Happy 4th of July!

At a Los Angeles press conference this morning, Governor Arnold Schwarzenegger pleaded with the press to write a complete story about the budget stand-off.

Challenged by a reporter’s question on why he wouldn’t raise taxes during this budget crisis while his Republican predecessors going back to Ronald Reagan raised taxes, the Governor seemed surprised. With a short laugh, Schwarzenegger reminded the reporter that California had raised taxes a record amount, $12.5 billion, just four months ago.

The Governor went on to lecture the reporters at the conference on the importance of presenting a complete story in their papers or broadcasts -- Tell the tax increase side of the story when they report on the budget cuts.

While there were budget cuts in the February budget plan along with the tax increases, many of those “cuts” were for projected budget increases, not actual cuts as measured against the previous year’s spending.

The campaign to oppose the Governor’s budget plan asks for a common sense approach of budget cuts and tax increases --- then forgets to mention the record tax increases from just four months ago.

The Legislature is slated to shut down for a month-long recess on July 17, but given the slim chance for a quick agreement on the budget, legislators shouldn’t buy any non-refundable tickets.

As the state controller began Tuesday to print out the first batch of IOUs that will replace the cash money many state vendors, clients and taxpayers normally would receive, the governor and legislators reprised the old kindergarten game of “I didn’t do it, he did it.”

Gov. Arnold Schwarzenegger opened the game with a morning news conference in the Capitol, where he complained that the Legislature has spent the past four weeks with “an endless amount of hearings and debates, finger pointing and assigning blame,” instead of fixing the budget.

The governor then proceeded to finger point and assign blame, saying that legislators – meaning Democratic legislators -- won’t support reforms to root out fraud in huge government programs like In-Home Support Services, are committed to protecting special interests and are refusing to make the same sacrifices they’re asking of other California residents.

Would Pete Wilson run for governor against Jerry Brown if term limits did not deny that opportunity? “Hell, yes,” the former California governor said firmly, when asked that question by Fox and Hounds Daily contributor Joe Mathews before an audience earlier in the week. Wilson is the only Republican to defeat Brown in a statewide contest when both ran for the United States Senate in 1982.

Wilson attended a Zocalo Public Square event moderated by Mathews at Santa Monica’s RAND Corporation on Monday. During the one-hour discussion, Wilson relived the difficult early days of his governorship, which are eerily similar to California’s current circumstances.

Dealing with a budget deficit that equaled about one-third of the entire budget, Wilson agreed to equally cut spending and raise taxes, although he said he warned Democratic leaders the taxes would not bring in the revenue expected from the tax increase. For three budget years following the tax increase, Wilson said, the revenue was lower than the previous year.

Wilson argued the only thing worse than raising taxes was deficit spending, which he refused to do, claiming such an action leads to utter irresponsibility.

Here's a link to a recent report from USC researchers on the demographics of California. The headline is that California's population is becoming more settled and homegrown. Today, more than 70 percent of Californians ages 15 to 24 were born and raised here. In 1990, barely half of that group -- 53 percent -- were born and raised here.

The report's authors, including Dowell Myers, write that such figures suggest a new narrative for the stat -- the "surprising transformation" of California from a "migration magnet" to a "more self-contained society that depends on its present members." This new narrative suggests a different approach in policy -- the new generation of homegrown Californians wants greater public services and is willing pay more in taxes.

We need more of a debate about this transformation. As a Californian, I'm not sure a more stable, homegrown state population is a welcome development. What makes California special is that it's always been a destination for people from around the world and around the country -- America's America. Do we want to adapt this transformation that the USC study outlines, or should we attempt to reverse it?

Normally, when someone writes an editorial or a letter to the editor that is critical of the Los Angeles Business Journal in some way or disagrees with me personally, we publish it without response from us. Reasonable people can disagree, after all, and everyone should have their say.

But this one, I can’t let pass.

