Capitol Alert

The latest on California politics and government

January 24, 2014
Court again sides with California Legislature in pay dispute


State Controller John Chiang lacks the authority to determine whether a budget approved by the California Legislature is balanced, a court ruled, handing another legal victory to lawmakers whose pay he docked amid a standoff in 2011.

Chiang based his denial of legislative pay on a finding that lawmakers failed to pass a balanced state budget in an attempt to get in under a voter-approved pay deadline. The 3rd District Court of Appeal in Sacramento unanimously upheld a 2012 lower court decision, concluding that lawmakers must merely enact a budget bill in which revenue estimates for the coming year exceed the total of existing appropriations.

"At that point, the Controller does not have the authority to make an independent assessment that the budget bill is not in fact balanced because it relies on revenues not yet authorized in existing law (or in enrolled legislation) and on that basis withhold the salaries of legislators as a penalty for failing to enact a timely budget," the court said in its decision published Friday.

Chiang called the ruling a setback for important reforms voters made to the budget process three years ago.

"The ruling adopts the Legislature's argument that a budget is balanced if it -- without any independent verification -- says it is so," he said in a prepared statement. "This is a loophole that undermines the voters' desire to only pay lawmakers when they discharge their most important and fundamental duty -- to pass a budget that is both timely and truly balanced."

In 2010, California voters passed Democratic-backed Proposition 25 requiring lawmakers to surrender their pay and daily per diem checks for every day they exceed the June 15 deadline. The same law permitted them to pass budgets on a majority vote rather than two-thirds, a considerably higher feat requiring bipartisan action.

Following Chiang's action, the legal challenge was launched by Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Assembly Speaker John A. Perez, D-Los Angeles. The filing specifically stated the Legislature was not seeking back pay.

Sacramento Superior Court Judge David I. Brown in 2012 ruled Chiang assumed budget duties reserved for lawmakers. The ruling essentially said the Legislature was free to determine whether a budget was balanced under the state constitution.

"The Legislature consistently made the necessary tough budget decisions over the last five years," Steinberg said Friday. "California is in much better shape as a result. Today's unanimous court decision is further affirmation of our difficult and responsible decisions."

PHOTO: California Controller John Chiang speaks at the Bee Capitol Bureau in 2011. The Sacramento Bee/Hector Amezcua

October 16, 2013
Controller Chiang raps local governments for not filing reports


State Controller John Chiang sent letters Wednesday to nine cities and 117 special districts, chastising them for failing to file timely financial reports with his office as required by law.

Stockton, which has declared bankruptcy and is seeking voter approval of a sales tax increase next month, is one of the delinquent cities.

Chiang gave the tardy governments until Dec. 31 to file the documents his office uses to compile reports, including those on employee compensation, or face audits.

"Transparency in financial reporting - including public salaries - is necessary to protect communities against the misuse of taxpayer dollars and other abuses of public trust," Chiang said in a statement, citing financial scandals in Bell and other communities.

Besides Stockton, the cities receiving Chiang's letter are Beaumont, Firebaugh, Hercules, Imperial, La Habra, Lindsay, Taft and Westmorland. The special districts are scattered throughout the state, mostly in rural communities.

PHOTO: State Controller John Chiang at The Sacramento Bee's Capitol Bureau on November 2, 2011. The Sacramento Bee/Hector Amezcua.

February 8, 2013
Controller: California $4.3 billion ahead of forecast in January

20111102_ha_JOHN_CHIANG0365.JPGCalifornia received $4.3 billion more in January than Gov. Jerry Brown predicted, state Controller John Chiang said in a new cash update this afternoon.

In an analysis, Chiang said "gains in jobs, incomes, and stock prices have underpinned the rise," while also alluding to higher tax rates on the wealthy that voters approved at Brown's urging in November.

But as the state saw a burst of tax revenue in mid-January, economists and fiscal experts suspected a third factor was largely to blame: a December run-up in capital gains and profit-taking ahead of the so-called federal fiscal cliff. Companies paid more dividends and bonuses in 2012 because of the likelihood that federal leaders would increase taxes on the highest brackets in 2013.

