Capitol Alert

Advocacy groups and lawyers are mulling over their next steps in response to Gov. Arnold Schwarzenegger's $489 million in line-item vetoes yesterday, the bulk of which were directed at social service programs.

The main crux of the issue -- if you believe there is an issue, which the governor's team firmly does not -- is whether Schwarzenegger can use his line-item veto authority to expand the size of legislative spending reductions.

The California Constitution says this in Article IV, Section 10:

(e) The Governor may reduce or eliminate one or more items of appropriation while approving other portions of a bill. The Governor shall append to the bill a statement of the items reduced or eliminated with the reasons for the action. The Governor shall transmit to the house originating the bill a copy of the statement and reasons. Items reduced or eliminated shall be separately reconsidered and may be passed over the Governor's veto in the same manner as bills.

In a normal budget act, there is little question that the governor can use his line-veto authority because the fine language appropriates money to each sector of state government. The governor's office believes there should be little question in this case, as well. Most of the 437-page main budget revision bill AB 1(4x), simply replaced the appropriation language from February's budget bill with lower amounts -- and for those sections, it's possible that Democrats would concede the governor is within his authority.

But Democrats, foreseeing that the governor may try to use his line-item authority to cut deeper, tried to veto-proof social service programs. In the last six pages of the bill, they inserted special "control language" that did not replace the appropriation amounts from the February budget for social services. Instead, the language in the revision bill said the February amounts were "hereby reduced." They argue the constitution specifies that the governor can line-item veto only appropriations, not reductions, and therefore, he is acting outside his authority.

Assembly Speaker Karen Bass, D-Los Angeles, has asked for an opinion from Legislative Counsel. Democrats believe that because they are able to pass spending cuts on a majority-vote basis, there is legal precedent for treating cuts differently from appropriations, which require a two-thirds vote.

While the governor signed the budget revision yesterday, Democratic state Controller John Chiang is charged with carrying out his budget. Earlier this week, Chiang spokeswoman Hallye Jordan said the controller's legal staff was reviewing whether the governor's line-item vetoes were constitutional.

If Chiang does carry out Schwarzenegger's vetoes, expect advocacy groups to file suit against Chiang. If Chiang does not carry them out, expect another legal battle between Schwarzenegger and the controller.

Those actions may be rendered moot, of course, if Democratic leaders and Schwarzenegger can find some way to secure new revenues that mitigate those cuts in the Legislature. While the Assembly last week scuttled the oil drilling project ($100 million) and the borrowing of local government gas tax money ($1 billion), Democrats could reopen those items to reverse the social service cuts.

Department of Finance Director Mike Genest predicted Tuesday that Democrats would not challenge the vetoes because "they have something to lose, too." His comment suggested that Democrats know full well that it is difficult to find another $489 million in savings -- and they might be better off politically allowing the governor to bear the brunt of criticism for the cuts he did implement yesterday.

Democratic leaders issued angry response statements Tuesday. But it remains to be seen how they will proceed once the Legislature resumes next month.