Crane Might Fly With Budget/Pension Deal (Or Not): We Will Likely Be in Suspense Until Next Wednesday
Regent-designate David Crane was appointed in the waning moments of the Schwarzenegger regime. Crane is noted for favoring the Schwarzenegger-Whitman approach to public pensions. That might make it unlikely under normal circumstances that the Democrats in the legislature would bless his last-minute appointment. Note that if they don’t approve Crane, that denial of a seat would give Governor Brown the opportunity to name someone else.
However, Crane has lately been writing that unions should not be blamed for the pension problem, which might make his case more palatable to legislative Democrats – particularly in the context of budget negotiations and the current wheeling and dealing. For details on Crane’s recent writings, see http://blogs.sacbee.com/the_state_worker/2011/06/former-schwarzenegger-official.html. Moreover, Gov. Brown seems to have reached some kind of pension deal with Republicans, details yet to be disclosed. From the LA Times website:
…Brown said he and Republican lawmakers are close to a budget deal that would include changes to the state pension system, a temporary limit on state spending and streamlining of some regulatory reforms. The linchpin of the deal is a five-year extension of higher sales and vehicle taxes, and an increase in sales tax that voters would be asked to weigh in on this fall.
A handful of Republicans have been talking to Brown for weeks about a budget compromise. They have been adamant that any deal include changes to environmental rules, pensions and limiting state spending, and that any tax extension or increase occur only after a public vote.
“We’re very close on all those issues,” Brown said. “We’re not even arguing over these things. Right now, this tax question is the sticking point.” …
So it is possible that a blessing of Crane could be part of the deal since Brown seems already to have conceded something on pensions. As this blog has repeatedly warned, a pension proposition put on the ballot as part of a budget deal could override the Regents’ December action on the UC pension. Although we have repeatedly noted that the Regents and UCOP should be in touch with the governor on that matter, there is no sign that such discussions have occurred.
The legislature is under pressure to pass a budget by the constitutional deadline of June 15. In the past, June 15 was not a particularly critical date despite the constitutional mandate, since there was no penalty for not meeting that deadline. July 1, the start of the fiscal year, was more critical since various state expenses – including legislators’ salaries – ceased to be paid until a budget was enacted. Then they were paid retroactively. However, last year voters approved a proposition that dropped the 2/3 vote requirement to pass a budget but included a provision that legislators do not get paid for each day there is no budget after June 15. They don’t get paid retroactively when a budget is finally enacted, unlike the former system.
The budget has to be “balanced,” but that is balanced in the sense that there is balance on paper. There is no requirement that the budget must turn out to be balanced in practice. The balance could assume that voters will eventually approve tax extensions. And all of the usual budgetary miasma that has been cited on this blog can be included, e.g., de facto borrowing treated as revenue, etc. But tax extensions can only be assumed if there is a prospect that voters will approve them. For the legislature to put a proposition on the ballot to give voters that chance would require a 2/3 vote and, therefore, some GOP support. A proposition could be put on the ballot via the initiative/petition process but no one has begun such an effort.
Even if the budget contains wrong numbers, we won’t know what they are until next week by the June 15 deadline (next Wednesday). In the meantime, we will be in suspense. Sorry about that:
