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Archive for April, 2010

April’s Over: State Falls $3.3 Billion Short on Tax Collections

The final tally for April income tax collections reported by the Franchise Tax Board is just over $7.6 billion — roughly $2.9 billion short of the $10.5 billion Gov. Arnold Schwarzenegger expected in his January budget proposal.

Bank and corporations taxes, predicted to total $1.9 billion for the month, were $1.5 billion, worsening the state’s budget hole by another $400 million.

On the final day of April, a month which generates 17 percent of the fiscal year’s income tax revenue, the Employment Development Department reported $158 million in withholding for 2010 taxes and the tax board logged $89 million in 2009 tax payments, after subtracting refund requests.

Democratic legislative leaders Senate President Pro Tempore Darrell Steinberg and Assembly Speaker John Perez travel to Washington D.C. May 3 through May 5 to speak to Obama administration officials and members of Congress about more federal funds for California.

The GOP governor, members of his Department of Finance and legislative budget writers wish them every success.

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The Tortuous Legality of Labeling Heinous Video Games

Recently, Gov. Arnold Schwarzenegger issued a statement praising the United State Supreme Court for agreeing to hear his appeal of a 9th Circuit ruing which declared a bill the GOP governor signed in 2005 requiring the labeling of violent video games and prohibiting their purchase by minors is a violation of the First Amendment’s right to free speech.

The measure, AB 1179 by then Assemblyman Leland Yee, a San Francisco Democrat, had it ever taken effect, would have required violent video games – as defined – be labeled with a solid white “18” outlined in black no smaller than 2 inches by 2 inches.

The stated intent of the bill is to limit the exposure of minors to violent video games, which Yee and the bill’s supporters argue contributes to anti-social and violent behavior in youths.

Most of the bill’s three pages are spent attempting to define what exactly constitutes a “violent” video game.

A “violent” video game is defined in the law as offering its player options that include “killing, maiming, dismembering or sexually assaulting an image of human being.”

In order to receive a label, the game must satisfy one of two tests.

The first test has three components:

1. “A reasonable person, considering the game as a whole, would find             appeals to a deviant or morbid interests of minors.”

2. “It is patently offensive to prevailing standards in the community as to             what is suitable for minors.” And,

3. “It causes the game, as a whole, to lack serious literary, artistic, political             or scientific value for minors.”

Here is the second test for a video game to warrant a label:

“Enables the player to virtually inflict serious injury upon images of human beings or characters with substantially human characteristics in a manner which is especially heinous, cruel or depraved that it involves torture or serious physical abuse to the victim.”

The “victim” being a creation of the video game’s software.

Some general guidance in determining if the “killing” in the video game is “especially” heinous, cruel or depraved is provided.

“Pertinent factors” include “infliction of gratuitous violence upon the victim beyond that necessary to commit the killing, needless mutilation of the victim’s body and helplessness of the victim.”

Again, the victim being a construct of the video game’s programming.

Some drafting issues arise with this particular definition of violent video game.

What exactly is heinous, cruel and depraved? When is the line crossed into torture or serious physical abuse?

Like the word “reform,” definitions of depravity, torture and cruelty differ depending on the definer.

The Marquis de Sade would certainly hold a divergent view on the topic than Mother Teresa.

This ambiguity was raised by opponents of the bill.

So Yee and the bill’s supporters struggled to find a neutral yardstick that would explicate these terms in a manner all parties could agree on.

The solution: Jury instructions in federal death penalty cases. In Yee’s bill, however, the defendant becomes a “player.”

In its litigation challenging the law’s constitutionality, the Video Software Dealers Association argues, among other things, that the definitions the state ultimately used in determining what constitutes a violent game are subjective.

Adding some credence to that argument, “heinous” is defined in the law as “shockingly atrocious.”

To reach the “heinous” threshold, the killing in the video game must include “additional acts of torture or serious physical abuse of the victim as set apart from other killings.”

The same problem persists: Where does serious physical abuse stop and torture begin?

“Serious physical abuse” is defined as a “significant or considerable amount of injury or damage to the victim’s body which involves a substantial risk of death, unconsciousness, extreme physical pain, substantial disfigurement or substantial impairment of the function of a bodily member, organ or mental faculty.”

Does one of those Lizard Dudes in Doom fade into unconsciousness after one of his members is substantially impaired through the infliction of extreme physical pain when the player treats him to the business end of a shotgun?

Or is the Lizard Guy even subject to Yee’s law because he’s a Lizard Guy?

Probably, since he shares human characteristics such as walking upright, making threatening noises and attempting to kill what he doesn’t understand.

