Archive for June, 2011

California Budget, Part II: Be Careful What You Ask (Legislators) For

Sunday, June 26th, 2011

In November 2010, California voters decided to stop tolerating state legislators’ annual refusal to pass a balanced budget by June 15th each year. They passed an initiative that requires the State Controller to stop paying the errant legislators when they fail to meet their constitutional mandate to produce a balanced budget by that date. And that pay is gone forever – no retroactive pay allowed.

That strategy seemed to work: for the first time in anyone’s memory, the legislature passed a budget on June 15, 2011. Everyone celebrated, most of all the legislators, who believed they had saved their paychecks.

The celebration was short-lived: Governor Jerry Brown vetoed the budget the very next day, saying that it was not a balanced solution to the state’s financial woes. In fact, he was quoted as saying that the budget that was passed contains “legally questionable maneuvers, costly borrowing and unrealistic savings.”

Personally, I call that budget the “Save our (California legislators’) paycheck” budget.

Legislators reportedly were outraged. After all, they passed a budget, didn’t they? And didn’t it show that revenues matched expenditures?

Well, not exactly. The Governor had promised voters a “gimmick-free” budget this year, and in his view, this budget did not pass the “no smoke and mirrors” test. In fact, his assessment of a gimmick-laden budget was backed up by the State Controller’s analysis, which found that while the budget committed the state to spending $89.8 billion, it only provided revenues of $87.9 billion, leaving a shortfall of $1.85 billion.


Now legislators are REALLY mad: the Controller’s assessment came with the news that because the budget was not balanced, their pay and per diems would be suspended until they pass a budget that does meet the “gimmick-free” criterion. One Los Angeles Assembly member was quoted as saying, “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.”

Welcome to the world of tens of thousands of Californians, whose financial situations are fraught with uncertainty each year when the legislature engages in its own form of grandstanding when it chooses not to meet its constitutional mandate of passing a balanced budget by June 15th. Institutions that rely on state funding, for example, have been forced to pass their own budgets without knowing how much money to expect from the state – if any. In the past few years, the state actually decided to issue IOUs in lieu of cash because the budget had not been passed. How well do legislators think that asking one’s landlord or bank to accept an IOU in place of a rental or mortgage payment will go over? Now they have an opportunity to find out themselves.

There are at least two related lessons to be learned here:

    1. Be very specific when asking for what you want or need.

    In this case, the voter-passed initiative said the budget must be balanced. Alas, it apparently did not define the term “balanced” in a way that made it crystal clear to legislators that their constituents would no longer tolerate their annual “smoke and mirrors” approach, but instead must pass a budget that actually balances when held up to the light of day.

    2. Be careful of what you ask for.

    By putting legislators’ pay at risk (as it relates to passing a balanced budget), voters caused lawmakers to focus on passing a budget. This seems to be a good thing, doesn’t it? Unfortunately in their haste to save their paychecks, the legislators neglected to take care of a few critical details. According to the State Controller, for example, the budget relies on a variety of fees and taxes to raise revenue – but lawmakers didn’t pass the legislation necessary to collect that revenue. Apparently the initiative should have said that intentions don’t count – there actually must be mechanisms in place in order for the budget to be balanced in reality.

So we’re back to smoke and mirrors. At least the legislators are not getting paid to not produce a balanced budget, which may jolt them back to reality. In the mean time, Californians across the state are suffering – again – because lawmakers –again – aren’t doing their constitutional duty.

I can’t wait for the next step: perhaps an initiative that makes the failure to pass a truly balanced budget by the constitutional deadline a terminable offense? No waiting till the next election either: no balanced budget, no job.

What’s your suggestion for getting the message across to politicians?

© 2011 Pat Lynch. All rights reserved.

California Budget, Part I: What a Difference Accountability Makes!

Sunday, June 26th, 2011

What a difference accountability makes! Compare these two statements about the California budget process. They were made nearly a year apart by the same California Assembly person:

    “The budget?” (Dismissive wave of her hand.) “We [Democrats and Republicans in the state legislature] just have philosophical differences.”

    “I’ll do whatever it takes to get a budget passed on time.”

The first statement was made by the Assembly person to attendees at a meeting of a Long Beach City Council person in 2010, about two months after the legislature continued to be in violation of the constitutional deadline for passing a balanced budget. (They finally passed it 100 days after the deadline.) She was quoted as making the second statement to a newspaper reporter one week before the constitutional deadline for passing a balanced budget in 2011.

What got the Assembly person’s attention? In November 2010, after years of frustration and serious economic hardship foisted by irresponsible legislators on Californians who rely on the state for funding (e.g., state employees, vendors, contractors, school districts, colleges and universities, health care recipients, welfare recipients), voters finally stopped tolerating the legislature’s annual illegal activity by passing an initiative that requires the State Controller to stop paying legislators their daily rates and per diems for every day they fail to meet their constitutional duty of passing a balanced budget by June 15th each year. The initiative further specified that there would be NO retroactive pay or per diem. Going forward, legislators are accountable for actually doing the primary job for which they were elected – i.e., to pass a balanced budget on time every year that identifies the state’s priorities.

Given that legislators’ pay now is at risk, was anyone surprised that in 2011, legislators suddenly began to turn their attention toward the budget? By essentially mandating a pay-for-performance requirement related to the budget, voters created a situation in which it now is in everyone’s best interest for legislators to pass a balanced budget on time. And it seemed to be effective: for the first time in anyone’s memory, the legislature passed a budget by June 15th. Whew! Legislative paychecks were saved. Accountability works!

Or does it? Stay tuned for Part 2….

© 2011 Pat Lynch. All rights reserved.