Pages

Saturday, February 20, 2021

What a difference a month makes (let alone 7). And then there's the recall


Let's consider two factors that should help UC in terms of what it actually gets from the state during the upcoming budget year 2021-22 which starts July 1. First, there is the state budget situation as it stands today. Second, there is the effort to recall Gov. Newsom about which you surely have read.

The Budget

The chart above compares forecasts of general fund revenues for the state for the first 7 months of the current fiscal year made in the governor's January 2021 budget message of a little over a month ago with what has actually been received through January 2021 for this fiscal year (2020-21). Both the Dept. of Finance and the controller say we got more money than forecast to the tune of $10.5 billion. That's a lot. The forecast underlying the January estimates was based on data available to the forecasters in December. So, what you see is above largely a January surprise. And most of that surprise came from the personal income tax, particularly as quarterly estimated payments were made that month. Why did the income tax play such a big part in generating extra funds? It's because that tax depends on more affluent taxpayers including some of the very highest earners. And those folks were not much affected by the pandemic-related economic slump.

If we look back to the forecast made last June when the current budget for California was adopted, the margin of actual vs. forecast is even greater. The controller puts it at over $27 billion! Wow!

You have to believe that with extra revenue comes a more generous legislature and more willingness to put more money into the UC budget.

The Recall

Various groups - mainly linked to the currently-marginalized California Republic Party - have been gathering signatures to recall Gov. Newsom. Could they succeed? If you dump enough money into signature-gathering, you can pretty much get anything on the ballot. Proponents of the recall claim at present to have enough signatures. But you have to have a lot more than enough because typically many signatures turn out to be invalid. So, we'll have to wait and see once petitions are turned in to the secretary of state and analyzed. However, it is possible they will have sufficient signatures. If so, the recall would take place in the fall.

Is Newsom at risk, given the "blue" politics of the state? There are many groups that have grumbles with Newsom based on such things as scandals related to the handing out of unemployment benefits, vaccine distribution, etc., as well as pre-coronavirus issues such as homelessness. Does a Republican candidate have a chance? Republicans have about a fourth of registered voters and they would pick up some independents and a handful of disgruntled Democrats. Note that in the last gubernatorial election with a no-name candidate and with no real budget for a campaign, the no-namer got about 40% of the vote. So a Republican could win even if there are more votes to retain Newsom than the Republican gets. Newsom loses if he gets a vote for retention of less than 50%. So he could get 49.9% and still lose. 

Who would win? The winner is whoever gets more votes than anyone else, not more votes than Newsom. So a Republican could win with a lot less than 49.9% if he/she gets more than anyone else. For that result to occur, what you would need is for Republicans largely to unite around one candidate and for a lot of Democrats to jump into the race and split the remaining vote. So, for Republicans there is a path to the governorship, albeit narrow.

From Newsom's perspective, however, he is out of office even if he is replaced by another Democrat. So, he has every incentive to ensure that he gets a retention vote of 50%+. To do so, he needs to make people happy. From the UC perspective, that means no tuition increase for next year - but one was not on the table anyway. But it also means that, particularly with the greater-than-forecast state revenue, the governor is unlikely to oppose legislative efforts to give UC "more." And with a fall recall, even when the budget is adopted in June, such generosity would still prevail. 

Bottom Line With Gravy

The budget situation alone is a Good Thing from the UC perspective. And the recall is potentially gravy on top of the Good Thing.


Data for the chart are from:

No comments:

Post a Comment