But does that mean simply offing him constitutes “violent,” as the law defines it, or does the player first need to roast the Lizard Guy over low flame, take a bite out of his haunch and pronounce it similar to chicken to qualify.

The law distinguishes serious physical abuse from torture in that the virtual victim is “not necessarily conscious of the abuse at the time it’s inflicted.”

But, the law says, the player must “intend the abuse apart from the killing.”

As for “torture,” it can include mental as well as physical abuse of the victim and the victim “must be conscious of the abuse as it is inflicted and the player must specifically intend to virtually inflict severe mental or physical pain or suffering upon the victim, apart from killing the victim.”

So would torture, at least the mental kind, be shouting racial Lizard Guy epithets or disparaging remarks about the length of his tail at the computer screen prior to unloading a ray gun on him?

Under the law, torture and serious physical abuse appear to be subsets of “cruel.”

While it seems implicit that torture and the inflicting of serious physical abuse would involve a hefty amount of cruelty, the law notes that “cruel” is when the defendant – er, player – “intends to virtually inflict a high degree of pain by torture or serious physical abuse of the victim in addition to killing the victim.”

The law isn’t clear as to whether this high degree of pain inflicting occurs prior to or post the killing.

Presumably before since if the virtual Lizard Guy were capable of feeling pain it wouldn‘t be much of an issue if a hole had already been blown in his scaly chest at a spot corresponding, presumably, with where his lizard heart previously beat.

Finally, comes “depraved.” It occupies the middle ground between “cruel” and “heinous.”

In order to qualify as “depraved,” the player “relishes the virtual killing or shows indifference to the suffering of the victim.” This would be demonstrated through the torture or serious physical abuse heaped on the Lizard Dude.

No surprising he video dealers stumbled on subjectivity as an argument.

In its opinion siding with the dealers, the 9th Circuit notes that in its appeal, the state now concedes its second definition of violent video games – and all its heinous, depraved and cruel torture – is, in fact, unconstitutional because, as the trial judge pointed out, it “doesn’t provide an exception for material that might have some redeeming value to minors.

Good luck with the Supremes.

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April Revenue Target Missed — Budget Hole $3 Billion Worse

Making it almost certain the state won’t reach its April revenue projections, net income tax collections for April 29, after subtracting refunds, was $184 million.

The Employment Development Department reported receiving $58 million in quarterly withholding payments.

With one day left in the month, income tax collections are nearly $7.4 billion — still  $3.1 billion short of the $10.5 billion estimated in the budget proposed by Gov. Arnold Schwarzenegger in January..

Bank and corporations taxes are also below estimates. The Franchise Tax Board reports collecting $1.4 billion through April 29 — $500 million below the expected revenue of $1.9 billion.

Every dollar below the revenue target worsens the state’s already $18.8 billion budget shortfall.

If the collections trend continues, that hole may deepen by some $3 billion.

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Two Long-time GOP Strategists Advise Democrat Jerry Brown

Jack Flanigan, a veteran GOP political strategist, is among the informal network of advisers Attorney General Jerry Brown consults in his race for governor.

Flanigan said he has no formal role in Brown’s campaign, just offers advice when Brown seeks it.

“I basically respond to his questions. What do you think about X? Who is this person? Why is this person important? What do I do” Probing questions that pop up during the day that he thinks I have special insight into by being Republican.”

Politically, Flanigan and Brown make quite the political odd couple. Brown, governor from 1974 to 1982, ran for the U.S.flanigan
Senate in 1982 against Flanigan’s long-time friend and political patron, former GOP Gov. Pete Wilson.

Wilson eked out the win, criticizing Brown for, among numerous other things, his appointment of Rose Bird, a death penalty opponent, as chief justice of the state supreme court.

150px-PeteWilson-1

Flanigan managed Wilson’s 1975 re-election campaign as mayor of San Diego and has been closely aligned with Wilson’s political career ever since.

Wilson is the chair of Republican Meg Whitman’s campaign for governor.

In 1992, Flanigan was one of two California co-chairs of George Bush and Dan Quayle’s unsuccessful re-election.

Flanigan also founded California Strategies, a Capitol public affairs firm, with Wilson’s former chief of staff, Bob White.

White was instrumental in launching Whitman’s candidacy and the 2003 candidacy of Gov. Arnold Schwarzenegger.

“I have a great deal of respect For Meg Whitman and (Whitman’s GOP primary opponent, Insurance Commissioner) Steve Poizner,” Flanigan said. “But I really believe we’ve got so little time left in terms of fixing California, I’m afraid one more governor with large Democratic majorities in the Legislature will keep us in gridlock.”

whiteFlanigan said Brown initiated the contact and that two have been talking, off-and-on, for six months.

