
September
28, 2001
(Jack)
Just ahead, budget concerns grow,
and a surprise decision about Edison could cloud the
picture.
California budget watchers are warning of a massive
budget shortfall next year unless swift action is taken, but others those
warnings are overblown.
(Kathleen Connell, State Controller)
I
certainly want to ease the concerns of any Californians that we are in a fiscal
train wreck. We are not.
(Melissa)
We’ll also look at growing concern over high ozone
and pollution levels.
What is the price tag of standards and precautions,
and are they working?
(Kerry Shearer, SMAQMD)
We know
that in about 21% of households that somebody has someone in that household who
is affected and who is having breathing problems.
(Melissa)
Hello I’m Melissa Crowley.
(Jack)
And I’m Jack Kavanagh.
Those stories and the latest on the Edison/Public
Utilities Commission deal, next.
(Jack)
Thank you for joining us.
We will get to the state budget and air quality concerns
in a moment, but first, big news regarding the Edison bailout deal.
This week a special legislative session was called
off on the heels of a deal to avoid bankruptcy between the Public Utilities
Commission and Edison.
Unclear is how this could affect any long-term
contracts.
Governor Gray Davis says the PUC negotiations began a
week ago and allow the utility to remain in financial health without a major
rate increase.
But Senator John Burton says consumers got a raw
deal.
(John Burton, Senate President Pro Tempore)
Creditors,
if they knew the dough was coming and the dough was there, they wouldn’t care
if somebody was robbing a bank to give it to them.
(Jack)
The deal allows Edison to pay power generators but
freezes retail rates thru 2003.
Edison will gradually repay more than three billion
in debts, but the deal still needs a judge’s approval.
The big negative is that the PUC did not approve a
separate agreement.
That means bonds needed to cover state energy purchases
cannot be sold yet.
Melissa will have more on the state budget
implications and further details later in the show..
First though, an issue that affects us all, air
quality.
The state is mandated to clean things up, but at what
price?
And what is at stake?
(Kelley Braddock, Asthma Sufferer)
It’s basically like your chest is closing up and you can’t
breath, or like if somebody put a pillow over your face.
It’s not a pillow that hinders 12
year old Kelley’s breathing. It’s asthma.
(Kelley Braddock, Asthma Sufferer)
It prevents me from doing a lot of physical activity like
PE, or I’m a cheerleader, so I sometimes have to refrain from that sometimes.
Taking medication daily and having her inhalers on-hand at
all times has helped tame Kelley’s asthma, but there are some days that are out
of her control.
(Kimberly Cox, Kelley’s Mother)
The thing that she is most allergic to is cigarette smoke or
smoke from forest fires. Well, we
normally just check the air quality either by checking in the newspaper or by
checking on sparetheair.com, and that gives me an idea on what the day is going
to be like for her.
(Kerry Shearer, SMAQMD)
Sparetheair.com is a website that we run here at the AQMD on
behalf of all the air districts in the Sacramento region, so it’s got air
quality forecast information on it. It
alerts people to Spare the Air Days, and we know that in about 21% of
households, somebody has someone in that household who is affected and is
having breathing problems.
(Dr. Jesse P. Joad)
It’s usually after a really high ozone day. We see children coming into the hospital and
actually being worse than they usually are and requiring hospitalization.
Mike Poole, the Instrument Specialist for the Sacramento
Municipal Air Quality Management District, checks the filter that helps
determine the air quality index each day.
(Mike Poole, Instrument Specialist, SMAQMD)
Most of our monitoring is what we call “ambient
monitoring.” We’re looking for overall
background levels of pollution. Our
pollution here is about 70% from vehicles.
People living together have a negative impact, but by knowing how much
pollution is there, what kinds of pollution, and what causes it, we’re more
able to solve those problems.
This is a dirty particulate filter for PM-10, and this is
what you might typically see during a winter’s day as contrasted by a clean or
unused filter. You can see the
difference, and, if fact, what is represented on this dirty filter is the type
of thing that we’re breathing when we have high levels of particulates in the
air.
(Kelley Braddock, Asthma Sufferer)
I really like to play soccer, so I can’t do that anymore.
With special features like “Air Alert,” sparetheair.com can
notify people like Kelley when the air’s quality is going to exceed healthy
limits.
(Kimberly Cox, Kelley’s Mother)
So, it looks like later this week it’s actually going to be
unhealthy for sensitive groups.
With more educational tools and conservation methods being
introduced to the public, the fight to curb air pollution is underway. If it wasn’t, the consequences could be
frightening.
(Mike Poole, Instrument Specialist, SMAQMD)
Nobody wants to go back to what Los Angeles and Riverside
were ten years ago.
(Kelley Braddock, Asthma Sufferer)
It’s kind of bad because I’m never going to be able to do
things I used to be able to, but it’s something that I’m going to have to deal
with, and it’s not going to go away.
(Jack)
For more information on how
the air’s quality and ozone can affect your health, log onto the Air Resources
Board web site at “www.arb.ca.gov”
Or to check the Air Quality
Index in the Sacramento and Bay area, log onto “www.sparetheair.com”
And for national ozone
levels log onto “www.epa.gov/airnow”
We know that Sacramento has
one of the worst air quality ratings, but how does the rest of the state fare?
Joining us to share more and
what happens if we don’t meet standards are
Lynn Terry from the Air
Resources Board
From the Chamber of
Commerce, Brian White.
And from the Sierra Club,
Bill Magavern.
Thank you all for being
here.
And, Lynn, let me start with
you. We’re in a war right now; the
economy is tanking; we’re worried about our own personal safety. Why should we care about air pollution? It seems like that’s something we almost
forget about these days.
(Lynn Terry, Air
Resources Board)
The health of our children is really
at stake, and it really is the future of their health. Not only is asthma triggered by air pollution,
our children’s health study has shown long-term exposures to air pollution
can actually stymie the g
rowth
of lung function in children, so the effects of air pollution can be long-lasting
and last a lifetime. There are many other vulnerable communities,
those with respiratory and cardiac illnesses as well that are severely affected
by air pollution.
(Jack)
So we can’t afford to ignore this,
is that what you’re saying? Even when
we’re consumed with a war?
(Lynn Terry, Air
Resources Board)
We can’t afford to ignore the issue,
and we have been able to balance our health needs in terms of air pollution
control and the economy very well over the past 20 years in the state of
California, and we believe at the board that we can continue to do that in the
future.
(Jack)
You know, that’s right. We do have some of the toughest air
pollution laws in the country, and we all seem to be able to survive with
them. Where are we? Do we meet standards now? Are there new standards coming that we need
to meet? Where are we?
(Bill Magavern, Sierra
Club)
Well, we’re actually not meeting
standards in most of California. People
are still breathing air that doesn’t meet health standards set by the state and
federal government, so we’ve made some progress, but we need to do a lot better
because our children’s health is at risk.
(Jack)
What is that going to cost,
Brian?
(Brian White, Chamber of
Commerce)
Well, that’s a good question. I think we really have to look back 20 years
ago when we really had a serious problem on our hands, and I really think
we nee
d to take credit for the past, whether
it be the public, the business community, and the government.
We’ve all worked together to get where we are now.
Does that mean we should rest on our laurels? No, it doesn’t, but as far as the cost is concerned, I think we
really have to balance where we’re going to be as far as when our economy
is starting, not to take a crisis situation, but it is getting fragile. There’s no real numbers on what a measure will
cost. No one can really determine,
but I think we have to make sure that if there’s going to be more costs imposed
on the business community, it has to be done so that there are incentives. If air pollution is a big health concern, we
need to make sure that resources from the state are infused into these voluntary
programs, such as clean diesel programs.
(Jack)
Well, who should pay for this? We all know we want cleaner air. Should I pay for it as a taxpayer? Should you pay for it as a businessperson? Should your employees pay for it? Who should pay for it?
(Brian White, Chamber of
Commerce)
I think it should be a little bit of
both. The state obviously needs to do
more to put more money into these programs.
The business community has been obviously been the main carrier of
trying to meet all these standards. We
have gone to the well many times. I
think the public needs to do more on their part to make sure the cars are clean
too. We have a program that’s probably
the toughest in the nation called “Smog Check II” that a lot of people who don’t
know about this program are afraid to have their car smog-checked because they
think it’s going to fail, and, obviously, that has political ramifications.
(Jack)
You know, when we saw in the story
before the discussion, there is now more emphasis on educating the public, and
is it true that the more we understand the problem, the more we’re willing to
kick in. Obviously with the energy
crisis, the more we understood, the more we kicked in. Does the same apply to air pollution?
