June 15

As the image on the left indicates, all kinds of things are scheduled for Friday, June 15.  However, among them is a constitutional deadline for the legislature to pass a state budget.

In the past, despite the constitutional requirement, June 15 was not especially significant since the fiscal year doesn’t start until July 1. The date that really mattered was July 1 because if there is no budget then, the state loses authorization to pay certain bills.

Going back to the Great Depression, California had rule requiring a 2/3 vote to pass a budget.  Especially beginning in the 1990s, there began to be repeated episodes in which no budget was passed by July 1 and the state went without a budget with increasing consequences, sometimes into September.  In 2010, however, voters changed the 2/3 rule for enacting a budget to a simple majority.  Part of the “deal,” however, was that if the legislature had not passed a budget by midnight June 15, legislators would not be paid for days without a budget.

The 2/3 requirement for a tax increase or for putting a tax increase on the ballot by legislative action remains in force.  Last year, after waiting futilely for the governor to negotiate a deal with enough GOP legislators to put a tax extension on the ballot, the legislature slapped together a quick budget to meet the June 15 deadline.  The governor vetoed that budget to great public applause.  But by itself, that action would not have prevented the legislators from being paid since a budget had been enacted.  However, state controller John Chiang – the state’s paymaster – refused to pay the legislature.  His refusal was widely reported – erroneously – as due to the fact that he did not consider the budget to be realistically balanced.  Actually, realism had nothing to do with it, as subsequent events demonstrated.  Chiang’s refusal was based on technical errors that the legislature had made in the hasty budget it enacted.

Subsequently, the legislature enacted a budget that assumed a phantom $4 billion in extra revenue.  Both the governor and the controller approved but the phantom money (surprise!) did not appear. There was a legal challenge to the controller’s action and a court decision saying he had no power to withhold paychecks; it was up to the legislature to determine if it had passed a proper budget.  On the other hand, the legislature did not ask the court to reimburse its members for the pay that was lost – since that would have created a public outcry.

As of this writing, the governor and the legislature seem not to have agreed on a budget deal and the deadline is Friday, midnight.  It’s not entirely clear to me what would happen if the controller again withheld pay, despite the court decision, if the deadline passes with no budget.  Legally, he would be on shaky grounds.  Politically, he would again have taken a very popular step.  Last time, the legislature did not demand to be reimbursed for lost pay, although it would seem that its members were legally entitled to be reimbursed. Would the unpopular legislature this time demand to be paid?

The state controller is normally a relatively obscure position, one rarely in the news.  (How many voters could tell you who is state controller or how the controller position differs from the state treasurer?)  No one who has been controller hasn’t felt the urge to be governor in the future.  So if there is no budget by June 15, midnight, keep your eye on Chiang.

And if there is a budget, we will have a better idea of what kind of funding UC might expect.  It won’t be a complete idea, however, since the governor could veto the budget or sign it and make line-item vetoes.

In any case, on June 15, midnight could be special:
[youtube=http://www.youtube.com/watch?v=9XUnfIB-f5s&w=320&h=195]