Proposition 25: No Budget, No Pay? Actually, No Teeth

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In 2010, I supported Proposition 25 which was sold to the voters as a way to make Legislators accountable for passing a balanced budget.  Prop 25 said essentially if the Legislature did not pass a balanced budget by the Constitutional deadline of June 15th, they would not get paid.

This week, we saw any credible enforcement of the measure defanged when a judge said the state controller had no authority to block the Legislature’s pay last year when he determined that the budget they had passed was not balanced.

Once again, the voters are the victims of a bait-and-switch tactic which will further undermine the Legislatures’ already-historic credibility deficit and lead to un-financed and un-financeable budgets in the foreseeable future.

Proposition 25, The Majority Vote for the Legislature To Pass The Budget Act, made it easier for lawmakers to pass a balanced budget, while also punishing them if they failed to do so by withholding pay and perks until a balanced budget was passed.  Voters approved the measure, embracing its ethic of “If you don’t do your job, you don’t get paid.”

The problem and chief criticism of Prop 25 was and is who determines what constitutes a balanced budget?

Last year, Legislators passed a budget, but one that state controller John Chiang determined was not balanced.  According to Chiang, although there technically was a budget passed by the June 15th deadline, it contained a $1.85 billion deficit, and didn’t meet the legal requirement that must be balanced.  He asserted that he was required by the terms of Proposition 25 to stop paying Legislators until there was a balanced budget.  Legislators didn’t receive pay for 12 days – costing each member about $400 a day – until they reached a new budget deal with Governor Brown.

Outraged by Chiang’s actions, Senate Majority Leader Steinberg and Assembly Speaker Perez sued asserting that Chiang improperly interpreted the voter-approved law requiring that lawmakers failed to pass the annual budget by June 15th.  They won.

Their victory is a decidedly ominous one.  The Legislature meets the requirement to pass a budget that “on its face” proposes spending that does not exceed revenue, according to Sacramento County Superior Court Judge David I. Brown.  This means the Legislature can pass any budget that relies on shaky fiscal assumptions, accounting gimmicks, or legally tenuous fiscal plans and call it “balanced” so that they can keep getting paid.

Laughably, when they weren’t getting paid last year because of Chiang’s determination to follow the requirements of Prop 25, Legislators complained bitterly that they “couldn’t pay their bills” and lamented the fiscal hardship.

What about the taxpayers who experience a disruption of services, or worse, no services when there is no budget and the state of California does not pay its bills?  Budget stalemates are an enormous hardship on small businesses, schools and health care providers paid through Medical – providers that care for the most vulnerable among us: our sick, elderly and children.

Judge Brown’s ruling says that the Legislature alone determines what constitutes a balanced budget.  This is bad news for the voters, who were sold a toothless tiger, for the taxpayers who can expect more phony budgets that arrive months late and for the fiduciary credibility of the state of California.