(Lynn Terry, Air Resources
Board)
Absolutely. We rely a lot on new technology to solve our
pollution problems. Cars are
cleaner. When we go to that Chevrolet
dealership, each year the car is cleaner, but there are many cars on the road
that still don’t meet our toughest standards, and that’s where less driving,
carpooling, and all of those kinds of “spare the air” programs come into play
in a big way, and they’re very important near-term measures, while we wait for
clean technology to solve this problem the rest of the way.
(Jack)
Bill, we could solve this problem
just by not growing. No more new
houses, no more new highways, no more new cars, just, you know, put a cap on it
right now, but realistically, that can’t happen, so where do we go on that
situation?
(Bill Magavern, Sierra
Club)
Well, one of the things we need to
do is to grow in a smart way, and smart growth means having people live closer
to the places that they work and play and shop, so that it doesn’t take a 20
mile round trip to make sure where you need to go. We need to give people alternative ways for getting where they
need to go besides getting in a car and driving there alone, so government
needs to provide people with transportation choices like carpooling, like riding
a bike, like walking to work, like public transportation, so that we’re not
putting so many air pollutants into the air through transportation, which is
the biggest cause right now of our air pollution.
(Jack)
Bill, I get the sense that the
environmental community makes the case in the legislature, and the business
community gets the tab, gets the bill.
Where are they going too far? Or
are they going too far?
(Brian White, Chamber of
Commerce)
Well, I don’t think it’s a question
of them going too far. I think when you
look at the total picture, we have a lot of programs that overlap one
another. The federal government has
their standards. California has its
standards. What we often see is that
there are duplicative rules, and the ball keeps moving for the business
community. The business community just
wants to know “What’s the level you want us to meet?” We’ll meet it, but just don’t mandate us to use certain
technology. Obviously, the market will
drive what the technology will ultimately be, and the cost, of course, if it’s
going to be exorbitant, then it’s going to be more for the consumer in the end.
(Jack)
Well, at what point, Brian, does the
business community say, “Hey, we can’t handle this anymore. We’re going somewhere else.”
(Brian White, Chamber of
Commerce)
Well, actually, you’re probably starting
to see that now. We don’t want to
get to a point where we were in the early 90’s, and business started moving
to other states. I think what we want
to see is to have more of a federal approach and a state approach where we’re
all working together. We need a national
fuel standard for one thing, so that we have cleaner fuels, cleaner cars,
all operating on the same playing field.
We don’t want to be put at a competitive disadvantage for both our
businesses and our consumers.
(Jack)
Is there a sense, Bill, from the
legislature that you’ve got to back off a little bit because the economy is so
fragile? This is such an expensive
place to live and work.
(Bill Magavern, Sierra Club)
Well, actually, I think, Jack, that
companies want to locate in places where the air is clean, and where the
children of the employees of those companies will be able to breath the air and
be able to play soccer without having to worry about asthma, and we talk about
the costs on business, but how do you calculate the costs on that girl who
can’t play soccer on the days when the air pollution is bad? Or what are the costs of the people who go
into the hospital or have heart attacks or die prematurely because of air
pollution? Those are really important
human costs that we need to consider.
(Jack)
Lynn, you’re basically a regulator,
so you get to implement what the legislature comes up with, and what does that
mean for us down the road. I know, for
example, there was a lot of discussion of a zero emission car at one point, and
I know that that has kind of been pushed back a little bit. Electric cars, which are very interesting
during an electric crisis in California, have kind have been pushed back a
little bit. Give us a sense. Where are we going? Are we going a little more slowly than we
were before? Are we more aggressive
than we were before? Where are we going
on this?
(Lynn Terry, Air Resources Board)
We’ve had really steady progress in
California from regulatory perspective, but Brian’s right. We are focusing on working on national
standards and working closely with the federal government so that there is a
level playing field in terms of fuels.
Interstate trucks are an issue that California alone can’t deal with, so
we do have a collaborative effort, from a regulatory standpoint, with the
federal government.
(Jack)
Meaning that my life isn’t going to
change much? My car is going to stay
the same and my barbecue outside and my spare the air days are all going to
remain the same in the future?
