The Sacramento Kabuki dance continues. As I publicly predicted, our state legislature (well, the Democrat majority) passed a state "budget" on time -- to avoid forfeiture of pay for tardiness. And as I predicted 10 November, 2010, Governor Jerry Brown has vetoed the absurd submission. The only surprise is the speed with which Brown rejected the legislators' fantasy plan.
The budget submitted was a particularly imaginative piece -- a disjointed combination of bogus revenue projections, even more accounting gimmickry, illegally passed tax increases and sources of revenue that this same legislature was bound to reject when the follow-up bills came before them (such as selling state government properties). Brown did the only possible thing he could -- he vetoed the mess.
Oddly enough, it's doubtful that many state legislators are upset with the veto. Indeed, it Brown HAD approved it, then the repercussions later in the year when the fraud became apparent would have been more harmful politically than the veto today.
Now comes the part that will shock the voters -- something that will become apparent in the next 24 hours of news analysis. Most will assume that, with the governor's veto, the forfeiture of all legislative pay will commence, as the budget is now past the 15 June deadline. But when Prop 25, the "Majority Vote for Legislature to Pass the Budget," was passed, few understood that it mandated only that a budget -- ANY budget -- must be passed by the state legislature by 15 June. A gubernatorial veto has no effect on the satisfactory completion of that requirement.
As events are developing, there now appears that there is a decent chance that the legislators won't get paid after all. The legislature didn't pass a "balanced budget" as required.
If CA State Controller John Chiang (or perhaps Treasurer Bill Lockyer) wants to get in the game, one or both might make such a determination, thereby blocking legislators' pay from 15 June until whenever they pass a REAL balanced budget.
Indeed, Chiang has already announced that he is reviewing the budget submission to see if it met the criteria. Probably we will have his "ruling" within a day or two.
Of course, the state legislature hasn't passed a TRULY balanced budget for many years, and no state controller or treasurer has taken action. But perhaps this latest version is SO unbalanced that Chiang will be emboldened to take this step. Such a move by either Democrat official would certainly would help them politically if they later want to run for governor -- or U.S. Senator.
So now the legislature will have to come up with something more closely approximating a real budget -- ya know -- where spending roughly matches revenue, and without illegal tax increases. In short, the normal budget mess likely will continue into the summer, and maybe even into the fall. Of course, the final product will be another work of fiction, but just not quite as unbelievable as the 15 June submission. The only thing that might hurry things along will be voter outrage that the legislature didn't get their pay docked.
As so often happens, the voters who were willing to trade a taxpayer protection (in this case, the 2/3 majority vote needed to pass a budget) to force a timely budget now have nothing to show for it but egg on their faces. Snookered again.
For convenience (and for skeptics of my clairvoyance), here's the column I wrote predicting all this right after the passage of Prop 25 last fall:
NOVEMBER 9, 2010 11:59AM
Jerry Brown may be a surprisingly good governor
Here's a column I bet you didn't see coming -- me praising Jerry Brown as governor. Well, it's a bit more nuanced than that, but nevertheless, I'm predicting that Governor Brown will not be nearly as bad as fiscal conservatives are expecting.
Jerry Brown May Make a Surprisingly Good Governor
by Richard Rider, Chairman, San Diego Tax Fighters
Granted, Jerry Brown is crazy. Proof positive is that he ran for governor of California, a doomed state. But he just might be crazy in a good way.
Who knows what Governor Brown will do? I don't. I doubt Jerry knows. But oddly enough, I predict that -- from a fiscal conservative viewpoint --he'll be far better than any of us imagined.
Not great. Perhaps not even good. Just better than conservatives expect -- alot better.
I would have preferred Meg Whitman as governor. But not by much. I viewed her as Arnold in a skirt. I ended up voting for the Libertarian Dale Ogden, and felt good about it afterwards.
Jerry Brown is an iconoclast who has reached the final office of his long political career. He was put back in the governorship by the Democrats -- especially the labor unions. But there is no political reason for him to pander to his supporters.
This is his legacy office -- the one he's going to be most remembered for. So, like most politicians, naturally Jerry Brown will be concerned with his swan song performance.
Jerry is facing monstrous state problems. A bottomless budget deficit. Unfunded pension obligations that are simply unfathomable. A Democrat legislature that now can pass damn near any budget it wants by simple majority vote. A high speed rail project that is a spectacular financial train wreck bearing down on us all. A hara-kiri global warming bill (AB32) that will gut the state's economy starting in 2011. High unemployment, high taxes, a terrible business climate. Little prospect for economic improvement. The likely acceleration of departing businesses and productive/wealthy people.
I'm predicting that Jerry doesn't want all that to happen -- certainly not on his watch. And, contrary to what people think, he's smart enough to know he can do much to reduce the problems.
So here are my perhaps reckless predictions:
- First the easy one -- this spring Jerry WILL propose tax increases. But they will likely go to a citizen vote by summer, and likely will be turned down. I suspect he KNOWS that they will be turned down. But he's gotta try. It's in the Democrat DNA.
- The legislature will extend the 1% sales tax and most other "temporary taxes" they passed a couple years ago. They will get the needed legislative 2/3 vote by culling out a couple weak RINO's from the GOP herd. The doomsday imagery of ending these taxes will just be too much for some Republicans -- and for the public. Jerry will support the tax extensions.
- In a surprise move, Jerry will veto whatever Democrat budget is passed, demanding spending cuts. To override the veto will require a 2/3 vote, and so the GOP will be back in play in the budget process. Gridlock and delay will result, but no legislator will be fined a dime under Prop 25 -- because the initial spendthrift "budget" will be passed on time (which is all Prop 25 requires). With Brown's surprising resistance to the big spenders in his own party, 2011 could see an epic budget battle the likes of which we haven't heretofore witnessed.
- Brown will suspend AB32, the global warming measure that is Arnold Schwarzenegger's legacy. It's inconceivable to me that Brown would go ahead with this Draconian legislation at this time, only to end up overseeing the demise of our state. But that's part of the joy of electing Jerry Brown -- ultimately his decision could end up depending on what he has for breakfast that morning. That being said, when the suspension of AB32 reaches the end of its locked-in time frame, what happens next is anybody's guess.
- Brown will call for major pension reform. Not major enough, mind you, but far more than the public employee labor unions were hoping for. And he will be resistant to any public employee pay or benefit increases.
- Brown will push for some significant deregulation to make our state less hostile to business. Actually, I'm expecting some pleasantly surprising proposals from him in this regard. We saw some of this innovative thinking towards the end of his first gubernatorial tenure -- though it never amounted to anything concrete.
OPTIONAL FOR LONG COLUMN:
The only outfit that comes close to agreeing with me is the New York Times. The paper recently had an intriguing article about Jerry Brown --
"California Shifted, and So Did Jerry Brown" --trying to gauge just what he'll do once in office.
Already there's evidence that some of the labor unions bosses are nervous. According to the Times, Art Pulaski, the chief of the California Labor Federation, offered this gloomy assessment: “I don’t think he [Brown] cares about re-election, so he’s not going to focus on keeping his constituencies happy, and that includes us.”
Will Brown's actions save the state? Sadly, even if I'm right, the answer is "no." We are a state doomed to decline -- at least for the next few years.
The problems are too big for Jerry Brown to solve -- especially with a state legislature owned and operated by the labor unions. But he's gonna try to do the right thing.
More often than not. I hope.