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Let The Sales Tax Yo-Yo 

Remember the state’s economic boom way back in 1998-2000? Because of those flush times, Californians are enjoying a nice sunny-day bonus this calendar year: a quarter-cent cut in the state sales tax. 

Didn’t notice? Well, the cut will save each person only about $31 a year. But that adds up to $1.2 billion in state revenue.  

And now that gloomier economic times are here the state needs every quarter-cent it can get to avoid making deep cuts in programs such as health care and education. 

The quarter-cent was added a decade ago, when recession was slamming California. As a result of a political compromise, legislators crafted the law in a way that the amount would automatically be cut in good times and be reinstated in bad.  

So, at the end of this year, it’ll be back. Maybe. 

Republicans, you see, want to cut that amount from the sales tax permanently, and they are threatening to block passage of the $100-billion-plus budget for the fiscal year beginning July 1.  

They’re being penny-wise and pound-foolish. 

The tax was raised in 1991, with a provision that it would be cut again if the state had two consecutive years with budget surpluses amounting to more than 4 percent of the state’s general fund total.  

Since then, the state has enjoyed several billion dollars’ worth of other tax cuts as well, including cuts in the income tax and a major reduction in the vehicle registration tax.  

The state’s tax burden is now at about the national average, and there has been little clamor for more cuts. 

Critics point out that by nature, sales taxes are regressive, hitting low-income people hardest because much of their income goes for necessities — even in California, where groceries and prescription drugs are exempt.  

Some moderate Democrats have expressed concern about letting the sales tax climb back to its previous statewide level of 7.25 percent. They don’t want to be depicted by their 2002 election campaign opponents as tax-raisers. 

But this is not a new tax or a raised tax. It merely is reverting to its former level. If better times return, the tax cut will go into effect again. Rainy days are here.  

The prudent thing for California this year is to put this money to use on important state programs. 

– Los Angeles Times 

June 26  

Affirmative action loses more ground 

Yesterday the U.S. Supreme Court took a step in the right direction of ending all discrimination, even that based on the seemingly benign intention of helping minorities. The matter remains unresolved, but the United States is closer to the day when people are treated as individuals, not members of favored or disfavored groups. 

The case was Texas v. Hopwood and involved the University of Texas Law School’s policy of granting special preferences to the admission of Latino and African-American applicants. The 5th U.S. Circuit Court of Appeals overturned the policy as discrimination against whites.  

The state of Texas appealed the ruling to the U.S. Supreme Court, which refused to hear the case, allowing the 5th Circuit ruling to stand. 

“It’s an important decision,” Ward Connerly told us; the Oakland businessman also heads the American Civil Rights Institute and was co-author of the California Civil Rights Initiative, Proposition 209, which banned such discrimination in state government. In 1997 the U.S. Supreme Court, similar to this new case, allowed Prop. 209 to stand without comment.  

And just last year the California Supreme Court upheld Prop. 209. 

“It’s a not the decisive decision I would like to see, which will have to await further court action,” he added. “But there’s a steady pattern coming from the courts, two steps forward, one step backward, to get rid of preferences in this nation. That does not bode well for those wanting preferences for race, gender and ethnicity.” 

He pointed out that on May 29, the Supreme Court also refused to hear a case decided by the 9th Circuit Court allowing — in a step backward — such preferences to stand at the University of Washington. 

“This is an untenable situation in the long run,” Roger Clegg, general counsel of the Center for Equal Opportunity, told us of the conflicting decisions. “Sooner or later the Supreme Court will have to settle this issue.” 

The cases that might do this include a lawsuit against affirmative action at the University of Georgia, which last month was argued before the 11th U.S. Circuit, a lawsuit against the University of Michigan’s undergraduate admissions policy and another against the U of M’s Law School admissions policy. 

The continuing confusion, he explained, stems from the 1978 Bakke decision concerning admission to the University of California Medical School at Davis, in which the high court splintered, producing six different opinions.  

Four members were four affirmative action, four against. Justice Lewis Powell also was in favor, but only to the extent that race may be taken into account as one factor of diversity among many. His opinion turned out to be the “controlling” opinion most cited since then. 

Mr. Clegg pointed out that such confusing decisions not surprisingly produce confusing results in cases in lower courts. Moreover, the historical discrimination that the Bakke case was supposed to remedy ended a generation ago. 

From our position here in California, in the midst of a society that is increasingly mixed racially, ethnically, culturally and in many other ways — with intermarriage producing combined backgrounds in offspring — the best chance of harmony is to treat persons as individuals. 