(Lynn Terry, Air Resources Board)
Well, we are continuing to push on
those everyday products that people use.
We are continuing to adopt new regulations to reduce emissions from
household products and lawn and garden equipment, and many of the things that
are part of our everyday life, and our view is that many of those projects can
be done cost-effectively, and that consumers can have the choice to buy a clean
product.
(Jack)
In our last minute, Brian, where are
we going on this from a business perspective?
Are regulations going to get tougher?
Are businesses going to start relocating from California?
(Brian White, Chamber of Commerce)
That’s a good question. We don’t know if they’re going to start
relocating right away, but what we do know is that we have a serious
infrastructure problem. Bill mentioned
making businesses and housing closer together.
We need that so that business and housing are closer together. The chamber has been very supportive of
having business and housing closer together in downtown areas. I think what we ultimately need to do is to
make sure that our air quality programs, our water quality programs, and all
these things ultimately play together in one role because we stand to lose
about 15 billion dollars in transportation funds.
(Jack)
Bill, what’s your sense of the
future? Is the air going to get better
or worse?
(Bill Magavern, Sierra Club)
I think the air will get better if
we make the right choices, and we can have cleaner air without sacrificing the
quality of life we’re used to in California.
In fact, it’ll improve our quality of life because we won’t have to
worry about hurting our lungs when we go outside to play.
(Jack)
On that point, thank you all for
joining us. Thank you very much for
coming in.
END AIR QUALITY DISCUSSION
(Jack)
While air quality is a
pressing concern, what do you see as the biggest issue facing the state today?
Send us an email to capitol
review dot ORG or the address on your screen. Melissa ?
(Melissa)
Thanks, Jack.
The big news this week as
you mentioned is the PUC/Edison agreement that negated the need for a
legislative special session on the matter.
Governor Gray Davis said
quote “ I am pleased to hear the PUC’s assurance that this can be accomplished
without a rate hike.”
This meaning avoiding a
bailout.
But whether the entire deal
is good for consumers and the struggling state budget is the subject of @issue.
@ ISSUE: PUC/EDISON DEAL
(Melissa)
The Governor’s staff says he
also plans to veto SB-18XX by Senator John Burton that would establish a
different rate structure.
Davis says he is also very
disappointed the PUC did not approve the rate agreement he backed.
Either way, with no
agreement, bonds cannot be sold.
The fact that the general
fund, down half a billion already last month, will not be immediately repaid
comes at a tough time fiscally,
Some groups say California
may be heading for financial disaster as the wait to sell 12 billion dollars
worth of bonds to cover energy costs drags on.
The Governor meantime is
trying to boost economic activity including travel and tourism.
Others say sounding the
alarm makes matters worse.
(Governor Gray Davis)
We’ve seen some evidence that
consumers are pulling in their horns, so that’s what worries me, certainly more
than anything else.
(Kathleen Connell, State
Controller)
I certainly want to ease the
concerns of any Californians that we are in a fiscal train wreck. We are not.
(Lon Hitamiya, CA Trade &
Commerce Secretary)
We are continually on a positive
trend up, but it’s not at the growth rate we’ve seen over the last decade. We certainly have some challenges before us.
(John Burton, Senate President Pro
Tempore)
There is no hot dog for the dollar
that the ratepayer is going to have to pay.
There’s no bun; there’s no mustard.
End
Soundbites
(Melissa)
That last clip was a
follow-up to the famous Edison hot dog quote from Senator Burton.
The state treasurer says
bonds may not be sold until next year.
What do we do in the
meantime, and how does the Edison deal factor in?
Joining us to share more are
Gale Kaufman, Democratic consultant,
and Kevin Eckery, Republican
strategist and president of Kevin Eckery Associates.
Thank you both for being
with us, and, Gale, we’ll start with you.
In light of everything going on, the question here is, is the sky
falling?
(Gale Kaufman, Democratic
Political Consultant)
Umh, I don’t think so, but I’m really
confused. I bet everybody is.
I try to read all the stories on what has gone on the last couple days,
and it is perplexing. I asked the question, “If the PUC did that
two days ago, why couldn’t they do that six months ago?” I think a lot of people are wondering with
the special session and lots of other thin
gs
why this is all coming together now, and I think it points out how complicated
all these negotiations have been, and how troubling it has been for the legislature
as well as the Governor to put deals together that are longstanding, to keep
our lights on, and also to keep the costs down as much as possible.
