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THE NOONER for March 4, 2014

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DISTRICT UPDATES

  • CD08 (High Desert): added retired public employee Odessia D. Lee (D)
  • SD12 (Salinas-Modesto): added businessman Shawn Bagley (D)
  • SD12 (Salinas-Modesto): changed from Likely Republican to Leans Republican
  • AD44 (Ventura): added businessman Mario de la Piedra (R)

NOONER PAID SUBSCRIBERS at $39.99/year get these benefits:

 

Warning: I'm jumping into budgetary weeds today, but there are some election items beneath the overgrowth.

RISING DOUGH: The Legislative Analyst's Office released its look at February revenues yesterday, and found quite a bit more in the piggy-bank than expected. "In total, the preliminary tax agency data indicates that overall PIT collections for February 2014 (all funds) were $2.07 billion, or about $700 million (52 percent) above the administration's projections. For the 2013-14 fiscal year to date, this would mean that PIT collections are beating the administration's January budget projections by about $650 million (1.7 percent)."

Here is the chart of 2013-14 cash flow at January proposal, which projected personal income tax revenue at $64.287 billion, which accounts for 64.2% of the state's anticipated revenue. This revenue projection for the "current year" was increased in the "budget year" (2014-15) proposed budget released in January by $3.46 billion. The LAO's November forecast pegged PIT at $66.002 billion, or $1.715 billion above the governor's budget (plus an additional $200m in sales and corporate taxes). To achieve this, personal income tax revenues need to be 3.3% above the Governor's January projections in the last four months of the year.

February is the lowest month for state personal income tax collections, but the surprising upside on revenues certainly is raising eyebrows. April will be the behemoth month that will make or break the budgetary projections. However, to "bank" some above-budget revenues to allow for some downside volatility in our biggest tax month puts smiles on the faces of budget-writers.

The stock market is certainly outperforming LAO projections. The LAO projected it would average 1,780 for calendar year 2014, while it is actually at 1,870--above the 2015 projected average. Of course, downside volatility of 5% is certainly possible, although upside revenues are generated more quickly than downside losses are realized (buy low, sell high).

In short, the revenues identified in the Governor's Proposed Budget are almost certainly on target, and there is a much higher likelihood of an upside change at May Revise than a downside.

Further, for the home gamers, we are talking about the current year. In an improving economy, this "amplifies" the revenue projections. If the LAO's projections come true, it doesn't mean that the state has $1.715 billion more to spend. Rather, that is added to the piggy bank but also adjusts the "base" budget for the "budget year" (2014-15). In a flat economy, that could mean $3.4 billion more to spend ($1.715 in the current year and a similar amount in the budget year). In a growing economy, it would be more, and in a shrinking economy, it would be less.

If I were asked to give a range of May Revise additional Big 3 (personal income, sales, and corporate tax) revenues as of right now (and nobody's asking), they would be:

  • Low-range: Current year (one-time): $1.2b; Budget-year (ongoing): $1.26b 
  • Mid-range: Current year (one-time): $1.7b; Budget-year (ongoing): $1.85b
  • High-range: Current year (one-time): $2.2b; Budget-year (ongoing): $2.31b

We'll see how I do in mid-May. I have no inside knowledge to what LAO or DOF are thinking, but have been doing these ranges for a long time for my day job.

Finally, it is likely that a large share of any of these scenarios would be owed to K-14 schools under Proposition 98.

The report comes amidst LAO Mac Taylor's goal of releasing analysis much more frequently, and comes from deputy Jason Sisney's economic unit. For those of you that have been around awhile, you remember the absolute secrecy most Capitol watchers used to encounter between the January/February governor's budget and analysis cycle and the May revise. Both in the policy and economic analysis arenas, we now get a steady stream of materials to chew on. Kudos, Team LAO!

RELEVANT: California well-represented on Forbes billionaires list [Julie Balise @ SFChron]

CD07 (E. Sacto County): Freedom is personal to Russian-born congressional candidate [Christopher Cadelago @ SacBee] - Igor "Birman, 32, believes he has a story to tell about the meaning of freedom because he lived in its absence. In variations of his stump speech, Birman warns audiences about the miseries of despotism: rationing and food shortages, hospitals devoid of basic supplies such as bedding, antibiotics and anesthesia. After arriving in America, Birman said, he watched his parents flourish in freedom only to see other families suffer now because the government is asserting more control over their decisions."

