Herdt: What’s missing from this year’s budget talks

When Gov. Jerry Brown and legislative leaders sit down for final negotiations in the final 10 days of the state budget process, he may believe that he has a silent Scrooge with him in the room, poised to start stealing legislators' paychecks if they don't see things his way.

He doesn't.

A little-noticed appeals court ruling issued last year removed Scrooge from the premises.

Some background: Proposition 25, the initiative that established a majority-vote budget, contained a provision that says legislators shall forfeit their pay if they do not approve a balanced budget by the June 15 constitutional deadline. Under its terms, they won't get paid again until a budget is passed, and the money they lost can never be recovered.

That provision worked in Brown's favor in 2011. He vetoed the budget approved by lawmakers, and then-Controller John Chiang ruled that the Legislature's budget was not balanced and, therefore, he would stop issuing paychecks to lawmakers.

After that, Brown quickly got his way.

But last year an appeals court ruled, unanimously and unambiguously, that Chiang overstepped his authority.

'The controller has failed to identify any basis for the exercise of a power to audit the accuracy of legislative estimates of revenues,' the court held. 'The Legislature should not be put in the position of risking the forfeiture of future salary if its position is not sustained in a future confrontation with the controller.'

The court's opinion is particularly relevant this year because the major point of contention between Brown and the Legislature is the revenue estimates upon which they base their budgets. Brown is using a more conservative figure produced by his Department of Finance; legislators are using a forecast from the nonpartisan Legislative Analyst's Office that is $3 billion higher.

How might that court decision impact this year's negotiations?

Seeking answers, I spoke with the only two men who have negotiated budgets with Brown, at least during his 21st century tenure — former Senate President Pro Tem Darrell Steinberg and former Assembly Speaker John Pérez.

Both agreed the dynamics have changed.

'The question is whether the budget is balanced,' noted Pérez. 'I think someone would have a hard time arguing that the LAO's numbers are not acceptable.'

Steinberg said it was essential that the executive branch not be allowed to have the negotiating leverage of telling lawmakers they must take his deal or lose their pay.

'You do not want a system in which elected officials are forced to make decisions that may be contrary to the public interest because they do not want to lose their pay. It's just not right,' he said.

Steinberg believes Proposition 25's no-pay provision was designed to ensure two things: lawmakers meet their deadline and the budget they approve isn't a ruse.

If a future Legislature were to adopt a fiscally fraudulent budget, he said, it can be appropriately challenged in court.

As much as Brown may like to publicly portray himself as the defender of fiscal prudence who must hold the line against profligate lawmakers, the differences between their plans are rather small.

'It's easy to stereotype the construct that the governor is fiscally prudent and the Legislature wants to spend,' Steinberg said. 'But it's a matter of degree.'

This year, all three plans — Brown's, the Assembly's and the Senate's — spend a lot more on schools, as is constitutionally required, pay off much debt and put billions in the state's rainy-day reserve.

The primary differences are that lawmakers want to spend several hundred million dollars to restore some subsidized child-care slots that had been eliminated in previous budget cuts and also seek to spend tens of millions more on higher education. This is out of a budget of $116 billion.

Brown insists the state can't afford it because it would be setting itself up for another round of budget deficits in future years.

Pérez insists that, as much as the media might like to manufacture the notion of a high-stakes budget showdown, the process of reaching agreement will be much more civilized.

After the Budget Conference Committee completes its work next week, Pérez said the differences between Brown and lawmakers will be very narrow.

'It will just be a matter of sanding the rough spots,' he said. 'Each year since 2011, the areas to be negotiated have become smaller and smaller.'

But if there is a sticking point that leads to a genuine confrontation, Brown will not be able to resolve it by summoning a silent ally. Scrooge has left the building.

Timm Herdt is a columnist for the Ventura County Star.