The Ghost of Delayed Budgets Past

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The intense reaction to the coronavirus that is upending life as we know it just may resurrect the ghost of delayed budgets that haunted California’s budget process for years.

The reason is not the same that caused past budget delays but because of the virus there is a chance the governor and legislature will slow the process to finish the budget while they implement responses and watch to see how the virus is playing out. This will occur during the crucial time period when the budget work is normally completed.

While there are many guesses over the period of time the coronavirus will affect daily life, some estimates run about 12 weeks, which would coincide roughly with the June 15th date the California Constitution requires the budget bill to be signed. Even if some form of the budget document is passed by the deadline, it might be a skeleton to be filled in by trailer bills, a recent and questionable phenomenon that adds budget requirements after the Constitutional deadline.

The legislature is going into a longer spring recess than normal to reduce exposure to members, staff, and legislative hearings attendees, delaying the budget process.

Legislative action this week to spend up to $1 billion to confront the COVID-19 crisis will have to be analyzed as it evolves and that won’t happen quickly.

Already the Franchise Tax Board has postponed the due date for payment of state taxes from the usual April 15th date to June 15th for individual taxpayers, partnerships, LLCs and quarterly estimated payments.

The delay in payments will have an effect on the governor’s traditional May revision budget proposal. The April tax payments allow the governor’s Office of Finance to readjust the budget originally offered in January to the realities of the tax collections due in April. However, the information on tax revenue will not be complete because of the postponed collection date. The May revise might also have to be put off or fashioned differently.

Despite the budget signing date firmly set in the state Constitution it has been missed many times before. Mainly the reason was that a two-thirds vote was required to pass the budget and neither political party had the ability to cobble together a budget that drew enough votes from across the aisle. In 2008, Governor Arnold Schwarzenegger didn’t sign the budget until September 23.

That former budget hurdle was cleared on two fronts with the passage of Proposition 25 in 2010 that lowered the budget passing requirement to a simple majority vote and the Democratic Party amassed a super majority in the legislature and can afford some defections come budget time.

Still, it’s becoming clearer that the extraordinary situation posed by the coronavirus and the response to it will upset usual timetables.

With the uncertainty surrounding the effects on the economy and workers and the quickly changing responses and demands from government at all levels to the crisis it will not be surprising if the Constitutional deadline to pass a state budget is missed or at least managed with a slimmed downed budget document and many supplemental budget trailer bills once financial data and circumstances are further assessed.

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