The director of the new documentary “Bananas!” scolded me in a letter to the editor we published last week in the Business Journal. He said it was “irresponsible journalism” for the paper to publish, in the June 8 issue, an article on Page 1 headlined “The Big Slip-Up.”

His main complaint was that we hadn’t seen his movie, so we should not have written an article that made “conclusions as to its contents.” As a result, he said the reporter who produced the article, Alexa Hyland, and I “failed to conduct appropriate objective research.” He used words such as “outrage” and “offended.”

In the end, Tuesday’s absolutely-positively-gotta-pass-something budget session was just another drill.

Senate Democrats brought out a trio of bipartisan Assembly bills that needed to get passed before the fiscal year ended at midnight to avoid poking another $3.6 billion hole in the budget only to see all three fail on yet another party-line vote.

The result? Not only did that $3.6 billion in anticipated 2009-10 school cuts disappear when the clock struck 12, but also under the state’s arcane education finance rules (thank you, Prop. 98), California will now be on the hook for another $2 billion in required payments to the schools for next year, boosting the deficit to about $26.3 billion.

But worst of all, even with the near certainty that the state now will have to pay its clients and vendors with promises instead of cash for who knows how long, there wasn’t even a hint that anyone not in the Assembly is willing to make the compromises that are going to be needed to solve the budget mess.

Call a cop. A law is being broken. A bunch of legislators are trying to raise taxes using a simple majority vote. That is against the main law of the land, the California Constitution.

Unfortunately, the track record of the California legislature in abiding by the constitution is not so good. Legislators make a practice of breaking the law of the land on a regular basis. I draw your attention to Article IV, Section 12, paragraph C (3): The Legislature shall pass the budget bill by midnight on June 15 of each year. How often does that happen?

Some legislators feel they can treat the law like a unique puzzle, arranging the pieces so as to reach their goal, regardless of what the rules say.

Based on the example set by the legislature, I guess its okay to run a red light. Just tell the officer who pulls you over, I know the law but I’m late for an appointment and I thought it was more important to get to the appointment than to stop at the red light. That’s what the legislature would do. Ends justify the means.

Governor Schwarzenegger is right to demand that the legislature deal with the entire $24 billion shortfall. Why? Because the budget crisis we face now is itself product of previous budget deals that didn’t solve the whole problem.

The examples are immediate. Even before the ink was dry on February’s deal, the state had another $8 billion shortfall. With the voters’ rejection of some $6 billion in budget solutions and the continued decline in revenues, that shortfall has grown to today’s shortfall. And last fall’s budget was out of balance nearly as soon as it’s signed.

The governor has put the question of out-of-control public employee pensions square in the middle of the budget fight. Good for him. The pension question must be tackled and there is no better time.

While public employee unions create a list of 31 tax increases and cry “corporate greed,” in justifying some of the tax increase proposals, it is time to balance the discussion with an examination of what might be labeled “pension greed.”

I don’t know of anyone in the private sector who enjoys retirement benefits anywhere close to those offered to retired public employees in health care benefits or early retirement age. Many who use Social Security as their retirement fund are doing the math and putting over retirement not at age 62 or 65, but hoping they can reach age 70 to get a fuller benefit. That payout still pales against the public retirement dollars paid out at age 55, or even 50 for many public employees. Let’s not even talk about the health benefit.

The self-destruction of Mark Sanford raises an issue that usually only gets talked about in newsrooms: the need for governors and other elected executives to put out detailed schedules, and the fact that many of them fail to do so.

Sanford, according to press reports, didn’t release his schedules. Reporters and editors in South Carolina complained, but the issue never attracted public attention. And so the governor of the Palmetto State managed to escape scrutiny of his activities for far too long.

That – and not Sanford’s personal behavior – is the public outrage in this sordid story.

Yes, yes, I’ve heard all the arguments from the staffers who advise governors and elected officials. “Disclosing our full schedule would compromise strategy.” “The governor has the right to secrecy in his deliberations.” “It’s a matter of protecting the governor’s security, though I’m not at liberty to discuss the details...” Blah. Blah. Blah.