THE LEONARD LETTER
A weekly electronic newsletter from
Bill Leonard, Member
State Board of Equalization
August 25, 2003

"It is the duty of every citizen, according to his best capacities to give validity to his convictions in political affairs." -- Albert Einstein (1879-1955)

UNDER THE DOME

***Recall Update***

The date selected for the upcoming recall election of Governor Gray Davis has a perverse twist to it. Seven days later (October 12th) is the constitutional deadline for the Governor to sign or veto the 1,000 or so bills that will be sent to him at the adjournment of the legislative session on September 12th. No matter what the outcome of the election is on October 7th, it will be Davis who makes all these decisions, because the law allows the Secretary of State time to certify the election results. If Davis beats the recall, will he use his signature power to reward all those interest groups that stuck with him? If he loses the recall, will he use his veto power to punish all those interest groups that did not?

Usually, the November election for Governor comes weeks after this deadline thus giving the voters an opportunity to judge the performance of the Governor before casting a vote. With the election now coming before the deadline, everyone with an interest in legislation pending on the Governor's desk will likely be kept in the dark until after election day, a period when our system of checks and balances may be on hiatus.

***Brulte's Math is Right On***

Many people have asked me my opinion on how the recall is going to play out. One person who has a good handle on what is going on and who has also declined to endorse any candidate thus far is Senator Jim Brulte. (I have also not endorsed a candidate). In Friday's Inland Valley Daily Bulletin, Brulte pointed out that if the Democrats have one well-funded candidate (Bustamante) against the Republicans' two or three, then Bustamante wins handily. This logic is compelling to me.

***Why He Should Be Sorry***

The campaigns are now all in full swing, demonstrated by Governor Davis's attempts to explain away his role in the state's energy crisis. I have a critique of Davis's half-mea culpa on the energy disaster. What still befuddles me about his actions is why he felt it was necessary to take ownership of companies' electric prices instead of letting the market run its course subject to State and Federal utility regulation. If he had not ordered his PUC to make political decisions, while ignoring economic realities, the crisis would have been resolved. For example, about the same time that we had the power crisis, natural gas prices also shot through the roof. Davis did not decide the State needed to buy natural gas. Because of the sharp increase in prices, market forces brought more natural gas into the state and prices fell back to normal levels. Same thing with gas for automobiles -- prices spiked this summer due to increased demand and refinery problems, but Davis did not feel it was necessary to float bonds to pay for your summer travel. The result of Davis's leadership on the electricity crisis is one bankrupt utility, one in near-bankruptcy and a hefty surcharge on our electric bills for a very long time.

If the Governor has taken full responsibility for this mistake, I have yet to hear it.

***Hey Bill, How Come Hillary Will Not Return My Calls?***

I have a question for Democratic Party insiders. It has been widely reported that former President Bill Clinton has been in daily contact with Governor Gray Davis with advice for dealing with the upcoming recall based on how the former president fought off an impeachment conviction. It has also been reported that the Governor and his aides have made several calls to New York Senator Hillary Clinton seeking to get her to come to the Governor's aid for fundraising and for help mending fences with left-of-center Democrats. As of yet, no return phone call has been reported.

ISSUE FOCUS

***State Commission for Raising Taxes***

I could only laugh after examining a document that was sent to me a couple weeks ago from the California Commission on Tax Policy in the New Economy. The group claims to be seeking structural reform of the tax system, which I think is a good topic for debate and discussion. So, I delved into this report thinking there might be some engaging thoughts and good research. The introduction to the Commission's report talks a lot about bipartisanship, how the commission wants to be an "honest broker for all viewpoints along the political spectrum," etc. So far, so good. Then I opened it to chapter one, which proposes to create a new tax on services and a new tax on Internet sales, offers ways to collect more use tax, and explains how to do away with current exemptions and exclusions on the sales tax. There are four other chapters dealing with how to raise taxes on just about every aspect of our lives. If this is bipartisan work, then I must now be living in France or Canada.

