Dave Cox Senate Report: July 2006

The Budget

Governor Arnold Schwarzenegger signed the State Budget into law on June 30, 2006. This puts the budget in place prior to the beginning of the fiscal year, a feat which has not been achieved since the year 2000. Many people consider an on-time budget an accomplishment. It is important to be on time, but it is more important to get it right.

While there were many positive aspects of this year’s budget, in the end it was not a budget that I could support, because it spends $11 billion more than last year and does not go far enough to reduce the ongoing deficit that we currently have. In my time in the Legislature, I have voted for some budgets and against some of them. This one did not meet my overall test for fiscal soundness.

California’s economy is strong, and because of that the Legislature had the opportunity to get our fiscal house in order by devoting one-time revenues toward paying down our debt. While some debt is in fact reduced, this budget still adds an additional $11 billion in new spending, and ignores the looming structural deficit that we must address.

There were some positive elements in this budget, and for those the legislative leadership and the Governor should be commended. Some of the good things about this budget are:

• No tax increases.
• Roughly $2.9 billion is used for debt payment, including:
  • $1.4 billion for Proposition 42 loans. This is transportation funding generated from the sales tax on gasoline.
  • $472 million for economic recovery bonds passed by the voters in 2004.
• A reserve in excess of $2 billion to address any emergencies that may arise during the year, such as natural and man-made disasters.
• Education is fully funded, including $350 million in equalization funding, so that rural and suburban communities will come closer to receiving their fair share of education funding.
• Restoration of critical public safety funding, including:
  • $19 million for the COPS (Citizens’ Option for Public Safety) program, which provides grants to frontline law enforcement agencies such as county sheriffs, police departments and district attorneys.
  • $35 million for Local Detention Facility Funds, which provides much-needed local jail funding to relieve the pressure on overcrowded local jails.
  • $8 million for Vertical Prosecution Block Grants which are used by local district attorneys to ensure consistency and proficiency in cases by allowing district attorneys to assign prosecutors to certain types of cases and crimes and follow cases through the judicial process.
  • $19 million for the Juvenile Justice Crime Prevention Act which is used to help to reduce more than 200,000 youths that are arrested annually by providing guidance and mentorship.
• Elimination of $22 million for new health benefits for illegal aliens under the Healthy Families Program. The proposal would have allowed comprehensive health insurance for all illegal immigrants who make less than $60,000 – based on a formula that considers eligibility at 300% of the Federal poverty level, which is at a cost of roughly $500 million per-year. California must continue to resist the continued efforts to incentivize illegal immigration.
• Language to implement the funding formula for the management, maintenance, and capital improvements of California’s fish hatcheries, the Heritage and Wild Trout Program, and related enforcement activities under AB 7 (Cogdill), which was passed last year.

As a member of the Senate Budget Committee, I worked with my Republican colleagues to offer proposals that would have reduced spending. In fact, we made recommendations for nearly $2 billion in spending reductions that would have significantly reduced our structural deficit and made sure that California does not spend more than it brings in. Those recommendations were rejected.

In the final analysis, the Legislature had the chance to get it right and it did not. This budget spends more than it brings in and increases the size of government, and we cannot sustain that growth. This may be an on-time budget, but that does not mean it’s the best budget we could have produced.

For more details on this year’s state budget you can go to:
http://www.lao.ca.gov/PubDetails.aspx?id=1496

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State Tort Liability Index Rankings

Regular readers of this newsletter know that we like to look at how the State of California ranks against other states on matters of public policy. A recent study by the Pacific Research Institute assesses the condition of each state’s tort liability system relative to other states. The study uses a dynamic model of elements of each state’s tort system to come up with a ranking in relation to other states. In other words, it assesses the positive and negative aspects of each state’s laws and outcomes of court cases instead of relying on individual opinions.

The report, U.S. Tort Liability Index: 2006 measures which states have relatively high tort costs and which states have enacted more reforms to better position themselves for future economic prosperity.

According to this study, California ranks 35th out of 50 states. We score the highest (meaning the worst) in the study’s monetary caps category. This means that we have very few caps on monetary awards. We score the best on the study’s monetary tort losses category, which measure the amount of loss that defendants experience in tort cases. States that do best on the overall scale are Texas and Colorado (where recent tort reforms have been adopted) and the worst are Rhode Island and Vermont (states that have few legal limits on tort cases).

The reason we need to examine where California lies in relation to other states is because it makes a difference on whether businesses open a new location, hire more people, or invest in new plants.