So, I don’t think anyone is thrilled at this point. I’ve heard a lot of the complaints from consumer
groups in terms of maybe rates will go up, and I think we’ll have to wait
and see and hope that the PUC will move on a rate package because I think
that’s still hanging out there.
(Melissa)
And that’s a big problem hanging out
there, Kevin. This brings to mind the
early 1990’s when we faced incredible economic trouble as a state. In the event that, say, these bonds are
delayed even further or in fact are not sold, is this bringing back some bad
flashbacks?
(Kevin Eckery, Republican
Strategist)
Well, you know, on the plus side, I
don’t work for the government anymore, so I don’t have a warrant paycheck
in my future, but, you know, this is serious stuff.
You know, even if you do do the refinancing at some point next year,
and Phil Angelides has made it
very
clear that you don’t do a bond sale until all the “I”s are dotted and all
the “T”s are crossed because bond holders don’t like controversy, period.
I think you’re talking about what
could be some pretty serious crunches. A lot of choices are going to have to be made
that wouldn’t have had to be made if the state weren’t so very much in the
energy business.
(Melissa)
Gale, are we up against a wall here
time wise? We keep hearing from the
Governor’s staff that there’s still time to agree upon a deal with the
legislature and get the PUC to back it.
The State Treasurer says it looks like the longer we go, the less and
less likely it is to get favorable bond sales.
What kind of pressure are we facing?
(Gale Kaufman, Democratic
Political Consultant)
I think everybody’s under incredible
pressure where this kind of dragged on.
I know I’ve said a number times, “Well, let’s see where we are in a
couple of months.” Well, we’re now at a
place where there aren’t many more months left, and with the dire predictions
about next year’s budget shortfall, I think, even if there is some time,
putting some closure on where we are with the energy crisis and paying for
energy would, I think, allow all the legislators and the Governor look at all
the other issues that they’re going to have to face next year in the budget, so
the longer this drags on, the harder that’s going to be, and the more dire
predictions you’re going to hear.
(Melissa)
We weren’t looking at a great
economic prediction anyway, so this isn’t exactly welcome news, is it Kevin?
(Kevin Eckery, Republican
Strategist)
No, this is—in fact, as you were
talking, I was just thinking I mean Governor Wilson’s first term, he had to
declare an emergency 28 time for funds, fire, everything but famine I think,
and if there was one silver lining to that, it was that we started early, and
by the time reelection came around, things were working much better. Governor Davis had sort of the
flipside. When he started, thing were
pretty rosy, and now the cash crunch, the energy crunch, and all these other
things are going to be hitting right at the same time that, you know, recent
polls show that he was actually less favored than Dick Verden when it came to
running for Governor. I don’t envy his
choices right now.
(Melissa)
Gale, some of the skeptics have said
that or heard that it was a bit unusual that Governor Davis pushed back the
special session a week. We thought,
“Hmmm, I wonder why that’s underway?”
Then, all of the sudden out left field, many people say, came the PUC
decision. Other are saying that this is
actually a result of a feud perhaps between Governor Davis and Senator Burton,
and Davis couldn’t get them to budge on the rate agreement he wanted, so he
went behind, I guess, and sort of got Loretta Lynch to go ahead and be the
scapegoat on this and push it through.
What is the sense that you’re getting on that?
(Gale Kaufman, Democratic
Political Consultant)
Well, you know, I like to gossip as
much as everybody else, and I think there’s a lot of truth to part of
everything you just said. There is a
little bit of a conflict with that though, because if the Governor went to
Loretta Lynch and asked her to bail him out on Edison, then she certainly did
not do that on the rate package. So, I
think it’s a little bit more complicated, but I don’t think that there was
going to be any sort of agreement in the legislature next week. That’s clear, and so the Governor was going
to have the legislature back here reminding people day after day that they did
not agree with what he was asking them to do, so it was a good, I think—I don’t
really want to call it a compromise, but it was a good solution to not have to
bring the legislature back, and I don’t think the legislature was thrilled to
come back either under those circumstances.
(Melissa)
Kevin, are the folks that make out
best in this deal perhaps the legislature because they didn’t have to make
these difficult decisions. The PUC
made this deal with Edison, so it gets the legislature off of the hook in
a sense.
