Does California Need A Budget Cop?

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The one thing that the recent debate over who gets to call a California budget balanced has shown... is that perhaps the old system has finally run its course.

For generations, legislators and governors promised that the state's fiscal plan penciled out. But now, in the era of perpetual deficits and polarized politics, traditional budget balancing has been replaced by creative accounting. And maybe what the state needs is a budget cop.

My story for our weekend newsmagazine edition of The California Report looks at the broader dispute behind the week's news of Controller John Chiang declaring the vetoed legislative budget imbalanced, and thus not good enough for legislators to get paid.

And there's some empirical evidence to suggest that budgets are getting much more iffy, especially in health services and corrections. Historical budget documents that track general fund "deficiencies" -- the amount by which the state overspends in a fiscal year -- show (PDF) that six of the ten biggest underfunded budgets since 1976 have been in the last decade. In fact, three of those were the last three state budgets.

To be fair, the "deficiency bill" data doesn't always mean lawmakers were crafting budgets they knew were full of unrealistic expectations. But more and more, it does. Just consider the budget year that's now winding down; in January, finance officials had already noted a $856.8 million "deficiency" in corrections. For several years running, lawmakers have balanced the state's books, in part, on expectations to save money on prisons that, well, was never saved.

Enter Controller Chiang, who only slightly dipped his toes into the 'budget gimmicks' pool last week in crunching the numbers. "I think you have to check the underlying math," he said in a phone interview after announcing that he will not pay legislators until they approve a balanced budget.

But Chiang wasn't just doing math; after all, the budget documents ratified by the Legislature all purported the plan to be balanced. What Chiang did was to assess whether the numbers used in that simple math were reasonable.

"We're entering new territory here," said Fred Silva, a former legislative budget expert who now works for the governance reform group California Forward. "And what the controller did, was he pulled the curtain back and looked back behind the scenes and argued that it's more than arithmetic."

But Controller Chiang says his power is limited. Not only did he avoid analysis of creative assumptions like the legislative budget's reliance on selling state buildings that Governor Jerry Brown says won't be sold, but Chiang will only intervene again if a new budget is vetoed.

A spokesman says Chiang (who, while part of the executive branch, is an independent constitutional officer elected by the people) does not believe that he has the authority to intervene once the governor's signature is on the budget.

"Currently, the controller's powers are largely implied," said state Sen. Sam Blakeslee (R-San Luis Obispo), author of a new constitutional amendment that would broaden those powers. Blakeslee's SCA 12 would give the controller three days between legislative ratification of a budget and a signature by the governor to do an independent analysis. That would no doubt put the controller, in those cases where gimmicks are flimsy, in a position to tell a governor that the budget could not be signed into law -- remember the requirement of Proposition 58.

There are, though, other ways to create some sort of budget cop already in use in other states. Data compiled by the National Association of State Budget Officers shows most states' attempts to police the budget process focus on how revenues are estimated, and who gives legislators the final tally of how much can be spent. 28 states have some sort of formal revenue estimating group within state government, with many stressing the goal of a "consensus" estimate. But other states go further in fact checking the budget. In the state of Washington, there's both an independent committee that oversees revenues and an independent committee to oversee and set levels for expenditures.

"There are different models around that could bring to bear some sense of objectivity," says California Forward's Fred Silva.

But no one knows whether Chiang's action will remain the exception to the rule, or whether it will spark an effort at budget reform that -- in essence -- validates the public's perception that elected lawmakers can no longer be trusted to write sound budgets.

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • http://CABroadcasters.org Stan Statham

    Excellent budget story on the eventual/possible impact of Prop 25

  • jskdn

    “Enter Controller Chiang, who only slightly dipped his toes into the ‘budget gimmicks’ pool last week in crunching the numbers”

    Slightly seem right. According to Chiang, he declined to assert any authority over budget gimmicks excepting that the budget can’t claim savings for things the legislature failed to do that would prevent them by law. So the k-12 savings would have been fine if the legislature had suspended Prop 98 so that those saving were possible under the constitution. Similarly the tax revenues assumed in the budget required legislation that actually enacted the taxes. Chiang set out the ways to avoid his intervention by simply making unrealistic assumptions that aren’t in contradiction to other, known legal facts, even if they are likely to be seen as specious by honest observers. And even that isn’t necessary if the governor agrees to whatever budget fiction the legislature crafts by signing the budget bill. Seems like California may have a pretty low bar relative to those in other states that have budget cops.