As stated by former Michigan Governor John Engler, who is now President of the National Association of Manufacturers, “the health of a state’s civil justice system is a key indicator of its economic vitality and potential for future growth. A fair, stable, and predictable legal environment is critical to a state’s ability to attract investment, draw new businesses, and generate new jobs.” I couldn’t agree more.

To view the Institute’s study you can go to:
http://www.pacificresearch.org

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California Veterans - Identity Theft Warning

The U.S. Department of Veterans Affairs (USDVA) recently reported that electronic data containing information on 26.5 million veterans and others was taken in a burglary in May 2006.

An employee of the USDVA took home electronic data from the VA, which he was not authorized to do. The employee’s home was burglarized and this data was stolen. This data included names, social security numbers, dates of birth and some disability ratings for up to 26.5 million veterans and some spouses, as well as personal information on as many as 1.1 million military members on active duty, 430,000 members of the National Guard, and 645,000 members of the Reserves. On Thursday, June 29th, the USDVA announced that the laptop computer with the data had been found and apparently the data had not been compromised.

The California Office of Privacy Protection recommends that veterans whose personal information may have been involved in this incident take the following steps to protect themselves against possible identity theft:

1. Contact the three credit bureaus.

Individuals can report the potential identity theft to all three of the major credit bureaus by calling any one of the toll-free fraud numbers below. Individuals will reach an automated telephone system that allows them to flag their file with a fraud alert at all three bureaus.

Trans Union 1-800-680-7289
Experian 1-888-397-3742
Equifax 1-800-525-6285

2. What it means to put a fraud alert on your account.

A fraud alert helps protect individuals against the possibility of an identity thief opening new credit accounts in their name. When a merchant checks the credit history of someone applying for credit, the merchant gets a notice that there may be fraud on the account. This alerts the merchant to take steps to verify the identity of the applicant.

3. Review individual credit reports. Look through each one carefully.

Look for accounts that are not recognized, especially accounts opened recently. Also, as a general precaution, look in the personal information section for any address listed for you where you’ve never lived.

4. If individuals find items they do not understand on their report, call the credit bureaus at the number given on the report.

Credit bureau staff will review your report with you. If the information can’t be explained, then you will need to call the creditors involved and report the crime to your local police or sheriff’s office.

Veterans should beware of any phone calls, e-mails, and other communications from individuals claiming to be from VA or other official sources, asking for your personal information or verification of it. This is often referred to as information solicitation or “phishing,” (i.e., “fishing” for information). VA, other government agencies, and other legitimate organizations will not contact you to ask for or to confirm your personal information. If individuals receive such communications, they should be reported to VA at 1-800-FED-INFO (1-800-333-4636).

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Avoiding Internet Escrow Fraud

The internet has given scam artists an infinite number of ways to try to steal people’s money. The Escrow Institute of California has just launched a website to help individuals avoid fraudulent internet escrow companies. Their website is located at:
http://www.escrowinstitute.org

The website refers to recommendations from the California Department of Corporations on how to avoid internet escrow fraud. To find those recommendations you can go to:
http://www.corp.ca.gov/ole/top10ole.htm

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Lake Davis/Northern Pike Public Workshops

The California Department of Fish and Game has scheduled several workshops this summer to address issues with the anticipated release of the Draft Environmental Impact Report/Environmental Impact Statement (EIR/EIS) on the proposed Lake Davis Northern Pike Eradication project.

These workshops provide the public with an opportunity to hear presentations from experts on the specific topics related to the proposed eradication of the Northern Pike in Lake Davis near the city of Portola in Plumas County. One workshop on the proposed alternatives to eradicate the pike has already been held.

The three remaining workshops and the topics of discussion are:

July 11, 2006 - Rotenone Formulations and Use, 6 p.m., Portola Station Baptist Church, Fellowship Hall, 171 S. Gulling St., Portola. This includes potential rotenone formulations included in the DEIR/EIS, their chemical composition, and advantages and disadvantages associated with each.

Aug. 2, 2006 - Groundwater Issues, 6 p.m., Portola Station Baptist Church, Fellowship Hall, 171 S. Gulling St., Portola. This workshop focuses on groundwater, well water and chemical fate and transport.

Aug. 10, 2006 - Economic Impacts of Pike, 6 p.m., Portola United Methodist Church, 396 Second Ave., Portola. Pike presence and absence affect both local and statewide economics; this workshop will explore the potential economic impacts of pike.

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Quotes Of The Week

“Giving money and power to government is like giving whiskey and car keys to teenage boys.”
- P.J. O’Rourke

“If you think health care is expensive now, wait until you see what it costs when it is free.”
- P.J. O’Rourke

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