***Sustainability Skewered***

Among the latest arguments made by ideologues opposed to economic development is the concept of "sustainability." They propose new laws and regulations that limit growth under the guise of scientific findings that claim that development will deplete the earth's resources. A new book published by the Independent Institute debunks such arguments and presents a reasoned explanation of why pursuit of development is not only good for us, but plain old good. The author, Oxford economist Wilfred Beckerman, writes, "The greatest contribution we can make to the welfare of future generations is to bequeath a free and democratic society. And the best means of bequeathing such a society to future generations is to improve respect for human rights and democratic values today. Because these rights are currently violated in most countries of the world, bequeathing a more decent and just society to future generations in no way conflicts with the interests of people alive today." A Poverty of Reason: Sustainable Development and Economic Growth is available from the Independent Institute at www.independent.org/tii/catalog/cat_poverty.html.

***Please Let Me Pay More Taxes***

Several cash-strapped states have created voluntary funds into which taxpayers can make additional donations to help with state services. In Arkansas the fund is nearly two years old and has taken in just over $2,000. Virginia created a fund in the wake of debate about how eliminating its car tax would negatively affect state coffers. About $400 has been collected there. Comparatively, then, California has done pretty well in collecting over $71,000 by asking people to pay the use tax on items purchased out of state. Keep in mind that that figure is still well short of what it cost us to print and mail the notices requesting the money. A spokesman for the National Taxpayers Union says, "The reason why [these funds] tend to exist is to serve as a wake-up call for lawmakers who still believe people might actually be willing to pay a lot of money to address budget deficits. The silence in response to these funds has been deafening."

MISCELLANY

***Three More Words to Know***

Each week, the Leonard Letter features a few of the words from a list of 100 words that some educators say every high school student should know. The full list may be viewed at http://www.houghtonmifflinbooks.com/booksellers/press_release/100words/.

34. Hemoglobin (n.) --- the iron-containing respiratory element in red blood cells of vertebrates which is necessary for life: If California's deficit is not resolved soon, the opposing parties will need a transfusion of hemoglobin to sustain them.

35. Homogeneous (adj.) --- of the same of similar nature or kind: The Republicans in the Legislature are of a homogeneous mind when it comes to opposing tax increases.

36. Hubris (n.) --- overbearing pride or presumption; arrogance: Voters find many politicians' hubris to be off-putting.

BOE AND LEGISLATIVE DATES

August 29 --- Last day for fiscal committees to meet and report out bills to the floor.

September 10 & 11 --- BoE meets in Culver City.

September 22 --- Last day to register to vote in upcoming special election.

September 24 --- BoE meets in Sacramento.

September 30 --- Last day to request an absentee ballot.

NOTABLE DATES/ HISTORY

August 25, 1950 ---President Truman orders Army to seize control of the railroads to avert a strike

August 26, 55, B.C. --- Roman forces under Julius Caesar invade Britain

August 26, 1920 --- 19th Amendment passes, granting women's suffrage

August 28, 1981 --- John Hinckley, Jr. pleads innocent in attempt to assassinate President Ronald Reagan

August 29, 1758 --- First Indian reservation established

August 29, 1786 --- Shay's rebellion in Springfield, Mass. Farmer Daniel Shays led an armed insurgency to protest against excessive taxes on property, polling taxes, and other issues. The rebels were captured and sentenced to death for treason in February 1787, but were later pardoned.

August 29, 1958 --- Air Force Academy opens

August 30, 1963 --- Hotline communication between Washington, D.C. and Moscow begins

GENERAL TAX INFORMATION

For answers to your general tax questions, call the Board of Equalization information center. Customer service representatives are available to help you from 8:00 a.m. to 5:00 p.m. Pacific time, Monday through Friday (except state holidays).

Toll-free number: 800-400-7115

TDD service for the hearing impaired
TDD phones: 800-735-2929
Voice phones: 800-735-2922

HOW TO CONTACT ME

Bill Leonard
Board of Equalization
450 N Street, MIC: 78
Suite 2337
Sacramento, CA 95814
Telephone: (916) 445-2181
Fax: (916) 327-4003

 Email to: Bill.Leonard@boe.ca.gov