State Budget: Square One

For the second time in 25 years, the California Legislature approved an on-time budget by June 15, the constitutional deadline. Less than 24 hours later, Governor Brown vetoed the entire budget, sending state legislators back to the drawing board.

Democratic leaders initially said their approved budget was an "imperfect" solution – however Senate President Pro Tem Darrell Steinberg and Assembly Speaker John Pérez were both “dismayed” over the Governor’s rejection.

In a letter to lawmakers, Brown said the plan is "not a balanced solution. It continues big deficits for years to come and adds billions of dollars in new debt. It also contains legally questionable maneuvers, costly borrowing and unrealistic savings. Finally, it is not financeable and therefore will not allow us to meet our obligations as they occur."

Some key measures of the vetoed budget included: cutting the University of California and California State University systems by an addition $150 million each, and taking $1 billion from First 5 county commissions – a move that’s already facing litigation. 

Gov. Brown has until the end of June to convince Republicans to support temporary tax extensions as a “bridge” to a special election this fall. The sales and vehicle taxes expire as of June 30^th – the end of the fiscal year. If not extended, raising these taxes back to current levels would be considered a “new tax” rather than an “extension” – a label much less favored by voters.

In order to raise taxes, there must be a two-thirds majority vote in the legislature. Since the Governor’s original budget proposal in January, he’s been unsuccessful in obtaining the four GOP votes (two in each house) to meet the supermajority requirement.

Last year’s passage of Proposition 25 would strip lawmakers of their pay for each day a “balanced” budget is late. State Controller John Chiang has thereby halted legislators’ pay, citing the approved budget as “insufficient” in meeting Prop 25 guidelines. Chiang said he determined that the budget spent $89.75 billion but only provided $87.9 billion in revenues, leaving a difference of $1.85 billion.

"My office's careful review of the recently-passed budget found components that were miscalculated, miscounted or unfinished," Chiang said. "The numbers simply did not add up.”