(Kevin Eckery, Republican
Strategist)
No, I mean, a lot of damage has been
done for a lot of people. I mean,
if you’re in the senate right now, you were forced to make a lot of really
unpopular votes, and now you’re left holding the bag, and you’re more than
a little resentful of the position you got put in. If you’re in the senate, you’re resentful because nothing happened.
You were threatened with what I call a “special session check-in session”
where, you know, you would have shown up, and you would have opened your mouth
and there wouldn’t have been any votes. There
aren’t many winners here. I mean, one winner is that Wall Street likes,
at least one day later, what happened with Edison, but as we seem to be at
the tail end of our energy crisis, we’re at the beginning of our fiscal crisis,
and I think that it’s going to make for a really bumpy ride over the next
year.
(Melissa)
And consumers are saying that they
think they may be the ones that are stuck with the worst part of this
deal. Also, some of the referendums—we
talked about some of the ballot measures that may or may not be on the
ballot—does this circumvent that process because of the way this deal was done?
(Gale Kaufman, Democratic
Political Consultant)
Yes, and I think that that
was in the back of a lot of people’s minds.
Because the PUC took the action that they did, nothing if
“referendable,” if that’s such a word, so if something goes on the ballot, it’s
a clean initiative. It isn’t someone
trying to undo some action by the legislature or Governor, and I think that’s a
very different story both to fund and also run a campaign on, and there isn’t
an enemy necessarily in all of that, and on the rate issue, I think you have to
give credit where credit is due. I
think the legislature and the Governor tried very, very hard to keep consumers’
rates from rising to consumers, and I think through all of this, as complicated
as it has been, and though we’re just starting to see how good these deals are,
you have to keep that in mind. I think
they were taking their job very seriously and tried to do the best that they
could in a bad time.
(Melissa)
All right.
(Kevin Eckery, Republican
Strategist)
(Gale Kaufman, Democratic
Political Consultant)
(Kevin Eckery, Republican
Strategist)
It is possible. Believe it or not.
(Melissa)
Kevin’s feeling very generous this
morning.
(Kevin Eckery, Republican
Strategist)
I mean, earlier you mentioned how
this deal may have been available six months ago. Well, this deal may have been available a year ago, in which
case, we wouldn’t have had a PG&E bankruptcy; we wouldn’t have had the
Department of Water Resources becoming the buyer of last resort; We wouldn’t
have a 12 billion dollar bill that we’re looking to refinance through bond
issues. We’re looking at a whole lot of
things that are all very exciting and all very important, but that all may have
been avoidable.
(Melissa)
We’re running out of time here, not
just in this deal, but also in this discussion. I want to get some quick, final thoughts from you both. You’re looking at the state budget, numbers
are tight. Gale, how would you advise
clients? What do you think we need to
be concerned about? Is it education?
(Gale Kaufman, Democratic
Political Consultant)
Well, I think the Governor has just
said that he’s going to keep education as the number one priority, and I think
that that means that a lot of other bills that are on his desk are going to
fall by the wayside unfortunately.
(Melissa)
Kevin, your predictions.

(Kevin Eckery, Republican
Strategist)
Well, the law makes K-12 education
a priority, but everybody else has to stand in line, so I think the colleges
and universities are going to look for a bad time.
I think there’s going to be a lot of pressure as we look at a recession
at economic development programs, tax rebates, things of this nature that
maybe we’re not going to be able to do because we’re looking at a deficit
of around 3 billion dollars, according to Phil Angelides, so there’s going
to be some pretty serious choices ahead.
(Melissa)
And on that note, we are out of
time.
Thanks to Gale and Kevin for
joining us.
We’ll have more on
legislative reaction next week, and what the Governor plans to do next. Now though, your thoughts on recent events. Jack?
Melissa, our viewers had a
lot to say about nation security, following last week’s discussion.
David J writes:
“No national emergency ever deserves the suspension of liberty even
temporarily.”
And from Pete in Los
Angeles:
“It is known that flying is a serious business and one that is in the
interest of all to keep safe and secure for innocent civilians.”
We thank you for your
comments.
(Melissa)
Next week,
More on the energy debate
and what budget priorities may now fall victim.
(Jack)
Until then, goodnight.
(Melissa)
We’ll see you next time.