May 27, 2018
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California lawmakers feel financial loss for late budget

By Judy Lin, The Associated Press

SACRAMENTO, Calif. — Few tears are being shed for California lawmakers.

The man who cuts the state’s paychecks decided to enforce a law this week that all 120 members of the Legislature will not be paid their salaries until they balance the state’s annual spending plan by closing its $9.6 billion budget deficit.

Democratic lawmakers say they followed the law by passing a budget last week and should not be penalized because Gov. Jerry Brown vetoed it.

They criticized the decision, saying the first use of a law some of them pushed for violated the separation of power between the executive branch and legislators. One lawmaker fretted about having to tell his family that they can’t pay their bills.

At a time when the state is borrowing heavily, cutting programs and suffering from the lowest credit rating in the U.S., there was little sympathy for a legislature that most Californians don’t think highly of, anyway.

“Their job is to get the budget passed so that the people who depend on them aren’t screwed,” said Dan Dougherty, 57, a Vietnam veteran in San Francisco. “These guys are making money and are representatives of the people.

“They need to do their jobs and get together,” he said. “Republicans and Democrats need to come to a middle ground.”

State controller John Chiang’s decision holds at least the potential to end budget shenanigans and return a measure of fiscal respect to a state that is the world’s eighth-largest economy.

Chiang determined that lawmakers failed to meet Proposition 25, an initiative approved by voters last year that is aimed at getting the Legislature to approve balanced budgets by their constitutional deadline of June 15.

The measure lowered the budget vote threshold from two-thirds to a simple majority. As an incentive for voters, Prop 25’s authors added a provision that halts pay and expenses for lawmakers should they fail to meet the budget deadline.

When Democratic lawmakers passed a budget this month, Gov. Jerry Brown vetoed it. Chiang reviewed the package, finding that it did not meet the requirements for a balanced budget. He said portions were “miscalculated, miscounted or unfinished.”

Chiang said it committed the state to $89.8 billion in spending but provided $87.9 billion in revenues, leaving a hole of $1.85 billion.

“Part of the reason the budget didn’t balance is that they were engaged in some of the past practices that worked in earlier years but that do not work today under the new reality,” he said.

Brown said he reluctantly vetoed the package because it perpetuated the state’s history for budget gimmickry by borrowing billions and making questionable legal maneuvers.

In years past, deadlines meant little to lawmakers.

The budget for the current fiscal year was signed last October, a record 100 days after the start of the fiscal year. Just five budgets since 1991 have been passed by the Legislature and signed by the governor before July 1.

The reality of going without a paycheck hit some lawmakers hard.

“I halted a fulfilling private sector career path to enter public service,” lamented Assemblyman Mike Gatto, D-Los Angeles. “I now have to explain to my wife and daughter that we won’t be able to pay the bills because a politician chose to grandstand at our expense.”

Gatto is one of many who rely on the job as a primary source of income.

According to the National Conference of State Legislatures based in Denver, the full-time California Legislature is the highest paid in the nation. Many legislatures serve part-time.

With lawmakers forfeiting their salary and daily expense pay, taxpayers are saving $48,603.50 a day.

For legislators earning $95,291 a year, the loss of salary works out to $261 each day. For leaders of the Senate and Assembly who make $109,584, that works out to $300 each day. Most lawmakers also lose out on a $142 per diem for travel and living expenses.

State lawmakers also won’t get retroactive pay.

In the past, their pay would stop once the new fiscal year began without a new budget, but they were able to recover their salaries when one ultimately passed. Although budget delays happen nearly every year, only nine times in the past 30 years has the budget stalemate dragged on so long that lawmakers missed at least a month’s worth of pay.

Now under Prop 25, they never get the money back.

The leader of the state Senate warned that Chiang’s decision could violate the state’s separation of power between the legislative and executive branches of government. Lawmakers could sue.

“The controller’s decision today sets a dangerous precedent,” said Senate President Pro Tem Darrell Steinberg.

Assembly Speaker John Perez, a Democrat and a former union political director, joined forces last year with labor groups to pass Prop 25. After the election, he said the measure would positively affect the budget process.

Perez struck a critical tone Tuesday.

“While I respect the controller’s efforts to render a decision within the guidelines of our Constitution, I believe he was wrong,” Perez said in a prepared statement. “I continue to maintain that the Legislature met our constitutional duties in passing the budget.”

California’s new fiscal year begins July 1 and that means the governor and lawmakers have just days to work out a compromise.

Standard & Poor’s credit-rating agency in San Francisco said Tuesday that California was “at a crossroad” in structuring its budget, debt and ultimately its credit rating. A poor rating means it costs the state more to borrow money, which is ultimately paid back by taxpayers.

Gabriel Petek, a senior director of S&P credit market services, said if lawmakers go into another long standoff, the state won’t be able to make short-term loans, which would send the state into yet another cash crisis and force more IOUs.

But Emily Raimes, a vice president with Moody’s credit research firm, said last week’s budget “may indicate that legislators are more eager to pass a budget to get paid. Now that they know it also must be a balanced budget, they may pass something else earlier than we’ve seen in prior years.”


Associated Press writers Don Thompson in Sacramento and Jason Dearen in San Francisco contributed to this report.


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