Dan Walters

Dan Walters: California's fiscal mess put in focus by recent events

Published: Friday, Apr. 27, 2012 - 12:00 am | Page 3A
Last Modified: Tuesday, Feb. 26, 2013 - 8:16 pm

California's fiscal mess – which is more political than financial – was brought into razor-sharp focus Wednesday by three events.

First was Sacramento Superior Court Judge David I. Brown's ruling that Controller John Chiang violated the state constitution last year when he cut off legislators' salaries by invoking a newly passed constitutional dictum that they would lose pay if they failed to pass a budget by June 15.

Democratic lawmakers had passed a 2011-12 budget before then, but Gov. Jerry Brown immediately vetoed it as being hopelessly unbalanced. Chiang then cut off their paychecks.

Brown quickly tossed legislators a lifeline by declaring, as if by miracle, that the state would get an extra $4 billion in revenue.

They then passed a "balanced" budget and got their salaries restored.

Later, legislative leaders sued Chiang, challenging his authority, and Judge Brown declared, in essence, that the Legislature is the sole judge as to whether its budget was balanced, thus confirming that the salary penalty was just a political ploy to persuade voters to pass a ballot measure eliminating the two-thirds vote requirement on budgets.

A few hours after Judge Brown issued his ruling, the Legislature's budget analyst, Mac Taylor, confirmed what everyone in the Capitol already knew, that the $4 billion in extra revenue was just fairy dust and the supposedly balanced budget that was ginned up to placate Chiang is likely to wind up $5-plus billion in the red.

That would seem to make writing a 2012-13 budget even more difficult, but Brown and legislators are planning an instant replay.

They'll base a new budget on an assumption that Brown's income and sales tax package will be approved by voters and generate about $9 billion.

The tax measure is largely weighted toward the capital gains of high-income taxpayers – the same sector on which last year's phantom $4 billion was based. And Taylor believes that the measure's revenues, therefore, are overstated.

In all likelihood, therefore, the budget that the Legislature will pass before June 15 to protect its paychecks will be based not only on passage of a tax package, but on one whose proceeds are very uncertain. It will likely be a budget that will be no more balanced in real-world, hard-dollar terms than this year's bogus budget.

Wednesday's third event was release of a new voter poll by the Public Policy Institute of California, a survey that found just a bare majority of voters are inclined to support the governor's taxes.

So the new budget will be more wishful thinking than reality – or perhaps more prayer.

Brown told a gathering of pro-tax religious leaders Thursday that securing a decent share of revenue from high-income taxpayers "who have been blessed" is a moral imperative.

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