It remains to be seen whether the state's big January will result in lower tax collections than expected this spring and in 2014. The Legislative Analyst's Office has warned policy makers to remain cautious and wait until Brown's May budget update to judge whether the revenue increase is for real.

August 24, 2012
California's sales taxes didn't fall short in July

When state Controller John Chiang reported this month that state sales taxes in July were a third lower than the state budget projection for the month, it created a stir in political and financial circles.

July was the first month of the 2012-13 fiscal year and some analysts wondered whether the controller's report meant that the budget's full year revenue projections were much too high, and deficits were in the offing.

Not to worry, says George Runner, a member of the state Board of Equalization, which collects sales taxes. "Contrary to what you may have heard, the sky is not falling in California--at least not as it pertains to sales tax revenue," Runner said in a statement Friday. "I'm pleased to report that sales and use tax revenues are doing just fine."

Instead of being $295 million below projections in July, Runner said, sales taxes - $1.527 billion - were actually $17 million above Department of Finance expectations.

Why the big difference? Differing accounting method in different financial agencies, which has become a bugaboo of late in determining fund balances throughout state government and contributed to a scandal over hidden funds in the Department of Parks and Recreation.

Runner said the controller counts only "money in the bank" while the Board of Equalization's data also include pending deposits. He said the BOE received more than $900 million in sales taxes during the final days of July which were not deposited in the state treasury by the end of the month.

March 9, 2012
Read the arguments in John Chiang's battle with the Legislature

ha_jchiang48630.JPGToday's lead item in The Bee's Buzz column gave a snippet of the legal wrestling going on in Controller John Chiang's battle with fellow Democrats in the Legislature over his move to withhold their pay during last year's budget debate.

Chiang says he was within his rights to withhold the pay, particularly because Gov. Jerry Brown vetoed the budget. Democrats say he was merely being "politically expedient" and overstepped his bounds, especially because SCO officials had recently acknowledged they had no expertise in evaluating the viability of the state budget.

The court showdown comes April 10. But the most recent filings lay out the arguments from both sides. Here's the filing Attorney General Kamala Harris made on Chiang's behalf:


Here are the points and authorities from legislative leaders:

Leg is Filing

January 31, 2012
Controller: State to run out of cash in March without action

ha_jchiang48630.JPGCalifornia will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today.

The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.

But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on.

January 24, 2012
California lawmakers to sue John Chiang over their pay

Thumbnail image for chiangsmiling.JPGDemocratic legislative leaders sued Controller John Chiang today for blocking their pay during last year's budget dispute, a decision that drew scorn from lawmakers last summer.

Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez said the Democratic controller overstepped his bounds when he decided that lawmakers sent Gov. Jerry Brown a flawed budget last June and docked their pay. They said they are not suing for back earnings, but to ask the court whether Chiang can intervene this year if lawmakers face another budget dispute with Brown at the June 15 deadline.

The lawmakers filed in Sacramento Superior Court, hiring Arthur G. Scotland, retired presiding justice of the 3rd District Court of Appeal, as well as the Los Angeles firm Strumwasser & Woocher. The Legislature's operating budget, financed by tax dollars, will pay for legal costs. Billing rates range from $435 per hour for the two lead attorneys to $130 per hour for a paralegal, according to the leaders' offices.

Chiang said his own party's lawmakers failed to balance the budget largely because their plan underfunded schools by $1.3 billion according to his interpretation of the state constitution. He also said they failed to pass all of the bills necessary to carry out a balanced budget. Chiang's decision came after Brown vetoed the first budget lawmakers sent him at the deadline.

Under a 2010 voter-approved law, lawmakers lose their pay and tax-free expense money if they do not send the governor a balanced budget by the June 15 deadline. Democrats added that provision as a sweetener in Proposition 25, the main thrust of which was reducing the budget vote threshold to a majority, rather than two-thirds. The controller believes he has discretion to determine what counts as a balanced budget under the initiative.

