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SACRAMENTO: Reports, state budget, tax revenue "plummets", new budget already facing shortfall, raising fear of more school cuts; commentary, "budget gimmicky falls short"....

***Bad news in Sacramento, declining tax revenue, less than two months after approval of a state budget that was looking to a $4-billion windfall....

* Los Angeles Times:  "California tax revenue plummets in July, raising fear of trigger cuts" - "July income was $539 million lower than expected, leading many to doubt the state's budget assumption of economic recovery and a $4-billion windfall. If revenues remain low, drastic education cuts will kick in."

* San Francisco Chronicle:  "California's new budget already facing shortfall"

* Sacramento Bee:  "California's revenue drop prompts fear of more school cuts"

* Sacramento Bee (Dan Walters):  "California budget gimmickry falls short"


POLITICS/REDISTRICTING: L.A. County supervisorial districts, first meeting on redistricting, proposed new Latino-majority district, "subtle threats of legal action" if boundaries are not altered.... 

* Daily Breeze:  "First hearing on supervisorial redistricting turns divisive" - From the DB:

   In its first meeting on a contentious redistricting process, the Los Angeles County Board of Supervisors on Tuesday heard subtle threats of legal action if boundaries are not altered to accommodate a growing Latino voter population. The four-hour hearing pitted two factions against each other: those who support a redistricting plan that would favor powerful incumbents versus those who want a radical new map that could bring a second Latino supervisor to office.

   The latter vision would shift much of the South Bay, Long Beach and Catalina Island from Supervisor Don Knabe's Fourth District into Zev Yaroslavsky's Third District with Malibu, Santa Monica and the western San Fernando Valley. Knabe's district would shift east and north into the San Gabriel Valley, becoming more than half Latino. The alternate plan would move almost 3.4 million county residents into new supervisorial districts.

   Knabe, whose 2012 re-election could be in jeopardy if that alternative is adopted, opposes the more radical plan. Instead, on Tuesday he proposed tweaking the proposed map before the board that generally maintains the status quo. No vote was taken. Knabe's proposal, along with any other maps that supervisors must submit for consideration by next Tuesday, will come back for a board hearing Sept. 6.


   At issue is political power on a board that gets little public attention but that wields enormous influence and oversees a $23 billion budget. Sometimes called the "five little kings," the supervisors each represent nearly 2 million residents in a sprawling county that is the nation's most populous. An incumbent has not been unseated since 1980...........................

* Los Angeles Times:  "Ethnic coalition backs Knabe in face of redistricting plan" - "Latinos seek to revise county supervisor's district to create a Latino majority. But an ethnic coalition backs the lawmaker and calls on minorities not to turn against one another."

* Daily News:  "Two L.A. County supervisors sharply criticize status quo map"


AFTERNOON MEMOS: State budget, revenues for July miss mark by more than 10 percent; State Sen. Ron Calderon, announcement of campaign for Congress; AEG/NFL stadium project, overall framework for financing approved by L.A. City Council....  

* Sacramento Bee:  "California revenues miss mark by 10 percent in July" - From the Bee:

   For the second straight month since Gov. Jerry Brown signed the state budget, California has fallen behind in revenue projections, this time 10.3 percent for the month of July.

   The state budget relied on a last-minute optimistic assumption that California would receive an additional $4 billion over the course of the 2011-12 fiscal year. Should the state determine in December that it will fall short, California would impose as much as $2.5 billion in further cuts to higher education, social services and K-12 schools, depending on how much it misses the revenue target..................

* Sacramento Bee:  "State Sen. Ron Calderon to run for Congress" - From the Bee:

   State Sen. Ron Calderon has announced plans to run for Congress in a district that will likely pit him against at least one Democratic incumbent. Calderon plans to run in the new 38th Congressional District, a San Gabriel Valley seat that shares much of the area he has represented in the state Senate. The Montebello Democrat, who is termed out in 2014, previously held an overlapping Assembly seat that is now represented by his brother, Assemblyman Charles Calderon.


   Incumbent Democratic Reps. Grace Napolitano and Linda Sanchez both live in the safe Democratic district, though as Around the Capitol has noted, Sanchez has apparently not yet decided where she will run............

* Los Angeles Times:  "L.A. NFL stadium agreement approved by City Council on 12-0 vote" - From the LAT:

   The plan to build a $1.2-billion NFL stadium in downtown Los Angeles took a big leap forward Tuesday when the City Council approved the overall framework for financing the project.
   On a 12-0 vote, the council voted for a nonbinding agreement with stadium developer Anschutz Entertainment Group that allows for the demolition and relocation of a section of the Los Angeles Convention Center. That, in turn, would make room for a 72,000-seat stadium just south of Staples Center, which would open in 2016 with the planned name of Farmers Field..................

