Will John Chiang Block An Illegal California Budget?

There are a lot of adjectives being used to describe the long-delayed California state budget passed in the wee hours of the morning on Sept. 16, few of them printable and none complimentary: “disgraceful,” “stop-gap,” “sham,” to cite just a few. But the most pertinent adjective now is “illegal."

A little history: In 2004, near the beginning of California’s long budget nightmare, newly elected Gov. Arnold Schwarzenegger, and most of California’s leaders, offered voters a two-part deal. Approve $15 billion in deficit borrowing to get the state through the budget crisis, the state’s grandees told voters, and then we “tear up the credit card.” Voters took them at their word. They approved both Proposition 57, authorizing the unprecedented borrowing, and Proposition 58, called “The California Balanced Budget Act,” forbidding the state from further deficit borrowing and making it illegal for the Legislature to pass, or the governor to sign, a budget in which spending exceeds revenue.

“Overspending has led to serious shortfalls which threatens the state’s ability to pay its bills and access financial markets,” Schwarzenegger wrote in the ballot pamphlet. “This proposition is a safeguard against this EVER HAPPENING AGAIN. Proposition 58 will prevent the Legislature from ENACTING BUDGETS THAT SPEND MORE MONEY THAN WE HAVE.” (Emphasis in the original.)

The budget just passed by the Legislature is plainly illegal and unconstitutional under those provisions. Everyone understands that it is unbalanced, and that lawmakers have attemped to make it appear otherwise with gimmicks and borrowing, including forced borrowing from taxpayers by mandating that their wage withholding and estimated tax payments be set at levels that exceed their tax liability.

Most Californians probably have no legal recourse against this illegal act. But one Californian does: Controller John Chiang.

As controller, Chiang took an oath to defend the constitution, and as the state’s chief financial officer, he is the official who actually doles out the money the budget appropriates. He has the opportunity –– and the duty –– to say that the budget is illegal under the terms of Proposition 58, and that he will not recognize or honor it. That would undoubtedly trigger a court challenge, but I doubt that any court in the state would be prepared to override the judgment of the controller and rule that the gimmick-ridden mess passed by Legislature can meet the Proposition 58 constitutional test.

Some will ask why California would want to prolong this year’s budget battle. Legislators are weary of it. (Which perhaps explains why the Democratic leadership of the state Senate committed the greatest act of political malpractice in recent California history by surrendering to the minority Republicans’ budget demands and then graciously permitting most Republicans to vote against the misbegotten result.) The voters are angry. The temptation to turn to other subjects, and revisit the budget next year is strong.

But failing to balance the budget now will only increase the damage to the future. The state’s structural deficit still yawns. With the effects of the housing bust now spreading to the larger economy, a real ––and perhaps very deep –– recession looms, which will widen California’s budget gap. When the voters passed Proposition 58, they were assured that this kind of budget irresponsibility would never happen again.

John Chiang has shown he is willing to stand up and defend the paychecks of state employees. Is he also willing to stand up for the promises made to California’s voters and the integrity of the state’s finances?