Metropolitan News-Enterprise


Monday, January 27, 2014


Page 3


C.A. Rules for Lawmakers, Against Chiang in Balanced-Budget Suit


By MICHAEL J. PEIL, Staff Writer



State Controller

State Controller John Chiang breached the separation of powers by withholding lawmakers’ pay based on his own finding that the 2011-2012 state budget was out of balance, the Third District Court of Appeal ruled Friday.

While the state Constitution specifies forfeiture of salary as the penalty for failing to pass a timely, balanced budget, Justice M. Kathleen Butz explained, it does not permit the state’s chief fiscal officer to substitute his own figures for those that the Legislature has declared to be accurate in certifying that its budget is in balance.

On June 15, 2011, the Legislature passed a bill that estimated revenues for the coming year of about $87.8 billion with appropriations of around $86.6 billion.

Gov. Jerry Brown vetoed the bill the next day, concluding that it did not present a balanced solution to the “big deficits for years to come.”

Following the veto, on June 21, Chiang declared that the Legislature had failed to pass a budget by midnight of June 15, announcing that legislative salaries would be forfeited until the enactment of a proper bill in accordance with the “timely budget and forfeiture provision,” a 2010 amendment to the Constitution.

He arrived at this conclusion saying the $87.8 billion in estimated revenues were based on four bills that were yet to be authorized as law. Chiang also asserted that the Legislature had had not met the constitutional minimum level of funding for education in the budget plan. 

The Legislature passed another budget on June 28, allocating $86 billion for general fund spending, and Brown signed it into law on June 30.

The Legislature never sought direct judicial review of Chiang’s action.

In January 2012, however, with President pro Tempore of the Senate Darrell Steinberg and Speaker of the Assembly John Perez as named plaintiffs, the Legislature filed an action for a declaration that it had complied with the balanced budget provision.  The plaintiffs also sought a ruling that Chiang was unauthorized to independently assess whether the bill was balanced and withhold legislative salaries based on a negative finding.

Sacramento Superior Court Judge David I. Brown agreed, and granted a declaratory judgment that the Legislature had complied with the Constitution, by estimating revenues to exceed appropriations, and that Chiang did not have the authority to assess the bill. 

Chiang argued that the courts lacked jurisdiction. He said the action for declaratory relief did not constitute an actual controversy, but rather an attempt to obtain an advisory opinion involving constitutional interpretation.

Butz disagreed, explaining that due to the ongoing relationship between the two parties, there was a high likelihood that this dispute would recur.  Chiang, she noted, continued to assert that he had the authority to withhold salaries when he determines that a budget relies on unauthorized revenues, which is often the case.

She concluded:

“The refusal to grant declaratory relief would work a serious hardship on the Legislature.  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, grounded on the Controller’s interpretation of the constitutional provisions[.]”

Chiang argued that he was entitled to determine whether a budget was balanced,  just as he has undisputed power to audit the legality of warrant requests.

While Butz recognized that Chiang is authorized with the responsibility of determining the lawfulness of state money disbursement, she explained that his role was one of limited discretion, without the authority to interfere with an agency’s legislatively granted discretion to pay out funds. 

She said:

“It would not make any sense as a matter of statutory interpretation to believe the Legislature granted such statutory review authority in defining the Controller’s powers where the Legislature in turn can ultimately override the Controller’s decision.  As a result, the Controller is not a party to the enactment of the budget bill.”

The court also held that Chiang was incorrect in asserting that the Legislature must only incorporate revenue bills that have been sent to the governor before being incorporated into a budget proposal.

In making the argument, Butz said, Chiang overlooked  the extent to which California balances its budget with federal funds, something the Legislature cannot account for while creating budgets. 

The case is Steinberg v. Chiang, 14 S.O.S. 378.


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