Steinberg and Pérez believe the controller has no role under Proposition 25 to determine the validity of the Legislature's budget. Scotland said today the controller illegally interfered with the Legislature's powers of appropriation.

Aside from veto powers, Steinberg said "neither the governor nor any member of the executive branch may brandish the threat of withholding legislative pay because they disagree with the decisions made by the legislative branch."

Brown and lawmakers ultimately reached agreement on June 27, costing most lawmakers about $4,830 each, equal to 12 days' worth of pay and expense money. The state saved a total of $583,200 in foregone legislative pay.

Mindful of public acrimony against the Legislature, the two leaders emphasized Tuesday that they were not asking for back pay. "Let me be clear from the outset, both the pro tem and I have waived our claims for renumeration should this lawsuit succeed," Pérez said. "This is fundamentally an issue of separation of powers."

Chiang said Tuesday in a statement that he welcomed the court's review. But he also used the words of fellow executive branch members as a retort to lawmakers.

"It is noteworthy to point out that the Legislature's budget proposal was not only vetoed by the Governor for not being a 'balanced solution,' but it was determined by the Treasurer to not be financeable, and would have, within months of its passage, led to the issuance of IOUs," the controller said.

Chiang's move gave Brown leverage in budget negotiations, as the controller essentially suggested that Brown could block legislative pay with his veto pen. Lawmakers have seethed ever since. If their lawsuit succeeds, they would not only have greater pay protection this year, but also greater leverage. Brown has asked lawmakers to pass significant cuts to health and welfare programs and to put school funding at risk if voters reject his tax plan.

January 10, 2012
California controller says December revenues missed mark

California missed its December revenue target by $1.4 billion due to weak income tax totals, closing the first half of the fiscal year down $2.5 billion compared to the budget enacted in June, according to state Controller John Chiang.

That gap isn't a huge surprise, given that the June budget was overly optimistic.

Gov. Jerry Brown said last month that the state budget would fall $2.2 billion short in the current fiscal year, triggering nearly $1 billion in mid-year budget cuts. He also acknowledged that deficit when he built his new 2012-13 budget proposal, which projects a $9.2 billion shortfall between now and June 2013.

But Chiang said the governor's new budget -- which is built on up-to-date economic data -- was still off the mark by $165 million in December, or 2 percent for the month.

November 2, 2011
VIDEO: Find out what statewide office John Chiang is eyeing

We asked our Facebook fans and Twitter followers to suggest questions for our bureau interview with Controller John Chiang.

One topic on readers' minds was whether Chiang, who is termed out of his current job in 2014, plans to run for governor in the future.

Chiang told us he isn't prepared to announce any plans to run for the state's top office. But he did share with The Bee one statewide post he is interested in seeking (hint: he's already opened a campaign account for a 2014 bid).

Watch Chiang reveal what seat he will likely seek and why he wants the job in this video:


Don't like cuts? Controller John Chiang says offer alternatives

Video by Bee photographer Hector Amezcua.

November 2, 2011
Don't like cuts? Controller John Chiang says offer alternatives

Controller John Chiang said Wednesday that lawmakers who fear the prospect of automatic mid-year budget cuts should find alternatives soon.

In a meeting with The Bee Capitol Bureau, Chiang wouldn't predict whether "trigger" cuts to education and social services would happen. Under the budget approved by Gov. Jerry Brown and lawmakers, California is required to impose up to $2.5 billion in cuts if fiscal analysts determine in the next few weeks the state will fall short in revenues this fiscal year.

Chiang reported last month that California is running $705.5 million short through the first quarter of the fiscal year, from July to September. Some budget experts have downplayed that shortfall, saying the amount received so far is less important than what forecasters believe California will take in from January to June based on economic indicators.

The Democratic controller credited the "trigger" cuts for adding certainty to the state budget in unpredictable times, noting that credit rating agencies have looked favorably on that mechanism. But he knows many Democratic lawmakers, who agreed to triggers only at Brown's urging, don't feel the same way.