Quotas and other forms of discrimination are the prescription for division and hatred. We hope that the Hopwood decision is a harbinger of the Supreme Court finally ending the confusion by taking up a major case and ruling clearly against preferences. 

The Orange County Register  

June 26, 2001 

Bracing for blackouts: Will FERC’s cap lower the price? 

As the political temperature rises along with the thermometer, the guiding hand of government is beginning to reappear on the West’s energy landscape.  

The Federal Energy Regulatory Commission (FERC) has devised a new floating price cap for electricity that moves with the mix of plants operating at any given hour in 11 western states. 

The free-market purists inside FERC have resisted this reality. But after more than a year of skyrocketing prices and billions of dollars of bleeding in California, FERC is reluctantly attempting to define a decades-old law that is supposed to keep prices “just” and “reasonable.” 

The idea is to cap the price of power at any given time based on what it costs the least efficient generator to produce power. In theory, this is supposed to provide a reasonable reward to generators that are more efficient.  

The question is whether this indeed will be reasonable, or excessive. The only track record — and it is limited — is what has happened inside California for the past few months. Here a similar price cap has been in place, but only when demand has crept close to outstripping supply.  

The resulting price has been less than in a troubled market without caps, but far more than California paid before the market went haywire. 

Any price cap can be gamed and this one is no exception. The FERC system creates the obvious incentive for power producers to withhold electricity from an efficient unit (suddenly down for “maintenance”) and offer as a replacement some pricey power from an inefficient “peaker.”  

If any grid operator throughout the West bites at this bait, all 11 states lose, and potentially lose big. 

FERC is misguidedly attempting to avoid another form of short-term price intervention, which would be to cap the price of each generating facility based on its actual costs. This smells too much like the era of regulation for some.  

Yet compared to FERC’s new, ever-floating price cap, a firmer cap would have been easier to implement.  

Perhaps more important, this system stood a better chance of increasing the availability of supply since it would have removed any incentive to withhold power to game the price. 

That said, FERC’s new cap is an important political milestone. FERC should remain ready to learn and react quickly to any lessons about this cap that the market may soon teach us. 

June 19, 2001 

The Sacramento Bee —  

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June 21, 2001 

The Sacramento Bee — Justice Stanley Mosk: California loses its tribune of human rights 

For longer than most Californians have been alive, state Supreme Court Justice Stanley Mosk, who died Tuesday at age 88, was California’s brightest beacon of liberty. From the beginning of his public career, when he served at age 30 as the youngest Superior Court judge in the state, to the end of his tenure as the longest-sitting Supreme Court justice in California history, he turned his abundant energy and intellect to protecting and expanding individual rights. 

In 1947, as a Los Angeles Superior Court judge, he struck down as unconstitutional racially restrictive real estate covenants used to prevent blacks and others from buying houses in particular neighborhoods, a decision that prefigured a later U.S. Supreme Court ruling. Elected as attorney general in 1958, he fought to force the Professional Golfers Association to end its whites-only clause. 

Appointed to the high court in 1964 by Gov. Edmund G. “Pat” Brown, he wrote decisions barring prosecutors from racially discriminating in removing jurors and the University of California from using racial quotas in admissions. Some saw this latter ruling as a detour from Mosk’s generally liberal views, but for Mosk it was consistent with his understanding of equal treatment under the law. 

Mosk’s greatest contribution to the law and rights was pioneering the theory of “independent state grounds.” The rights of the people were lodged not just in the Bill of Rights and the transitory interpretations of the U.S. Supreme Court majority, Mosk argued. They were embedded as well in state constitutions, which sometimes offered greater protection to individuals than the minimum required by federal courts. The doctrine, widely adopted by state courts around the country, is the source of many path-breaking state privacy rulings and has given states the chance to become agents for legal change. 

A devoted liberal, Mosk was also an adept politician, twice elected to statewide office and handily winning reconfirmation to the court each time he appeared on the ballot. He knew how far and how fast the court could go without provoking a public backlash. Personally opposed to the death penalty, he nevertheless followed the law in capital cases, even voting to expand its application. Had Gov. Jerry Brown named Mosk chief justice in 1977, instead recklessly appointing the rigid and mercurial Rose Bird, chances are good that California could have been spared a decade of polarization that harmed the courts and set the state on a course that limited some of the rights that Mosk so eloquently championed. 

