- Associated Press - Tuesday, June 21, 2011

SACRAMENTO, Calif. — California’s controller took the rare step Tuesday of halting paychecks for all 120 state lawmakers after he determined they failed to meet a voter-approved requirement aimed at getting the Legislature to approve balanced budgets on time.

Controller John Chiang said he reviewed the budget approved last week by Democrats on a simple majority vote and determined it was not balanced. Mr. Chiang, a Democrat, said lawmakers therefore did not meet the requirement for getting paid under Proposition 25, which voters approved in November.

Lawmakers can start receiving their salaries and expenses again once they pass a balanced budget. They will not be retroactively paid for the days the budget was late.

The decision sparked sharp criticism from lawmakers and could be challenged in court. Assemblyman Mike Gatto, Los Angeles Democrat, said Mr. Chiang decided to withhold pay for political reasons.

“I halted a fulfilling private sector career path to enter public service. I now have to explain to my wife and daughter that we won’t be able to pay the bills because a politician chose to grandstand at our expense,” Mr. Gatto said.

Under Proposition 25, lawmakers don’t get their salary or living expenses if they miss their budget deadline of June 15 each year. The measure gives the state controller the authority to judge whether revenues matched or exceeded state spending.

Proposition 25, the “on-time budget act,” was born out of frustration with California’s late budgets, which stall pay for some state workers and vendors.

Mr. Chiang’s decision marks the first time the unique initiative has been put to use.

Few other states have late budget problems, said Arturo Perez of the National Conference of State Legislatures in Denver. Only New York and Guam withhold pay from lawmakers if they fail to meet their budget deadline, he said.

California’s measure is different because lawmakers don’t get retroactive pay, Mr. Perez said.

“The issue of late budgets is alien to most states,” he said.

Each day, California taxpayers save $48,603.50 by not paying lawmakers a salary and per diem. For lawmakers who earn $95,291 a year, that works out to $261 less for each day their salary is cut. For leaders of the Senate and Assembly who make $109,584, that works out to $300 per day.

Most lawmakers also lose out on a $142 per diem for travel and living expenses.

Mr. Chiang, whose office issues paychecks, found the Democratic package did not meet the constitutional requirements for a balanced budget. He said it committed the state to $89.8 billion in spending but provided only $87.9 billion in revenues, leaving a hole of $1.85 billion.

“My office’s careful review of the recently passed budget found components that were miscalculated, miscounted or unfinished,” Mr. Chiang said. “The numbers simply did not add up, and the Legislature will forfeit their pay until a balanced budget is sent to the governor.”

Mr. Chiang’s analysis found much of the imbalance comes from underfunding education by $1.3 billion. Underfunding is not possible without suspending the state’s education funding law, which would require a two-thirds vote of the Legislature. That was not done in this case.

The Democrats’ budget also counted on hospital fees, taxes on managed-care plans and vehicle registration charges, but the Legislature never passed the bills needed to collect those revenues, Mr. Chiang said.

Lawmakers said they thought that action allowed them to continue receiving paychecks. But Gov. Jerry Brown vetoed the package, saying he didn’t want to see billions more in borrowing or questionable maneuvers.

“The Controller has made his determination. We should all work together to pass a solid budget,” Mr. Brown said.

Democratic lawmakers said they were disappointed by the controller’s decision. They said Mr. Chiang’s decision would not help budget negotiations with Republicans.

“The controller is, in effect, allowing legislative Republicans to control the budget process and I believe that’s a very unfortunate outcome that is inconsistent with the intent of Proposition 25,” Assembly Speaker John Perez said .

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