As we noted last week, a rarity happened in that the Legislature passed a budget on-time but saw it vetoed by Governor Jerry Brown (D). If the Governor had signed it, it would have been just the fifth budget in 19 years to have been passed prior to the beginning of the fiscal year on July 1. Instead, Brown rejected the budget as being too gimmick-ridden, and California will likely see the start of another fiscal year without a budget.
California voters are familiar with their elected officials’ inability to get a budget enacted on time. In 2010, they approved Proposition 25, which:
- Lowered the requirements to pass a budget from a two-thirds vote to a simple majority, so long as as no taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increases are involved (in which case, two-thirds is still required); and
- If a budget is not passed by June 15, state legislators forfeit their pay until it is passed.
The question arose – does “passing” a budget that is not balanced and that the Governor vetoes still count as “passing” it for the purposes of getting paid? The latter requirement was thrown in to provide legislators an added incentive to pass a budget on time. The provision does not specifically require that the budget be signed by the governor or be balanced.
This is not the first time this “escape hatch” has been noticed within the proposition. State Controller John Chiang, California’s chief financial officer, noted that because the state constitution requires the budget to be balanced and signed by the governor, a budget is not “passed” unless it is balanced and signed by the governor:
“In passing Proposition 25 last November, voters clearly stated they expect their representatives to make the difficult decisions needed to resolve any budget shortfalls by the mandatory deadline, or be penalized. I will enforce the voters’ demand.”
Yesterday, Chiang released a press release that stated that the budget was not balanced and actually had a $1.85 billion shortfall. Some of this money was reported to come from over $700 million in proposed fees and taxes that were either not approved by two-thirds of the legislature or had no means of collection.
As a result, state legislatures will forfeit any pay and living expenses “until the day the budget is presented to the governor.” Only time will tell how much of their $95,291, the state legislators are willing to give up before finishing the budget.
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