When California Controller John Chiang decided on Tuesday that legislators would not be paid, he did so by connecting two provisions in the Constitution – one approved in 2004 (Proposition 58) that required budgets to be balanced – and the other approved last year (Proposition 25) that prohibited legislative pay if the budget is not passed by June 15.
Many lawmakers have taken issue with the controller’s decision, and some have threatened to sue to get their pay reinstated.
The dispute over what constitutes “fiscal balance” has been with us for a long time, even before Prop 58. California’s state budgeting process has always been based on an agreement between the legislature and the governor about what fiscal balance means in a given year, with the Legislative Analyst’s Office (LAO) providing commentary.
That LAO commentary often deals with identifying “threats” to fiscal health – sometimes through the courts – and the ability of the administration to achieve savings in the adopted budget.
In the case of the former, the legislature and the administration bet on winning any lawsuits. In the case of the latter, the legislature often overstates savings that could be achieved by budgetary actions and sounds alarm bells when that over-statement turns into real shortfalls.
In this year’s budget, rather than relying on a five-party agreement (four legislative leaders and the governor), Governor Brown is acting like the new sheriff in town, refusing to take the legislature’s view of what constitutes “fiscal balance.” Enter the Controller, playing the role of deputy sheriff and taking the argument one step farther. In this case, Controller Chiang has woven two related provisions together to determine whether legislators get paid: the requirement that budget be balanced (Prop 58) and that the budget must pass by June 15 (Prop 25). Because the legislature accomplished the latter and missed the former, Chiang is enforcing Prop 58’s budget balance requirement through the non-payment provision in Prop 25.
Controller Chiang has taken the obvious next step in this dispute, concluding that the revenues in the budget sent to the governor last week were not sufficient to meet the level of spending included in that budget. Hence, the budget is out of balance, and lawmakers have not fulfilled their Prop 58-mandated duty.
An underlying problem is that we do not have an adequate definition of what constitutes fiscal balance. This action will either turn the Office of the Controller into a new force for fiscal prudence as deputy budget sheriff or establish a new venue for fiscal mischief stuck between the legislature and the governor. Time will tell.
Fred Silva is senior fiscal policy advisor for California Forward