"As I share with a few legislators when I talk to them today, I say if you don't like the fact that we may have triggers, then you better offer an alternative, and you should offer that alternative pretty quickly," Chiang said.

October 20, 2011
Announcing the winner of our first-ever punch line contest

chiangsmiling.JPGOur top takeaway from Capitol Alert's first-ever punchline contest?

Controller John Chiang's staffers have no problem publicly poking fun at their boss.

Several of the department's employees were among the readers who submitted their best joke about the California Democratic Party's recent offer to reward the winner of a fund-raising contest with two hours with the state's top accountant.

The winning entry came not from inside the Democratic controller's office, but from a reader across the aisle.

GOP social media and political consultant Meredith Turney got the most laughs from our judging panel with this quip:

"California Democrats finally found someone who can help their fundraising even more than Kinde Durkee"

For readers not following the Kinde Durkee saga, the joke references allegations that the prominent Democratic campaign treasurer, who was arrested last month, stole millions from the accounts of her high-profile clients.

It's been a good week for Turney in terms of getting laughs. A recent tweet taking a swipe at the Occupy protest movement got some love in a daily email newsletter sent out by state GOP spokesman Mark Standriff.

"I can be sarcastic when I need to be," she said of her snark skills.

Turney, who is currently based in Southern California, can toast to her successes with the $25 gift certificate to Starbucks she won as our top entrant.

Seeing as the contributor is an active member of the GOP, it's unlikely she'll win face time with Chiang through the state Democratic Party's fundraising drive. so she asked us to pass along one message to the person at the center of her punchline:

"Please don't audit me!"

Thanks for all who participated for the laughs (and the groans). Click here to check out the post announcing the contest.

PHOTO CREDIT: State Controller John Chiang enjoys a laugh during a meeting with The Bee Capitol Bureau on July 14, 2010. The Sacramento Bee/Hector Amezcua.

October 14, 2011
Punch line contest: Everybody's a comedian

ha_jchiang48550.JPGCapitol Alert has had its share of photo caption contests in which readers submit humorous or biting caption ideas for provocative photos of public officials.

What about a punch line contest?

Here's the set-up. The California Democratic Party is promoting membership in its DEM 2012 (Donate Every Month) group, in which donors commit to writing a check for as little as $10 to the party every month. The party is now running a contest through Nov. 15 to see which DEM 2012 member can sign up the most new members. The first place prize? Two hours with state Controller John Chiang "for lunch, dinner, or on a project for an organization of the winner's choice." Keep in mind, an exciting day for Chiang might be commenting on the state's cash-flow situation or issuing an audit on a school district in San Benito County.

Our punch line: What's second place, four hours with John Chiang?

We're sure you can do better than that.

Here are the rules: Read the set-up. Write a punch line. Email it to us. Feel free to request anonymity, but only those willing to have their real names published can win the grand prize: a $25 gift certificate to a capital coffee shop. (Entrants outside Sacramento can request any coffee chain.)

Entries are due by 11:59 p.m. Monday, Oct. 17. Send them to

PHOTO CREDIT: The Sacramento Bee/Hector Amezcua


Capitol Alert Staff

Amy Chance Amy Chance is political editor for The Sacramento Bee. Twitter: @Amy_Chance

Dan Smith Dan Smith is Capitol bureau chief for The Sacramento Bee. Twitter: @DanielSnowSmith

Jim Miller Jim Miller covers California policy and politics and edits Capitol Alert. Twitter: @jimmiller2

David Siders David Siders covers the Brown administration. Twitter: @davidsiders

Christopher Cadelago Christopher Cadelago covers California politics and health care. Twitter: @ccadelago

Laurel Rosenhall Laurel Rosenhall covers the Legislature, the lobbying community and higher education. Twitter: @LaurelRosenhall

Jeremy White Jeremy B. White covers the Legislature. Twitter: @capitolalert

Koseff Alexei Koseff edits Capitol Alert's mobile Insider Edition. Twitter: @akoseff

Dan Walters Dan Walters is a columnist for The Sacramento Bee. Twitter: @WaltersBee

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