As many of you already know, the state of California is running a budget deficit of approximately $15 billion for the 2008-2009 fiscal year. The legislature is currently conducting a special session to address the problem. In most instances, a revised budget would be sent to the governor with the usual combination of service cuts, tax increases, hiring freezes, and, if unavoidable, public employee layoffs.

But that's not happening here in California. The reason? California requires 2/3 Assembly and Senate approval for the passage of its budget instead of a simple majority. The substantial Democratic majority can't get a budget to the governor's desk without some Republican support. They can't get the Republicans to even discuss it unless they agree to repeal numerous labor, environmental and consumer protections previously enacted by majority vote with the signature of the governor.

Yesterday, the Republicans made their demands quite clear yesterday:

REGULATORY CHANGES

Employment law flexibility

Employee schedule flexibility: Allows employers to avoid paying overtime for working more than eight hours in a day by shortening work schedules on other days.

Expanding health care options for employees (health savings accounts): Opens the health savings account concept to more workers.

Reducing unwarranted litigation: Makes it harder to sue for alleged violations of workplace rules on issues such as meal breaks.

Overtime for high wage earners: Gives employers more flexibility in not paying overtime to workers making $100,000 a year or more.

Meal and rest clarification: Simplifies rules on meal and rest breaks to allow more flexibility for workers and employers to take breaks when practical.

Eliminate "needs test" to allow more apprenticeships: Would allow companies to use more nonunion apprenticeship programs.

Business development

Design-build: Allows state agencies to consolidate contract bidding processes to cover both the design and construction phases.

Public-private partnership: Increases the use of private firms by state agencies when there are economic and efficiency reasons for doing so.

ADA compliance: Gives businesses more leeway in complying with regulations for providing access to the disabled.

Streamline small business certification process for micro businesses and sole proprietorships: Reduces paperwork for one-person or mom-and-pop businesses.

Reclassify "destination management companies" (DMS) as consumers rather than retailers (Senate Bill 1628): Exempts companies that help stage tours, stage shows and deal with airport arrivals from having to collect sales tax.

Streamline the permitting process (THPS, development): Streamlines Timber Harvest Plan regulations to shorten logging permit process.

Contracting out: Allows more use of private companies for state work currently restricted to state workers.

ENVIRONMENTAL FLEXIBILITY

Extending deadlines for engine retrofits (on and off road

Extending deadlines for greenhouse gas regulations (Assembly Bill 32)

Both provide more flexibility for meeting requirements when construction equipment is not in use because of the economic downturn. Both also would lift a requirement that companies fit equipment with clean-air devices that may make the equipment unsafe to operate.

Carl Moyer program changes: Extends a state program that provides funds for voluntarily making equipment "greener" to also cover making some improvements that are required by law.

Regulatory flexibility for agricultural industry: Provides farmers more wiggle room in meeting environmental rules for equipment.

Third party analysis of economic impact of ARB regulations: Allows use of an outside party to determine costs of meeting air quality rules in disputes between private firms and the Air Resources Board.

TAX CREDITS

A new employee tax credit for businesses that hire out-of-work Californians: Creates incentive for hiring unemployed workers.

A manufacturing investment credit to help businesses purchase the equipment they need: Creates incentive for buying new equipment.

Capital gains reduction for businesses that invest in California: Creates a tax break to lure companies that sell to Californians but don't employ Californians.

Modification of the tax code to encourage companies to locate jobs in California: See above

Rarely does one encounter a public political document, as one does here, that confirms the Marxist analysis that capitalism aspires to the the seizure of the powers of the state to flourish. Here, the Republicans want to transform California into one in which taxpayers subsidize the business activities of investors and corporations while rendering it nearly impossible for workers and consumers to challenge their conduct. In effect, they want to carry out a legislative coup to implement a program that has never and could never receive a majority vote of the populace or the legislature independent of the budget crisis.

But that assumes that the Republicans are serious. I doubt it. Instead, it appears that they have deliberately issued a list of impossible demands to prevent approval of a revised budget. If that happens, approximately $5 billion in state construction projects could be halted. My impression is that the Republicans want to force a financial emergency so as to drive California into bankruptcy for the purpose of destroying the power of state labor unions and eliminating spending on social services that they find so abhorrent.

Gaius has posted an illuminating comment on this mentality over at Undemocracy in America. In response to Minnesota Governor Tim Pawlenty's proposal that we should immediately proceed to require a balanced federal budget, he observes that it would not only lead to a global depression, as recognized by Yglesias, but provide a historic opportunity to eliminate the enduring progressive economic measures of the New Deal: Played right by the globo-capitalists, wages would collapse, unions would disappear, and America could be pushed into ending Social Security, Medicare, Medicaid, and a lot more of what social democracy we actually have.

Pawlenty, unlike California Republicans, is much more subtle about how he is trying to achieve these ends. He emphasizes a balanced budget, while remaining silent about specific assaults upon workers, consumers and the environment. Here in California, the Republicans need not be so circumspect. It is now a race against time. Can the state remain afloat until an incoming Obama administration and a Democratic Congress provides billions in assistance to local governments? Or, will the congressional Republicans, with the assistance of blue dog Democrats, succeed in derailing it? If California is left to its own devices, the rest of the country will soon experience a similar fate.

Labels: California, Global Recession, Neoliberalism, Republicans