SD12 (Salinas-Modesto): Democrats find another candidate following lackluster fundraising by Tom Hallinan for the Democratic-leaning Central Valley seat running from Salinas to Modesto and down to the outskirts of Fresno. Farm businessman Shawn Bagley is the candidate, who is a gubernatorial appointee on the Monterey County Fair Board, lives in Salinas. It will be an uphill battle against Anthony Cannella, who has made significant in-roads with Democrats (including those in the Legislature), and particularly with Bagley's late start. However, if Bagley can move quickly and show some fundraising prowess, he has a shot at this district with a 13.9% Democratic voter registration margin which Barack Obama won by 17.3%. For this reason, I'm moving the seat from Likely Republican back to Leans Democrat.

AD44 (Ventura): Third GOP candidate plans to run in 44th Assembly District race [Timm Herdt @ VCStar] - "Mario de la Piedra, who owns an insurance agency in Camarillo that specializes in agribusiness, announced that he will run as a Republican in the campaign to replace incumbent Jeff Gorell, who is forgoing a re-election campaign to run for the House of Representatives."

WHACK A MOLE: S.F. Supervisor Eric Mar crafts plan to regulate e-cig use [Marisa Lagos @ SFChron] - "Thirty-one years ago, UCSF researcher Stanton Glantz helped push a San Francisco law to curb smoking in the workplace, pioneering legislation that set the stage for some of the strictest antitobacco laws in the nation. Now, he's hoping to expand those laws to electronic cigarettes."

 

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**CLASSIFIEDS**

  • The California Optometric Association seeks a Grassroots Manager to mobilize members, patients and the public in support of COA's legislative and political action agenda. Salary DOE. Send cover letter/resume and salary requirements to employment@coavision.org
  • California Senior Legislature - You can help keep this essential organization in business by making a tax deductible contribution on your state tax form 504, sheet 4 under Contributions. This is the only way the CSL is funded and will help the 120 senior legislators continue to research and write legislation impacting our aging population! Check out www.4csl.org for more information.
  • California Restaurant Association seeks digital communications specialist. Administration of online community engagement programs; i.e. social media, email marketing, content strategies. BA/Communications required w/min 3 yrs. exp. in PR and/or Marketing. Please include writing sample with resume & cover to employment@calrest.org. Salary range: 38,000-48,000, DOE
  • California Subcontractors Legislative Conference on Wednesday, April 2, 2014. Get briefed on bills regarding prompt pay, disputed amounts, additional insureds, "substantially complex" public projects, design build, and bidding. Then lobby your own senator and assembly member. To Register and pay by credit card, go to www.CaSubLegConf.org. Or call 888-310-2722.
  • Pacific McGeorge is hosting information sessions about its Master of Science in Law (M.S.L.) and J.D. part-time degree programs for working professionals: Feb. 26 and March 11, 5-6 p.m. at Hyatt Sacramento. Register online.
  • The fastest, most cost-effective way to learn the legislative process and effective advocacy. Veteran lobbyist Ray LeBov presents his introductory "Lobbying 101" and advanced "Lobbying 201" seminars March 13-14. $250 each. Essential for principals / support staff at lobbying firms, organizations that employ lobbyists, public agencies. Complete info / registration: www.capitolseminars.net or 916 442 5009.

  

 

 

TOP HEADLINES ON AROUNDTHECAPITOL.COM AS OF 12:00PM
Loss Of Supermajority In Senate Could Doom Vote On 55 Percent Parcel Tax | Edsource Today
edsource.org
Backers of a constitutional amendment on the parcel tax are cursing their luck. The proposed constitutional amendment, which was shelved last year and has yet to be formally re-introduced this year, would lower the threshold needed to pass a school parcel tax from two-thirds majority to 55 percent, the same level as it takes to pass a school construction bond.

Secretary Of State Candidates Make Their Case In Early L.A. Forum
Jean Merl @
latimes.com
Meeting in Los Angeles Monday night, all six announced candidates for California secretary of state offered their sometimes-contrasting views of the job each hopes to win in this year's elections.

Jerry Brown Reports Receiving $11,721 In Gifts And Travel
David Siders @
blogs.sacbee.com
Gov. Jerry Brown received $11,721 in gifts and travel payments last year, mostly to pay for his trip to China, according to his latest financial disclosure statement.

Obama says budget reflects values with money for schools, job training
Kathleen Hennessey @
latimes.com
WASHINGTON -- President Obama unveiled a budget proposal Tuesday that increases spending on early childhood education, job training, high-tech manufacturing and urban redevelopment in an effort to shrink the gap between rich and poor.

Assembly Speaker Got Nearly $38,000 In Gifts, Travel Last Year
Melanie Mason @
latimes.com
Nearly half of that -- about $16,000 -- came from three trips paid for by the State Legislative Leaders Foundation, a nonprofit group that hosts policy conferences for top lawmakers. 

Republicans draw election year battle line over Obama budget
latimes.com
WASHINGTON -- Congressional Republicans quickly erected a wall of opposition to President Obama's proposed 2015 budget, establishing election year battle lines over which party can best handle the nation's finances and address rising income inequality.