In choosing a successor to Mosk, Gov. Gray Davis must remember that he isn’t replacing just a single justice. He is filling a void on the court that has lost its best legal mind, its best writer, its institutional memory and its most watchful guardian of individual rights. The chances of finding another Stanley Mosk are slim. But the governor who uses Mosk as a model won’t go far wrong, for either the court or California. 

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June 20, 2001 

The Sacramento Bee — Paying for the pill: Court points the way to gender equity 

Last week, a federal judge ruled under federal antidiscrimination laws that a Seattle drugstore chain must cover the cost of birth control pills for female employees. That welcome outcome might come off as old news to California women, who have enjoyed the benefits of a similar state law signed by Gov. Gray Davis back in 1999. But the suit, filed by Planned Parenthood on behalf of Jennifer Erickson, a pharmacy manager for the Bartell Drug Co. stores, is very important to women here and in the 11 other states that have passed gender-equity prescription-coverage laws. 

That’s because Bartell doesn’t use an HMO or outside carrier to provide health insurance. Instead, like many large companies, it is “self-insured” and pays for insurance claims out of a company cash reserve. According to a 1974 federal law, these “self-insured” companies are exempt from state insurance law, and therefore don’t have to pay for birth control pills, or the other Federal Drug Administration-approved contraceptive prescriptions in states where such coverage is mandated. 

With this ruling, Bartell will have to pay. Beyond Bartell, however, it’s unclear the impact this decision will have on employers nationwide. Planned Parenthood representatives say they hope the decision will scare companies into compliance or spur other cheated female employees to seek justice in the courts. 

But even if the Bartell decision gets applied broadly, women at companies with fewer than 15 employees and those who purchase their own insurance would still have to open their own wallets for birth control. This will only change with a revision of federal law. 

Critics contend that forced coverage of birth control will send monthly insurance payments through the roof. Their argument doesn’t make much sense. Why battle against paying for a relatively inexpensive prescription that can prevent a $10,000 pregnancy, plus continued health costs for an additional child? 

Maybe this is the reason a federal bill, the Equity in Prescription Coverage Act, has languished in Congress since 1997. This year, the bill has been reintroduced, and it is time for Congress to act to make the coverage available to all women. In 1998, Congress approved contraceptive prescription coverage for members of the House, the Senate and their families. Maybe this year, they’ll see fit to return the favor and extend the benefit to the rest of us. 

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June 26, 2001 

The Fresno Bee — Cal Grants still beyond reach for many 

California’s expanded student aid program was supposed to pave a golden road to college for thousands of graduating high school seniors this year. Get good grades and prove your financial need, students were told, and the state will give you a Cal Grant — up to $3,500 a year for tuition and other expenses at a public university or $9,708 at a private university. 

The trouble is, the state’s application process has proven to be so complex that many students who most need scholarships haven’t been able to get them. 

California now must either simplify the Cal Grant process or provide extensive application assistance to prospective students — probably both — if the state is to deliver what Gov. Davis has touted as “the most generous college financial aid program in the nation.” 

Despite a Cal Grant funding boost of 35 percent, the California Student Aid Commission, or CSAC, expects to hand out 2,100 fewer awards this year. It’s not for a lack of need. 

More than 100,000 high school seniors applied. A third were rejected for not meeting income or achievement guidelines. 

What’s truly worrisome is the one in four students who may have been eligible but were disqualified because they’d omitted application information or, in some instances, simply checked the wrong box. The complex, six-page federal application form required by CSAC asks detailed questions about a student’s family assets and income, including tax return information that some applicants may not have had by the March filing deadline. 

California had expected to give $221 million in grants to incoming college freshmen by fall. But officials have only spent $186 million on awards. 

The balance — $35 million — has been sent back to the state’s general fund. 

Meanwhile, thousands of students who could have used a slice of that money for their college dreams are pondering how to pay tuition fees in the fall. Returning college students and others who took time off after high school aren’t entitled to grants but can compete for a set pool of financial aid through a separate Cal Grant program. 

There are plenty of qualified applicants in this group: More than 51,000 prospective students were eligible, yet more than half were turned away for lack of funds. So why not shift the untapped $35 million — an amount less than the state has been known to burn in a single day of electricity purchases — to the grant program for older and re-entry students? 

Despite long odds in a summer when the governor wants to increase his budget reserve, some legislators are sensibly trying to do just that. If they succeed, some 20,000 students whose average family income is $19,000 will get the help they need to go to college. 

But in the longer term, if California is to keep its promise, the Cal Grant application process needs major surgery, soon.