Also advising Brown is Don Sipple, a long-time GOP media consultant who, like Flanigan, is closely aligned with Wilson and White. Sipple helped Schwarzenegger in the 2003 recall campaign and has produced spots for numerous ballot measures.

“I think Jerry’s whole approach is to try and reach out and find folks from the other side of the aisle because, if he becomes governor, in order to find solutions he will desperately need help from the Republican side,” Flanigan said.


Brown’s campaign said the candidate confers with all kinds of people.

jerry_brown-241x300

“Jerry benefits and seeks out the advice of all kinds of people from all walks of life. Those people are Republicans and Democrats and they come from a variety of professions and personal backgrounds,” said Sterling Clifford, a campaign spokesman. “Lots and lots of people are part of that group.”

Flanigan and White’s competing candidate alliances aren’t a novelty at California Strategies.

Former Senate GOP leader Jim Brulte of Rancho Cucamonga is a member of the firm and chairs Poizner’s gubernatorial campaign.

Former Assemblyman Rusty Areias, another of the firm’s principles, backs Brown and has hosted several fundraisers for him.

Former Gov. Gray Davis’ campaign manager, Garry South, formerly employed by San Francisco Mayor Gavin Newsom, now consults for Newsom’s rival for the Democratic lieutenant governor nomination, Los Angeles City Councilwoman Janice Hahn.

Jason Kinney, also of California Strategies, is Newsom’s campaign spokesman.

“When Bob and I started the firm, the firm was never going to get involved in a partisan race but because of the nature of the people in the firm, individuals are partisan,” Flanigan said. “Everyone in California Strategies does their own deal. There’s a firewall – we just don’t talk to each other about the other campaigns.”

(Top right: Jack Flanigan. Left: Pete Wilson as U.S. Senator. Below WIlson: Bob White. Bottom right: Jerry Brown.)

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Grim News: Revenue Is Likely $2.5 Billion Below Estimates

After subtracting refunds, income tax collections for April 28 were a net $389 million.

The Employment Development Department reported receiving $84 million in quarterly withholding payments.

The budget proposed by Gov. Arnold Schwarzenegger in January predicted income tax collections of $10.5 billion for April.

With two days left in the month, income tax collections total $7.1 billion — almost $3.4 billion off the target.

Bank and corporations taxes are also below estimates. The Franchise Tax Board reports collecting $1.3 billion month-to-date — $600 million below the expected revenue of $1.9 billion.

Every dollar below the revenue target worsens the state’s budget shortfall which is already $18.8 billion.

Absent two days of income tax collections of more than $1.5 billion each — extremely unlikely although $1.4 billion was logged on April 29, 2008 — the state will probably end the month with at least a $2.5 billion deeper hole to fill.

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Governor Schwarzenegger Comments on TechAmerica Survey

“News that California is the nation’s leader in high-tech jobs and wages comes as no surprise because our state’s tech-friendly policies and world class workforce create an environment ripe for high-tech success.

“But we must not stand still.

“We must work to ensure California remains Number One and that means continued investment in education because the high tech industry requires a well-educated workforce. That’s why my budget protects K-14 funding and boosts higher education funding and why I called for pension reform and a constitutional amendment in my state of the state to protect education funding over the long term. It also means smart tax policies, such as the singles sales factor corporate income tax that I fought for, to retain and attract high-tech businesses.”

(Editor’s Note: See post below for more information about TechAmerica’s state-by-state analysis of the high tech industry.)

California Still Holds Multiple High Tech Firsts But Faces Stiffer Competition From Other States, National Survey Finds

California continues to lead the nation in high tech employment, wages, payroll and number of businesses, according to Cyberstates 2010, an annual national analysis of the high tech industry by the TechAmerica Foundation.

In 2008, the most recent year in which state-by-state information is available, the Golden State led the nation in number of high tech workers – 993,300 out the state’s estimated 15.9 million workforce – and the size of its high tech payroll, nearly $105 billion.

It also had the most high tech firms in the country – 42,300 – and, at $105,500, the highest average high tech wage, which is more than double California’s average private sector salary of $50,704.

However, in interviews, TechAmerica representatives caution that California could lose its edge as other states work harder to lure companies or convince California firms to expand elsewhere.

“California is experiencing a lack of focus and an increase in volatility in it’s business environment. Currently, California is one of three states that doesn’t offer some sort of sales and use tax exemption for manufacturing and research and develop equipment. That’s approximately an 8 percent higher cost when planning to build a new manufacturing or research facility here,” said Joe Gregorich, director of TechAmerica’s government affairs in California.