Santa Clara County Office of Education paid $200,000 for missing tax deadlines
Sharon Noguchi @
mercurynews.com
The Santa Clara County Office of Education was assessed nearly $200,000 in penalties for failing to pay payroll taxes on time for some of the thousands of school employees in the county whose paychecks it handles.

Gov. Jerry Brown Endorses Bonnie Lowenthal In Long Beach Mayor's Race
latimes.com
Gov. Jerry Brown waded into the Long Beach mayor’s race Monday, announcing his endorsement of Assemblywoman Bonnie Lowenthal .

Steinberg On Loss Of Wright, Calderon
Jeremy B. White @
blogs.sacbee.com
His caucus having indefinitely lost two members to ongoing court cases, Senate President Pro Tem Darrell Steinberg, D-Sacramento, pledged on Monday to put weeks of strife behind him and press on with legislative work.

Paul Ryan Calls For Cuts To Anti-poverty Programs In GOP Budget
Lisa Mascaro @
latimes.com
WASHINGTON-- House Budget Committee Chairman Paul Ryan is taking aim at the nation's poverty programs, unveiling an ambitious report Monday that will underpin Republican budget priorities this election year.

Freedom Is Personal To Russian-born Congressional Candidate
Christopher Cadelago @
sacbee.com
Igor Birman, a Republican who is running in the 7th Congressional District, challenging Democrat Ami Bera, meets with voters in Elk Grove last month.

Medical Marijuana Bill Limits Who Can Prescribe Pot - The Orange County Register
LAURA OLSON @
ocregister.com
State Sen. Lou Correa pushes legislation that would require patients to go through their primary-care doctors – or someone their primary doctor refers them to – to get documents to purchase medical marijuana.

Obama's Budget Would Shift Tax Benefits From Wealthy To Poor
Kathleen Hennessey @
latimes.com
Obama's budget would shift tax benefits from wealthy to poor

Obama Budget Would Expand Low-Income Tax Break
nytimes.com
President Obama will propose expanding a tax break for workers who are childless, which the White House estimates will help 13.5 million Americans who hold jobs yet remain poor.

Ap California State News Wire | Union Democrat | Sonora News, Sports, & Weather, Angels Camp, Twain Harte, Jamestown - Ap Nation / World
customwire.ap.org
>Union Democrat | Sonora News, Sports, & Weather, Angels Camp, Twain Harte, Jamestown

Gov. Jerry Brown, Other Lawmakers Release Financial Reports For 2013
Anthony York and Patrick McGreevy @
latimes.com
The governor received $11,000 in gifts and had assets worth millions, according to filings with the FPPC.

Dan Walters Daily: Ron Calderon's leave shakes up Senate plans
Alexei Koseff @
blogs.sacbee.com
With the Democrats unlikely to regain their supermajority this term, hopes for raising taxes or placing constitutional amendments on the ballot have gone down the drain, Dan says.

Sacramento County’s High-poverty Areas Hit Hardest By Fatal Flu
Cynthia H. Craft and Phillip Reese @
sacbee.com
A portrait of Leon Burns hangs in the entry way of the Burnses’ home on Thursday, February 27, 2014. Burns fell victim to the H1N1 virus on January 31, 2014. The Burns family live in one of the Sacramento ZIP code areas hardest hit by severe influenza cases this season.

Americans Use Twice As Much Water As They Think They Do, Study Says
Monte Morin @
latimes.com
Americans use twice the amount of water they think they do

San Jose students travel to Sacramento to tout bill allowing four-year degrees at community colleges
mercurynews.com
About 300 college students from San Jose boarded buses today and traveled to Sacramento to urge lawmakers to favor a bill allowing community colleges to offer four-year degrees, a spokesman said.

Brown Must Show The Money For Two Big Projects
Dan Walters @
sacbee.com
Once in a while, a line of movie dialogue becomes a cultural icon, and it happened in 1996’s “Jerry Maguire” when actor Cuba Gooding Jr., playing a talented athlete, told his agent (Tom Cruise) to “show me the money.” It neatly captures the financial squeeze facing two big public works projects that Gov. Jerry Brown wants – drilling twin water tunnels beneath the Sacramento-San Joaquin Delta and building a bullet train, together likely well over $100 billion.

U.S. Pledges $1 Billion In Aid To Ukraine
Associated Press @
latimes.com
KIEV, Ukraine — Secretary of State John Kerry flew to Kiev Tuesday to show U.S. support for the fledgling Ukraine government, and the Obama administration announced with his arrival a $1 billion energy subsidy package. The fast-moving developments came as the United States readied economic sanctions amid worries that Moscow was ready to stretch its military reach further into the mainland of the former Soviet republic.