POLITICS/BUSINESS: Wall Street "aftershocks", impact on California's economy, state budget, public pension funds.... 

* Sacramento Bee:  "Wall Street aftershocks felt in California's economy" - From the Bee:

   Wall Street's scary losing streak could put a dent in California's fragile economic recovery. In some ways, it already has.

   The huge downturn in the stock market, punctuated by Monday's near-record fall, is costing the state's public pension funds billions of dollars. It's putting a strain on tax revenues – and could throw the just-passed state budget out of whack. . . . .


   The most immediate, concrete effect of the stock market's stumble is on stock portfolios – particularly the big ones.

   The California Public Employees' Retirement System, the nation's largest public pension fund, has lost about $17 billion since the state's new fiscal year began July 1. Monday's loss alone topped $6 billion. The past month of trading has erased more than 40 percent of CalPERS' robust investment gains from the previous fiscal year. Roughly two-thirds of CalPERS' portfolio is in stocks.

   "It's not a time to panic," said Joseph Dear, CalPERS' chief investment officer. "Stay the course, apply the policies … look for opportunity." But Dear acknowledged these are anxious times. His staff spent Monday telephoning the pension fund's outside money managers to get a sense of investors' outlook. The response was an overwhelming lack of confidence in U.S. and European political leadership, he said. Until that changes, he added, "The market's going to be highly volatile."

   State Treasurer Bill Lockyer issued a statement saying that California's government won't be affected by S&P's credit downgrade. But he said Californians should worry "about the continuing effects of the economic recession on jobs and the stock market."

   State government could be affected if the stock market plunge blows a hole in California's budget, which hich relies in part on a projected $4 billion surge in tax revenue. That forecast, viewed skeptically by many independent analysts to begin with, now seems shakier as the financial markets weaken. "It  doesn't look real good right now for the budget projections," said Michael Shires, a fiscal policy expert at Pepperdine University..................


POLITICS (National): Wisconsin recall elections today, implications for presidential and congressional elections next year, more than $31 million estimated have been spent on the nine recall campaigns....

***Big day today in Wisconsin, recall elections with national political implications....

* Washington Post (AP):  "Wisconsin recall elections to determine whether Republicans can hold on to Senate majority" - From the WP:

   Wisconsin Democrats, fueled by millions of dollars in spending by national unions and other outside groups, are hoping to wrest control of the state Senate away from Republicans through six recall elections Tuesday that stemmed from anger over Gov. Scott Walker’s collective bargaining proposal. The races targeting incumbent Republicans morphed into a high-stakes political fight with national implications as tens of millions of dollars poured into the state, breaking spending records in the unprecedented recalls.

   Until this year, there were only 20 attempts nationally since 1913 to recall lawmakers from office, just 13 of them successful.

   Besides the six Republicans on Tuesday’s ballot, two Democratic incumbents face recalls next week. A third Democrat survived a recall attempt last month. Republicans hold a 19-14 advantage in the Senate, so Democrats need to win five of the eight elections to take control. If Republicans lose three or four seats on Tuesday, the balance of power in the Senate will rest on the outcome of the two Democratic races next week. Those races target Sens. Bob Wirch of Pleasant Prairie and Jim Holperin of Conover.

   The stakes were clearly much larger than simply determining who has control of the state Senate. The elections figured to help determine whether the Republican revolution led by Walker will get a shot in the arm or a major setback. Both parties also were testing messaging ahead of the 2012 presidential race, in which Wisconsin could be an important swing state.


   It all amounted to a summer unlike any other in Wisconsin, with the unprecedented recalls the largest unified effort to kick incumbents out of office in history. More than $31 million was estimated to have been spent on the nine recall elections, rivaling the $37 million spent on last year’s governor’s race................

* Los Angeles Times:  "Wisconsin recall elections carry implications for 2012" - "Six Republican state senators are being challenged in the latest fallout from the passage of anti-union legislation. The races are seen as test battles for the presidential and congressional elections next fall."

* Christian Science Monitor:  "Why Wisconsin's recall election matters to the rest of America" - "Tens of millions of dollars are pouring into Wisconsin, where voters will decide Tuesday whether to recall six Republican state senators for their role in the union battles of February and March."