strategy from Rubio, Cruz and Sen. Mike Lee (R-Utah), adding that it could cost House Republicans their majority.

Many in the Tea Party are urging GOP leaders not to pass any government funding measure that pays for the implementation of ObamaCare. The White House and congressional Democrats have long scoffed at such requests.

(Read Full Article)


New Cigarette Tax Could Reduce State Revenues

I received two calls from the Board of Equalization late this week claiming information in a story I wrote about the latest tobacco tax bill was wrong. The calls were from Venus Stromberg, spokeswoman, and Brian Miller, tax counsel.

Photo courtesy Sudipto_Sarkar, flickr

Photo courtesy Sudipto_Sarkar, flickr

SB 768, by state Sen. Kevin de León, D-Los Angeles, would increase the state’s cigarette tax another $2 a pack from the current 87 cents. That would be a 230 percent hike, to $2.87.

I wrote, “The State Board of Equalization has found that California will actually lose hundreds of millions of dollars in revenue if SB 768 passes. Even legislators have become weary of funding programs using tobacco tax revenue because of its instability.”

But the BOE employees who called me said the tax revenues actually will be more than a $300 million net gain through the special fund SB 768 will create.

Yet according to a study by the BOE itself, programs funded by cigarette taxes have experienced a “funding gap” due to cigarette sale decreases. And the revenue raised from the cigarette tax in California has decreased, according to a Federation of Tax Administrators study, “The Tax Burden on Tobacco.”

However, the BOE analysis of the tobacco tax which I linked to in my first story is terribly confusing and also makes it sound as if the state will take a hit.

What’s odd is the two BOE employees who called me were unusually defensive, and would not explain their agency’s analysis. I asked for a quote to explain their study, but instead one of them referred me to an analysis by the Senate Appropriations Committee.

While they are pushing for a correction, they would not give me more information or an official BOE quote for attribution.

Committee analysis

The paragraph which the BOE employees referred to in the Senate Appropriations Committee analysis says:

“The Board of Equalization (BOE) estimates that this bill would result in a net cigarette tax revenue gain (nearly all of which would be special funds) of $355 million in 2013-14, and $1.4 billion in 2014-15. In addition, 2014-15 sales and use tax revenues would increase by $51 million, resulting from the higher excise tax.”

This doesn’t add up.

California’s Proposition 10 has seen its revenue slide every year. After voters passed Prop. 10 in 1999, the tobacco tax rose by 50 cents. But within two years, taxable sales dropped 26 percent, forcing many retailers out of business.

Because of the 2009 federal excise tax on tobacco, the maximum tax rate on large cigars has surged more than 700 percent and has already resulted in significant layoffs within the cigar industry, according to Stogie News.

In Michigan, the Mackinac Center for Public Policy did a study on the effects of cigarette tax increases on cigarette sales.

“Cigarette tax hikes come with harsh and real unintended consequences. Before reaching deeper into smokers’ pockets, state lawmakers should consider the deeper social costs of creating a lucrative black market for smuggled cigarettes,” wrote Michael D. LaFaive and Todd Nesbit, Ph.D. of the Mackinac Center.

“But state and local levies have grown so onerous in some parts of the country that they almost could be called ‘prohibition by price,’” according to the study. The study looked at cigarette smuggling into Michigan, where state taxes are $2 a pack — that is, less than the $2.87 California’s tobacco tax would be under SB 768. They found shocking results:

“And like other forms of prohibition, this one has led to a spike in smuggling-related criminal activity as smokers turn to illicit distribution channels. We estimate that for 2011, 29.3 percent of all cigarettes consumed in the Great Lake State were smuggled in.”

For SB 768, one bill analysis said:

“California tax-paid cigarette distributions have decreased dramatically over the past 30 years, both before and after passage of Proposition 10. Consequently, revenues for all funds supported by cigarette taxes have declined as well.”

Wrong estimates

Unfortunately for government budgets, revenue expectations from tobacco taxes tend to be chronically wrong. “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues,” the Minnesota State News reported in 2011, when their state was faced with another tobacco tax increase. “In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year.  Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.”

New Jersey’s cigarette tax currently is $2.70 a pack, also less than the $2.87 it would be in California if SB 768 becomes law.

The Taxpayers Protection Alliance reports, “These types of ‘targeted’ tax increases harm small businesses and could result in smuggling, which would not only defeat the purpose of tax increase but also take away money from both those businesses and the state that they otherwise would have received without the proposed legislation.”

(Katy Grimes is a longtime political analyst, writer and journalist, and CalWatchdog’s news reporter. Originally posted on CalWatchdog.)