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No Pay, No Peace: Chiang Rising, Boosts Gov

Jun22

Controller John Chiang’s decision to block paychecks for members of the Legislature is a ballsy move that hands Gov. Jerry Brown a last-ditch, Indiana Jones-type opportunity to head off a summer-long budget deadlock.

“My office’s careful review of the recently-passed budget found components that were miscalculated, miscounted or unfinished,” said Chiang. “The numbers simply did not add up, and the Legislature will forfeit their pay until a balanced budget is sent to the Governor.”

Brown, whose administration was hoping and praying for Chiang to throttle the Legislature’s pay, reacted completely neutrally, at least on the record. “The Controller has made his determination. We should all work together to pass a solid budget,” Brown said. But behind the scenes, Gandalf and his Hobbits in the Horseshoe were delighted.

While Republican legislators were generally complimentary about Chiang’s decision – which Treasurer Bill Lockyer had urged — their Democratic colleagues were generally miffed.

“We are basically being held hostage to vote for the governor’s version of the budget. It’s a perfect opportunity for political grandstanding for the controller and treasurer,” said state Sen. Ron Calderon, D-Montebello.We’ve done our job and given a balanced budget. The controller and treasurer have approved of them in past. They’ve never had a problem before. We are being treated like children and punished for politics.”

Holy cow, Martha! They’re doing something different in Sacramento!

Chiang “was wrong,” said Assembly Speaker John Perez. “The Controller is, in effect, allowing Legislative Republicans to control the budget process and I believe that’s a very unfortunate outcome that is inconsistent with the intent of Proposition 25,” Perez said. “In the coming days, we will be taking additional budget action informed by the Controller’s analysis, and consistent with the values of the budget we passed last week.”

Beyond its considerable impact on the Capitol, Chaing’s just-say-no to legislative salaries gambit also boosts his personal statewide political cred. In raising his profile among the laundry list of little-known constitutional officers, he’s seized the spotlight in a way that will define him as a guy who isn’t afraid of a tough choice, even if it enrages his own party.

Most importantly, however, the controller has given the governor some new political leverage in his long-running and disciplined effort to get a budget approved before July 1, when a host of temporary tax increases will expire, making Brown’s job of selling higher rates to voters in a fall special election much tougher by an order of magnitude.

By determining that the tricked-and-tarted-up spending plan Democratic lawmakers sent Brown on June 15 is not balanced, Chiang has pushed the snouts of the Legislature’s political pygmies out of the public trough unless and until there’s a real budget. Squeezing them where it hurts will improve the focus of solons from both parties, providing self-interested motivation to return to Brown’s picnic table in the horseshoe, for renewed bargaining on California finances.

According to Chiang:

Nothing in the Constitution or state law gives the State Controller the authority to judge the honesty, legitimacy or viability of a budget. The Controller can only determine whether the expected revenues will equal or exceed planned expenditures in the budget, as required by Article 4, Section 12(g) of the Constitution: “. . .the Legislature may not send to the Governor for consideration, nor may the Governor sign into law, a budget bill that would appropriate from the General Fund, for that fiscal year, a total amount that. . .exceeds General Fund revenues for that fiscal year estimated as of the date of the budget bill’s passage. That estimate of General Fund revenues shall be set forth in the budget bill passed by the Legislature.”

While the vetoed budget contains solutions of questionable achievability and some to which I am personally opposed, current law provides no authority for my office to second-guess them in my enforcement of Proposition 25. My job is not to substitute my policy judgment for that of the Legislature and the Governor, rather it is to be the honest-broker of the numbers.

Using this standard, the Controller’s analysis found that the recently-vetoed budget committed the State to $89.75 billion in spending, but only provided $87.9 billion in revenues, leaving an imbalance of $1.85 billion.

The largest problem involved the guaranteed level of education funding under Proposition 98. The June 15 budget underfunded education by more than $1.3 billion. Underfunding is not possible without suspending Proposition 98, which would require a super-majority (2/3) vote of the Legislature.

The budget also counted on $320 million in hospital fees, $103 million in taxes on managed-care plans, and $300 million in vehicle registration charges. However, the Legislature never passed the bills necessary to collect or spend those funds as part of the State budget.

What it all means: As a practical matter, the legislative salary suspension does not change the three basic scenarios Brown faces on the budget, but it does alter the likelihood of which one will occur. Here’s the Calbuzz line on the options:

–Summer deadlock. The most likely outcome of the budget remains the spectre of a Schwarzenegger-like, months-long boring stalemate extending through months of baking heat. Republicans are still under huge pressure from the ideologues who man the barricades of the state GOP’s cuckoo caucus not to compromise in any way on taxes, while bleeding heart Democrats, having already voted for billions of dollars in spending cuts, are likely to dig in against any more, spurred on by their sponsors in the SEIU, CCPOA and CTA.

Chances of happening: 47.5 percent.

