Newsom’s final CA budget faces multiple challenges

from Dan WaltersCalMatters

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On paper, the annual state budget preparation process is rational. In practice, it’s more like voodoo.

It begins, as state law requires, with the governor’s presentation of a draft in January, as Gavin Newsom did last weekdisclosure of a A $349 trillion budget for the fiscal year beginning July 1.

In theory, the Legislature will spend the next four months hammering out the details, Newsom will make some revisions in May, and he and lawmakers will finalize a version for passage by the June 15 constitutional deadline.

A few decades ago, this happened more or less every year. In the last few decades, however, this has gone off the rails.

As Democrats gained overwhelming control of the legislature, they resented that minority Republicans had any input. Their allies in the public employee unions sponsored a ballot measure in 2010 to reduce the vote requirement for budgets from a two-thirds to a simple majority, thereby eliminating the need for Republican votes.

Proposition 25 there was another unspoken consequence. It allowed so-called “trailer bills” to pass with the same simple majority and take effect immediately upon signing. Initially, the trailer bills had to make legal changes necessary to implement the budget allocations. But a year turned into vehicles for major changes in state law which had little or no relation to the budget, often drawn up in secret and passed to groups with little scrutiny.

Years ago, a reporter covering the Legislature coined an apt name for such measures, calling them “mushroom bills” because they grew in the dark, fueled by manure.

Newsom was especially eager to take advantage of the loophole in the trailer bill, often packs much of his program into such measuressubjecting them to closed-door negotiations with legislative leaders and using appropriations for leverage.

Some mushroom bills backfired when their true impact became known, embarrassing lawmakers who voted for them and forcing them to back down. After being burned, lawmakers implicitly refused to allow some issues to be addressed through trailer bills, forcing Newsom to deal with them more or less publicly.

Two years ago, for example, they resisted Newsom’s efforts to include an overhaul of the California Environmental Quality Act in a trailer bill, leading to two years of negotiations that ended last year with CEQA Reform Measure.

However, trailer bill syndrome persists. The Capitol is waiting to see what Newsom has up his sleeve for the final budget of his governorship.

Even without the sideshow, crafting a new budget will be difficult, as Newsom said the version he unveiled last week is basically a placeholder — an updated half-branch of the current year’s budget — that must await more revenue data, especially the important personal income tax returns due in April.

Newsom projected the state would gain an additional $42.3 billion in revenue over three years, but has faced skepticism, particularly from the Legislature’s budget analyst, Gabe Petek. In an Newsom’s initial budget estimate on Mondayhe goes on to warn that the state could suffer a major revenue hit if the high-flying stock market stumbles.

“These risks are serious enough that not including them in this year’s budget, as the governor is proposing, would put the state on shaky ground,” Petek wrote. He also reminded the Legislature that even if Newsom’s rosy scenario plays out, the state still faces huge deficits, saying the state’s “negative fiscal situation is already chronic.”

With a draft budget that hasn’t arrived, deep revenue disparities, chronic deficits and pressure on Newsom and lawmakers to offset the effects of major cuts in federal aid — not to mention looming problems with trailer bills — it’s hard to even find a starting point.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.