'No Budget, No Pay' Works Once Again in California

Every so often, in the world of legislation, California lives up to its own self-image of trendsetter. This is one of those times.
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Sunday was Father's Day. Most dads, even those who happen to be elected officials, were able to relax and enjoy the day by spending some time with their families. California legislators did not have this luxury, due to their own inactivity in the days leading up to a midnight legislative deadline. They worked throughout the weekend to produce the state's budget on time -- which they achieved, late yesterday. But the really newsworthy thing about this was why they decided to work the whole weekend instead of just ignoring the mandated deadline (which they used to routinely do). They put in the overtime hours for one reason and one reason alone: if they hadn't come to an agreement on time, their pay would have stopped at midnight. Call this story the success of the "no budget, no pay" idea, if you will.

I have to admit that even though I live in the Golden State, I pay little attention to state-level politics. This makes me normal, out here, since very few people do pay much attention to what is going on in Sacramento, most of the time. I mean, we've elected movie actors as governors not just once, but twice. What other state can say that? But every so often, in the world of legislation, California lives up to its own self-image of trendsetter. This is one of those times.

A little California budgetary history is necessary here, to understand the scope of the problem which existed before Proposition 25 passed in 2010. California's budget is supposed to -- by law -- be passed by the legislature (both houses) and put on the governor's desk on June 15. It is supposed to be signed into law by the time the fiscal year starts, on July 1. But for 30 years of budget negotiating, the legislature had only managed to actually meet this deadline a pathetic five times. The legislature had only even passed a budget by the start of the fiscal year 10 times out of 30. That is not a very good record, as anyone can see.

California's budget showdowns weren't on the same scale as a national default or federal government shutdown, of course; but due to the state not being able to print its own money (something the federal government can do) this meant crises which often led to furloughs of government employees, employees getting "IOUs" instead of paychecks, or outright layoffs. It also led to bond status downgrades for the state, as well as other ripple effects on the state economy.

This all came to a head in 2008. It took the legislature an astonishing three months beyond the deadline to pass a budget. This was obviously a signal that government had broken down in a major way. It didn't help that the following year saw the worst effects of the Great Recession, where California had to face budget deficits larger than most other states' entire budgets. California, like many other states, also has a balanced budget law, which removed the possibility of outright deficit spending to make up the shortfall.

By 2010, the voters had had enough. They passed Proposition 25 by a healthy 55-45 margin. This made two major changes in the law. The first was to jettison most of an archaic supermajority requirement to pass the budget. California had been one of only three states to require a whopping two-thirds majority in both houses to pass budgets. What this meant, in practical terms, was that Republicans could block all budget bills if they held more than one-third the seats in either house.

The other major change was that the voters approved a law which stated that if the budget wasn't passed by the June 15 deadline, the legislators would not get paid from that point on, until a budget was on the governor's desk. The very next year, legislators tried to pass a "budget" made up of smoke, mirrors, and wildly unrealistic math, which they then sent to the governor. The governor declared it wasn't a real budget, and the state controller (the guy who issues the checks) agreed. The legislators' paychecks stopped.

As I wrote back in 2011, here's what happened next:

And for the next twelve days, California legislators worked for free. They each lost an average of $4,830 in that period. Some of them (Democrats and Republicans) even had the gall to whine about not being paid in public. This was met with precisely zero sympathy from the public.

Yesterday, they passed a budget. It did not rely on gimmicks or budgetary tricks -- another first in modern California budgets -- and it gave [Governor Jerry] Brown many of the things he had been fighting for over the past six months or so. And the legislators cannot award themselves the back pay they missed -- that's one of the beautiful things about the new law.

By 2012, the legislators had learned their lesson. Here's a quick timeline of California's budgetary history, right up to yesterday:

  • 1980 onward -- five budgets passed on time out of 30

  • 2008 -- budget is 100 days late
  • 2011 -- (first year under Prop. 25) after pay is cut off, budget passes 12 days late
  • 2012 -- budget passes on time
  • 2013 -- budget passes on time (a day early, in fact)
  • 2014 -- budget passes on time (happy Fathers' Day!).
  • The record is clear. The new law works wonders. Now, some might argue that it's a lot easier to pass a budget when there's a whopping big surplus to spend (as is the case this year). This is no doubt true, and will likely be the reason Jerry Brown will be elected for an unprecedented fourth term as governor this November. But the law has already worked in years with deficits, and my guess is that it will do so again in the future. A strong argument can also be made that getting rid of the two-thirds supermajority requirement did more to break the legislative logjam than the prospect of lawmakers losing their pay. But left in place was a two-thirds supermajority to raise any taxes, meaning the budget rules haven't changed as radically as some might think. It's really impossible to separate the effects of the supermajority rule change and the "no budget, no pay" provision, since they both passed not just in the same year but as parts of the same ballot proposition. Still, my guess is the threat of losing pay has forced a very beneficial change to the way California's legislators view their responsibilities.

    Of course, this leads to the next question: "If it works for California, why couldn't it work on the national level?" I've actually been actively promoting this idea myself for years now.

    The barriers to getting a law passed to cover the paychecks of the United States Congress are a lot higher than they were in California, though. To begin with, there are no voter ballot initiatives at the federal level. Which means that it'd be up to Congress itself to vote on killing their own paychecks -- a rather far-fetched idea, it might seem. Added to this is the complication of the Constitution, which states that changes in lawmakers' pay must have an intervening congressional election before they can take place (if Congress passed the law this year and Obama signed it, it could not constitutionally take effect until the 2015 budget season, for instance).

    What is rather unexpected is that the Tea Party Republicans are the ones who have, in recent years, attempted to get some sort of "no budget, no pay" bill passed. Some have been watered-down (pay would go into escrow until the budget passed, but would be paid out afterwards rather than forfeited, for instance), but it's still interesting to see which side of the aisle has even given the idea lip service. Democrats, if they were smart, would realize how well the law is working in California, and get behind the idea on a federal level as a populist measure to use in their campaigns. Bruce Braley, a House member who is now running for the Senate in Iowa, was one of the few Democrats to join in the effort to pass a "No Budget, No Pay" bill last year. At the time, he commented:

    In the real world, there are real consequences if deadlines aren't met. There should also be real consequences if Congress can't meet its deadlines. I can think of few stronger incentives to get politicians to do their job than tying their pay to their job performance. This idea is a powerful way to restore a little common sense to a Congress that has none.

    Braley was right back then, and he's still right. The idea is simple to understand, and the concept is one that most voters would instantly agree with.

    No budget? No pay. It's as easy as that.

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