–A deal with Republicans. Brown advisers seem truly to believe that they can still convince at least four Republicans, who perhaps will soon find themselves in new districts that are less GOP-tilted than the current ones, to vote for his plan for a special election on taxes, in exchange for cobbling together a deal that links the revenue line with other ballot measures to reform public employee pensions and slap a cap on state spending.

Chances of happening: 30.75 percent.

–A more-cuts budget: Legislative Democrats are still peeved at Brown by flinging their dog-ass budget back at them, less than 24 hours after they performed an end zone dance congratulating themselves on passing it. Still, there’s room for the governor to negotiate with them by accepting some key parts of their plan – delaying $3 billion in payments to schools, for example – while finding ways to backfill other cockamamie elements, like the silly notion of raising more than $1 billion by staging a garage sale to sell off state property.

Chances of happening:  21.75 percent

Before Chiang called out the Democrats for their ersatz “balanced budget,“  we would have put the odds of deadlock at over 80 percent. Now, however, the low-key controller has slipped Brown a huge bargaining chip in budget talks, while establishing himself as a Man of Respect among the cognoscenti (if his gambit doesn’t get whacked in court).

Carpe diem, Mr. Controller.

P.S.: We’ll be surprised if Speaker Perez and Senate President Darrell Steinberg don’t challenge Chiang’s decision in court. It’s not at all clear that Chiang has the authority to declare unbalanced a budget that the Legislature says is balanced. But what will members of the Legislature say — Republicans and Democrats alike — when our colleagues in Sacramento ask them whether they’ll take the pay? Surely, all those GOP members who support the decision would refuse to accept tainted paychecks, right?

Yes, he has no bananas: The estimable Mark Paul, noting that Chiang himself says nothing in law or the state Constitution gives the controller the authority to judge whether a budget is balanced, writes:

Just when you think California governance can’t get more bizarre, Controller John Chiang, using constitutional authority he admits he doesn’t have, has decided to withhold pay from legislators for having passed a gimmicky budget, which is the only kind of budget that California’s current constitutional and political balance permits them to pass.


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There are 6 comments for this post

  1. avatar OC Progressive says:

    Heh.

    “Dog-ass budget”

    If my dog were that ugly, I’d make it walk backwards.

  2. avatar Ernie Konnyu says:

    My compliments to Governor Jerry Brown for vetoing an unbalanced budget and for Controller John Chiang to withold legislators’ pay for not passing a balanced budget by June 15 as required by law.

    Legislatures preceding the current one such as those led by the great liberal Speaker, Willie Lewis Brown Jr., repeatedly passed balanced budgets without any tax increases. Those prior Legislatures dominated by Liberal Democrats did so even in bad economic times such as in the 1980-s during the last two years of Governor Brown and the first two years of Governor George Deukmejian. I know that for a fact as a former California Assemblyman.

    It would economically benefit our high-unemployment state for Speaker Perez and Majority Leader Steinberg to follow responsible leadership precedent and, as Larry the Plumber would likely say on the state budget, “Git ‘er done!”

    Ernie Konnyu (R-San Jose)
    Former Member, California Assembly

    • avatar GeoHagop says:

      “Republicans are still under huge pressure from the ideologues who man the barricades of the state GOP’s cuckoo caucus not to compromise in any way on taxes” – hmmm…. rhymes with Konnyu?

  3. avatar chrisfinnie says:

    Interesting question that illustrates the frequent problems with ballot propositions.
    1. What is the legal criteria for the budget the Assembly must pass?
    2. Who has the legal responsibility and authority to determine whether they have met this criteria?
    3. What benchmarks do they use to determine this?
    4. Who then has the authority to say when the paychecks get pulled?
    5. Have we just shot ourselves in the foot by limiting people who are willing to run for Assembly to only those who really don’t need a paycheck?

    I don’t have the answers to these questions–except for the last one, which is “yes.” But I’d be interested to hear if anybody knows. If these are not clearly defined in the law, then we, the voters of California, have just passed another badly written initiative that will probably have unintended consequences and rightfully be challenged in court.

    Really, how many times are we going to fall for these messes?

  4. avatar chrisfinnie says:

    Interesting piece that illustrates the frequent problems with ballot propositions and raises the questions:
    1. What is the legal criteria for the budget the Assembly must pass?
    2. Who has the legal responsibility and authority to determine whether they have met this criteria?
    3. What benchmarks do they use to determine this?
    4. Who then has the authority to say when the paychecks get pulled?
    5. Have we just shot ourselves in the foot by limiting people who are willing to run for Assembly to only those who really don’t need a paycheck?

    I don’t have the answers to these questions–except for the last one, which is “yes.” But I’d be interested to hear if anybody knows. If these are not clearly defined in the law, then we, the voters of California, have just passed another badly written initiative that will probably have unintended consequences and rightfully be challenged in court.

    Really, how many times are we going to fall for these messes?

  5. avatar Cate says:

    Finally someone in state government who will stand up to these do-nothing-but-try-to-run-your-life legislators (otherwise known as democrats).

    Also, nice to hear from you Mr. Konnyu.

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