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Friday, May 24, 2024 | Back issues
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California Budget Fiasco Checkup Was Out of Line

SACRAMENTO (CN) - The California controller has no authority to check lawmakers' work when they claim they've passed a balanced budget, a state appeals court ruled.

The dispute stems from the budgeting process for the 2011-12 fiscal year when the Legislature passed what it claimed was a balanced, $86.6 billion budget. Gov. Jerry Brown vetoed the bill, saying it did not balance spending cuts with tax increases to address "big deficits for years to come."

State controller John Chiang then looked at the vetoed budget to determine whether it complied with state constitutional requirements for a balanced plan. He found that lawmakers based revenue projections on four bills they had yet to pass, and declared on June 21, 2011, that the Legislature missed its mandatory deadline of June 15 to pass a balanced budget.

Accordingly - and under the terms of a 2010 voter-approved constitutional amendment - Chiang ordered lawmakers to forfeit their salaries until they passed a truly balanced budget. The Legislature finally passed a signature-worthy spending package on June 28, and the controller withheld $583,000 in pay for the 12-day standoff.

Lawmakers sued Chiang in 2012, asking a judge to declare that the controller lacked the authority to decide whether a budget they've passed is indeed balanced and to block their pay. After oral arguments, Sacramento Superior Court Judge David Brown agreed and ordered Chiang to pay the Legislature.

A panel for the Third Appellate District in Sacramento upheld that decision Friday, finding that Chiang cannot second-guess the Legislature's revenue estimates to enforce the balanced budget provision.

"The balanced budget provision does not prescribe the manner in which the Legislature must calculate this estimate, the nature of the revenue sources the Legislature may or may not take into account, or any role for the controller in overseeing the estimate," Judge M. Kathleen Butz wrote, citing the state constitution. "The constitutional text does not in any way expressly support the controller's assertion that any revenue bills (which cannot be part of the budget bill itself) must be enrolled and sent to the governor for signature before the constitutional deadline of June 15. Indeed, the controller overlooks the extent to which California balances its budget with federal funds, the authorization for which is entirely outside the control of the Legislature (and the predicted total of which bespeaks more legislative artistry than accounting skills)." [Parentheses in ruling.]

"Given this absence of any express language to support the controller's asserted concern with vouchsafing the absence of any phantom revenues included in a budget bill's estimate, it would amount to 'inappropriate judicial interference with the prerogatives of a coordinate branch of government' to endorse his intrusion into the budget process under 'the guise of interpretation,'" Butz continued, citing a 1998 appellate court ruling in Schabarum v. California Legislature.

This does not make the balanced budget provision "a dead letter," since the governor has the power to enforce it by either vetoing the budget package or using the line-item veto power to bring spending in line with revenue, according to the ruling. Failing that, the courts - not the controller - must decide on the constitutionality of any budget lawmakers consider to be balanced, the judges added.

"It is true that the Legislature (to which the Constitution has delegated the task of defining the duties and functions of constitutional officers) has vested the controller with the responsibility for determining the lawfulness of any disbursement of state money," Butz wrote. "But this is primarily a ministerial function in which the controller is not authorized to review and approve or reject an agency's approval of a disbursement if it is within the scope of the legislative grant of discretion to the agency; the controller's limited discretionary function involves the determination of whether the factual circumstances of the claim come within the scope of the agency's approval."

She concluded: "Consequently, where the Legislature is the entity acting indisputably within its fundamental constitutional jurisdiction to enact what it designates as a balanced budget, the controller does not have audit authority to determine whether the budget bill is in fact balanced. In addition, it would not make any sense as a matter of statutory interpretation to believe the Legislature granted such statutory review authority in defining the controller's powers where the Legislature in turn can ultimately override the controller's decision. As a result, the controller is not a party to the enactment of the budget bill."

Chiang called the ruling "a setback for important reforms voters made to California's budget process."

"The ruling adopts the Legislature's argument that a budget is balanced if it - without any independent verification - says it is so," Chiang said in a statement.

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