California's budget deadline doesn't work as voters think

June 15, 2021 5 AM PT

SACRAMENTO — The California Legislature on Monday approved a $264-billion state budget blueprint, far-reaching legislation to boost the state’s COVID-19 recovery and comply with a state constitutional mandate that lawmakers pass a plan by June 15 or forfeit a portion of their salaries.

But it will not be the final budget of record for the fiscal year that begins on July 1.

The most senior member of the Legislature, state Sen. Jim Nielsen (R-Red Bluff), publicly called out what budget analysts and lawmakers knew: The bill is largely a placeholder, not the finished product that voters might have expected.

“This is a fake budget,” Nielsen said during Monday’s Senate budget hearing. “It’s a feel-good budget, a ‘let us get paid’ budget. But what we’re voting on is not going to be the budget.”

Nielsen’s words were somewhat hyperbolic — the proposal is hardly “fake,” as a number of the provisions in the 920-page bill align with Gov. Gavin Newsom’s budget preferences and will almost certainly appear in the final plan. Both the governor and legislative Democrats support record spending for public schools, new stimulus payments for millions of Californians and expanded government services funded by a tax windfall of some $76 billion.

The underlying point of Nielsen’s criticism, however, seemed reasonable: How can the budget meet the deadline if it’s not yet completed?

The answer rests with the expectations set by Proposition 25, a 2010 ballot measure approved by voters in the aftermath of arguably the worst decade of governance in California history. In nine of those years, the state started the fiscal year on July 1 without a budget in place. In 2009, a bitter stalemate in the face of a large projected deficit forced officials to sell IOUs to cover the state government’s bills.

The most overdue budget in state history was enacted just three weeks before voters approved Proposition 25.

In doing so, they removed the most obvious impediment to timely passage of the budget: a constitutional provision from 1933 that required approval by a two-thirds vote in each legislative house. Over the decades, that meant at least a handful of Republican lawmakers had to sign on, even as bipartisanship faded in the 1990s and 2000s.

But previous efforts at allowing passage of a state budget on a simple majority vote had failed. And so supporters of the 2010 effort added a political sweetener to “hold legislators accountable for late budgets,” as a spokesperson for Proposition 25 said in one TV commercial. In that same advertisement, a slogan later flashed on the screen in bold, capital letters: “NO BUDGET, NO PAY.”

Lawmakers would forfeit all salary and expense payments for every day after June 15 that the budget wasn’t passed, using a long-standing constitutional deadline that had been routinely ignored.

If punctual budgets were the goal, Proposition 25 has worked.

California has begun every fiscal year since its passage with a budget in place. Because Democrats have maintained sizable legislative majorities and consistently held the governor’s office, they’ve been able to write spending plans without the approval of Republicans. Budget negotiations in Sacramento have become more like family disagreements than the political brawls of the past.

Perhaps even more importantly, California’s economy has consistently produced more than enough tax revenues to pay the bills over most of the past decade. While lawmakers have quarreled over where to spend the money, the debates are less caustic than those in years past over where to cut back.

“What we face today is that we are in an unprecedented position to make transformative investments,” state Sen. Nancy Skinner (D-Berkeley) said during the budget debate Monday.

But in some ways, the ballot measure that created a firm deadline for budget passage also made deadlines less meaningful.

In six of the 10 years since Proposition 25 took effect, including this year, legislators failed to finalize the budget by the June 15 deadline. Subsequent details were later passed through the use of budget “trailer bills,” a nickname meant to convey that each proposal is legally linked to the main spending plan.

But the link can sometimes be tenuous, with a trailer bill including a meager appropriation that counts as part of the budget.

“For good or for bad, the trailer bills end up making a number of policy changes that may or may not directly be a part of the budget itself,” said Chris Micheli, a longtime lobbyist.

Partisan politics is at the heart of one of this year’s budget trailer bills, a proposal introduced last week that will allow Democrats to speed up the election in which voters will decide whether to recall Newsom from office. That change to the election process can be made as soon as Newsom signs the bill, likely by the end of the month.

Legislative records show that Democratic lawmakers introduced 176 bills between the two houses in January that could be used as trailer bills through next summer.

“The budget process has now become a session-long affair with very little transparency provided to the public,” state Sen. Melissa Melendez (R-Lake Elsinore) said.

Chris Hoene, the executive director of the California Budget and Policy Center, said it’s not surprising that the June 15 deadline did little to flesh out the state’s ultimate budget needs for the current fiscal year and the one that begins July 1 — during which resources and needs were complicated by the COVID-19 pandemic.

“The scale of what’s not settled is so much larger” than most years, Hoene said. “There just hasn’t been as much time to get the details in place.”

Even so, legislative leaders know that the only legal requirement is the one they cleared with Monday’s vote.

Tuesday marks the 10th anniversary of the first and most substantial test of the Legislature’s powers under Proposition 25. In 2011, then-Gov. Jerry Brown vetoed the budget sent to him by his fellow Democrats, calling the spending plan “unbalanced.” One week later, then-Controller John Chiang said he would withhold legislative pay as a result.

The courts ruled that Chiang had overstepped his role and that lawmakers had done exactly what voters had told them to do under Proposition 25.