“Companies usually plan 10 years out. When looking at growing or establishing somewhere else, if there’s a state they can accurately project what their tax liability is going to be for 10 years that offers more certainty than California where it’s likely to be a gray number,” Gregorich said.

For example, The Washington Post reported April 27 that defense giant Northrop Grumman is moving its headquarters from Los Angeles to Northern Virginia after the state offered between $12 million and $14 million in cash and other incentives.

At 283,406 jobs, Virginia is now fifth nationally in high tech employment with 95 of every 1,000 private sector jobs in high tech firms. California has 76 of every 1,000 private sector jobs in high tech.

Texas also has an aggressive program for luring high tech and other businesses. At 492,400 jobs, it is second behind California in high tech employment.

A sample of the Lone Star State’s marketing:

Texas_Brags

Like California, Texas added high tech jobs between 2007 and 2008. California’s high tech workforce climbed by 15,800, TechAmerica’s analysis shows. Texas increased high tech jobs by 14,600. Virginia: 5,700.

Virginia is second behind California in computer systems design – 133,600 employees to California’s 205,600.

In semiconductor manufacturing, Texas is second at 35,700 jobs to California’s 57,700.

In part to battle the perception California is not business-friendly, Gov. Arnold Schwarzenegger on April 8 opened the Governor’s Office of Economic Development. The aim is to assist companies in siting new facilities or expanding existing ones. There’s a tab on the office’s website titled “Why California.”

“California businesses, California workers, California communities and California as a whole need a single entry, a single source for economic development information on programs and services, all with the purpose of bringing more capital, more companies and more jobs to California,” the GOP governor said at the office’s opening.

TechAmerica’s top legislative priorities in California are restoring the state’s “Manufacturer’s Investment Tax Credit” which forgave the state’s share of sales tax – 5 percent – for purchases of manufacturing equipment.

Under the terms of the legislation creating the credit, if manufacturing employment didn’t exceed 1994 manufacturing employment levels by more than 100,000, the law would expire. The law expired seven years ago when manufacturing employment was actually more than 10,000 jobs less than the 1994 number.

California is now one of three states that don’t have such as credit. The other two are Wyoming and South Dakota.

Boosting the California’s research and development tax credit from 15 percent to the 20 percent in federal tax law would also help, Gregorich said.

“California used to have the most robust research and development tax credit in the country. But in recent years we’ve fallen to fourth – behind Arizona, Rhode Island and Hawaii, all of whom recently increased their tax credits,” Gregorich said.

Gregorich acknowledges that given the state’s budget shortfall, the two tax breaks are unlikely to be enacted this legislative session.

Nationally, high tech employment figures are available for 2009. The TechAmerica analysis shows a 245,600 drop in jobs between 2008 and 2009 from over 6.1 million to 5.9 million.

Nearly half the job losses – 112,600 were in high tech manufacturing.

High tech employment peaked in 2000 at 6.6 million. After the Dot Com Bubble burst, it declined for four years straight before growing again in 2005, TechAmerica found.

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Reaching April Revenue Target Getting Less and Less Likely

After subtracting refunds, income tax collections for April 27 were a net $521 million.

The Employment Development Department reported receiving $100 million in quarterly withholding payments.

The budget proposed by Gov. Arnold Schwarzenegger in January predicted income tax collections of $10.5 billion for April.

With three days left in the month, income tax collections total $6.6 billion — almost $4 billion off the target.

Every dollar below the revenue target worsens the state’s budget shortfall which is already $18.8 billion.

“I’m confident we’re going to beat the governor’s January projection,” said Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, of the budget’s overall revenue estimates.

“We could get a bump of between zero and $9 billion,” Steinberg said, acknowledging $9 billion was unlikely.

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Another Major Hollywood Star Comes to Sacramento Today

Henrietta “Etta” Waterfield, a GOP candidate for the 33rd Assembly District centered in San Luis Obispo, is hosting an April 27 $1,000-per-person fundraiser at Frank Fat’s in Sacramento.

Unlike the usual no frills, hors d’ oeuvres and cocktails receptions thrown by sitting lawmakers and legislative wanna-bes, Waterfield offers something unique – a chance to meet her 88-year-old mother-in-law, Ernestine Jane Geraldine Russell, whose 1943 film debut was in Howard Hughes’ The Outlaw.

jane-russell

The movie didn’t go into general release until 1946, however, because of concerns by censors over Russell’s display of cleavage in her role.

In her autobiography she says she wore her own bra in the film — straps pulled down — instead of the underwire bra Hughes created for her, the first of its kind.

Russell starred in 1948’s The Paleface with Bob Hope who once famously introduced her as the “two and only Jane Russell.”

Candidate Waterfield is married to Robert Waterfield, the son of Russell and her first husband, Bob Waterfield, a quarterback and then coach of the Los Angeles Rams.

They divorced in 1968.

Russell starred with Robert Mitchum in two movies, 1951’s His Kind of Woman and Macao in 1952.

In 1953, she starred with Marilyn Monroe in Gentleman Prefer Blondes.

jane-russell-2005-vanity-fair-oscar-party-1GSWL2Two years later, she and Wakefield formed Russ-Field Productions which produced, among other films, Gentlemen Marry Brunettes.

In 1957, she debuted a successful solo nightclub act at the Sands in Las Vegas.

Her hand and footprints are in the forecourt of Graumann’s Chinese Theater. Her star is at 6850 Hollywood Boulevard.

A Republican who attended Dwight Eisenhower’s inauguration, Russell lives in Santa Maria – in the Central Coast district her daughter-in-law is running to represent.

(Photo above: Russell from The Outlaw. At left, attending the 2005 Vanity Fair Oscar Party, courtesy of Exposay.com.)

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State Senate Confirms Maldonado as Lieutenant Governor

On a 25 to 7 vote, the 40-member Senate confirmed Gov. Arnold Schwarzenegger’s nomination of Sen. Abel Maldonado to become lieutenant governor, a job vacant since John Garamendi’s election to Congress in November.

The Santa Maria Republican, who broke ranks with the GOP and helped pass a budget in February containing tax increases of nearly $19 billion over two years, said he hoped to sworn in April 27 and would focus his energy on job creation.

“Tomorrow morning will be the end of ridiculing the office of lieutenant governor,” Maldonado told reporters after his confirmation vote. “California is going to have a lieutenant governor who is going to work very, very hard” and help create “jobs, jobs and more jobs.”

In return for his vote on the budget, Maldonado insisted Democrats abandon a proposed gas tax increase and place a measure on the ballot restoring California’s open primary law that allows voters to choose candidates of either party at the polls. The top-two vote getters advance to the November election.

That measure is Proposition 14 on the June ballot.

Of the Senate’s approval of his nominee, the GOP governor said in a statement:

“Senator Maldonado is a model of post-partisanship, reaching across the aisle to improve education and strengthen public safety. As Lieutenant Governor, he will get right to work and use his experience as a business owner to help grow and create jobs”.

Maldonado was approved April 23 by the 80-member Assembly on a 51 to 17 vote. While some Democrats praised his bipartisanship, others were critical of his record.

Assemblyman Pedro Nava, a Santa Barbara Democrat and Attorney General candidate, criticized Maldonado for having a 21 percent environmental voting record, according to the Sierra Club.

Besides being a University of California regent, the lieutenant governor is one of three members on the State Lands Commission, which makes decisions about offshore drilling and other resources issues.

Part of Schwarzenegger’s budget proposal is premised on the commission allowing more drilling along Tranquillion Ridge off the coast of Santa Barbara and using the state royalties from the drilling to support California’s park system.

Maldonado reiterated April 26 he did not support the expansion of drilling there without an assurance drilling platforms would eventually be removed.

Maldonado told reporters he would resign his Senate seat shortly before being sworn in as lieutenant governor.

Confirmation of Maldonado by the Democratic majority Legislature is based in large part on their belief that demographic changes in Maldonado’s district could allow Democrats to take the seat.

The likely Democratic candidate is former Assemblyman John Laird of Santa Cruz, located in the northern part of Maldonado’s lengthy coastal district. He is expected to likely square off against termed-out Assemblyman Sam Blakeslee of San Luis Obispo, 138 miles to the south.

Waiting until after April 23 allows Schwarzenegger to schedule the likely run-off between the Democratic and Republican candidates to coincide with the November 2, 2010 election. Democrats hope the added turnout of a general election will push their candidate to victory.

Maldonado said April 26 he favored consolidation of the run-off with the general election.

“We should all be in the business of saving money,” he told reporters.

Winning a second Senate seat centered in Salinas being vacated by Jeff Denham, a Merced Republican, would then give Democrats 27 seats and a two-thirds majority in the upper house.

It’s unclear whether Maldonado can win the GOP primary, which is 43 days away.

Among the “no” votes on Maldonado in the Senate was San Aanestad, a Grass Valley Republican, who is running for lieutenant governor.

“Don’t be in a hurry to change the drapes too soon,” Aanestad advised his colleague.

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