Capitol Alert

Post will be updated as news develops.

Controller John Chiang announced today he has blocked pay for lawmakers, rejecting his own party's spending plan as insufficient to satisfy a voter-approved law on timely budgets.

In doing so, the Democratic controller exercised unprecedented authority, establishing a new role for his office under Propositions 25 and 58 to determine whether a legislative budget is "balanced."

"My office's careful review of the recently-passed budget found components that were miscalculated, miscounted or unfinished," Chiang said in a statement. "The numbers simply did not add up, and the Legislature will forfeit their pay until a balanced budget is sent to the Governor."

The controller said he determined that the Democratic budget spent $89.75 billion but only provided $87.9 billion in revenues, leaving a $1.85 billion imbalance.

Assembly Speaker John A. Pérez said in a statement that he believes the controller "was wrong."

"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," said Pérez, D-Los Angeles. "In the coming days, we will be taking additional budget action informed by the Controller's analysis, and consistent with the values of the budget we passed last week."

Chiang has determined that the majority-vote plan Democrats sent to Gov. Jerry Brown last week was not a "balanced" budget and therefore did not meet lawmakers' constitutional obligation for timely passage of a spending plan. Brown immediately vetoed the budget Thursday, less than 16 hours after passage, dubbing it "not a balanced solution" and noting that it relied on legally questionable solutions.

In his determination, the controller highlighted one component of the budget that he believes ran afoul of the state's Proposition 98 minimum guarantee for school funding. The Democrats' budget underfunded K-12 schools and community colleges by $1.3 billion, Chiang said. John Mockler, an education consultant who wrote Proposition 98, said in an interview last week the Legislature would have to provide that money if courts intervene or at some future date if revenues come in as projected.

Chiang's office said it is not possible to underfund schools without suspending Proposition 98, a politically risky vote that requires two-thirds support of the Legislature. Chiang also said the Legislature failed to pass the necessary bills to carry out hospital fees, a managed-care tax and a $12 hike in registration fees.

In his analysis, Chiang actually ignored some of the most legally dubious solutions, such as a $1.2 billion sale of state buildings and a quarter-cent local sales tax raised by majority vote.

"While the vetoed budget contains solutions of questionable achievability and some to which I am personally opposed, current law provides no authority for my office to second-guess them in my enforcement of Proposition 25," Chiang said. "My job is not to substitute my policy judgment for that of the Legislature and the Governor, rather it is to be the honest-broker of the numbers."

The controller's review suggests that if lawmakers go back and write their budget with cleaner legislation, he will rule differently next time. In doing so, Chiang did not preclude lawmakers from again seeking the building sale or quarter-cent sales tax.

"Most of us are going to have to limit our expenses," said Sen. Ron Calderon, D-Montebello. "To date, we've lost $2,000. We've done our job and given a balanced budget. The controller and treasurer have approved of them in the past. They've never had a problem before. We are being treated like children and punished for politics."

Sen. Tom Berryhill, R-Oakdale, one of four Republicans whose vote Brown is targeting, said, "I think this is going to put pressure on all of us to get something done."

Brown's veto had no effect on legislative pay. But questions raised by Brown and Treasurer Bill Lockyer about the plan's viability appeared to force Chiang's hand, and the controller reviewed the proposal to determine whether it was balanced.

Brown issued a brief statement Tuesday, "The Controller has made his determination. We should all work together to pass a solid budget."

Lawmakers approved more than $14 billion in cuts, fund shifts and borrowing in March, concentrating reductions in higher education and the state safety net. An influx of higher revenues also helped reduce the once-$26.6 billion state deficit.

But the state still faced a $9.6 billion gap this spring. Brown wanted to bridge that difference with a tax election, as well as extensions in sales and vehicle taxes until voters could decide.

When the governor was unable to secure the necessary GOP votes before the June 15 deadline, Democratic lawmakers cobbled together an alternative plan that included a few more cuts, but relied more on questionable maneuvers.

Jim Sanders, Paresh Dave and Torey Van Oot contributed to this report.