Another day, another lawsuit and another potential hole in California’s already leaky budget.
It’s looking ever less likely that the budget numbers will hold up until June 30, the end of the fiscal year. That means legislators are looking at a potential repeat of this year’s long and ugly budget revision battle, with even fewer choices available.
This time it’s the California Redevelopment Association that’s taking aim at the state’s spending plan. In a suit filed Tuesday in Sacramento Superior Court, the group is arguing that the state’s attempt to grab more than $2 billion from local redevelopment agencies to help balance California’s budget is unconstitutional.
If a judge agrees, the state is going to have to find $1.7 billion this year and another $350 million in 2010-11 to replace that redevelopment cash. And given California’s shrinking revenue numbers, that extra money isn’t likely to be there.
The wheels of justice in California seldom spin quickly, so there’s a chance the suit could disappear into the black hole of the civil court system and not emerge until the next fiscal year, which would give the state some breathing room. Unfortunately, California already has lost a none-too-different suit, when the court barred the state from taking $350 million in local redevelopment money last year.
“We believe the second budget raid by lawmakers is just as unconstitutional as the first,” John Shirey, the redevelopment group’s executive director, said in a statement. “Lawmakers ignored the state Constitution and attempted to write state budget legislation around it.”
There was plenty of creative lawmaking – and bookkeeping – going on earlier this year as legislators and the governor worked overtime to come up with ways to close a $60 billion budget gap and produce a spending plan they could at least argue was balanced.
But a lot of that fiscal Spackle is starting to crack under the hammering of a variety of lawsuits.
On Monday, for example, a federal judge in Oakland issued a preliminary injunction blocking the state from cutting in-home support services for 130,000 poor and disabled Californians. The suit, filed by disabled rights groups and government employee unions, blocked reductions that would have saved the state $82 million by the end of the fiscal year.
Since the cuts were scheduled to take effect Nov. 1, it’s a guarantee that the state will come up short of those budgeted savings, even if it ultimately wins the court case.
Then there’s the suit by state Senate President Pro Tem Darrell Steinberg. The Sacramento Democrat is arguing that Gov. Arnold Schwarzenegger’s veto of nearly $500 million in health and welfare spending last July was illegal and should be overturned.
The suit is winding its way through the legal system with no guarantee it will see a courtroom any time soon. But that’s still a potential half a billion-dollar budget hit for the state.
This year’s budget also calls for the state to receive $1 billion from the sale of part of the State Compensation Insurance Fund. But state Insurance Commissioner Steve Poizner has sued the state to block any sale, which won’t make it any easier to find a buyer.
Adding to all that, the state Supreme Court earlier this month let stand a lower court’s ruling that three years of state raids on local transit money were illegal. The potential cost? Let’s call it as much as $3.6 billion in potential repayments to local governments.
State Controller John Chiang reported last week that state revenues in September already were $1 billion below budget estimates. While a spokesman for the governor admitted that the numbers were “cause for concern,” the plan is to wait a month – with fingers crossed — to see whether the shortfall is a one-time event or an on-going problem.
Looking at the state’s recent economic track record, any bets?
John Wildermuth is a longtime writer on California politics.