Until 2011, California’s budget process followed a very unfortunate pattern. Democrats, who control the legislature, would propose the general outlines. California’s budget required a two-thirds supermajority to pass it in the legislature, however, which Democrats do not have. So any budget would need Republican support.
Republicans would then make a series of demands for their support, demands which Democrats would find unacceptable. The two sides would then be stuck at an impasse. This would last for months, until finally (long after the deadline) some type of compromise would pass. The whole process would then begin anew the next year.
In 2011 all this changed. California passed its first on-time budget since 2006. This budget was only the sixth budget in the last twenty years which has been on-time. The accomplishment is all the more substantial given that it happened in the middle of a recession. In the past, budgets passed before the new fiscal year only during the good times – when revenues were much higher than spending.
Proposition 25, which passed in 2010, is responsible for all this. The proposition did two things to improve the process. Firstly, it annuled the supermajority requirement. From now on, budgets only require a simple legislative majority to pass (like forty-seven other states). No longer can a small minority hold the budget hostage until they get what they want.
Secondly, the proposition permanently took away legislative salaries for every day that the budget was late. Previously pay had just been delayed, not permanently taken away.
This part of the proposition turned out to be a lot more important than anybody thought it would be. At first the clause had just been put in there as a way to sell the proposition to voters. But the threat of permanently losing one’s pay has turned out to be a very powerful incentive for state legislators to pass a budget.
All in all, Proposition 25 has turned out to be an enormous success.
Nevertheless, there is one more reform which California must enact. California still requires a two-thirds supermajority in order to raise taxes. Neither party has this supermajority, although the Democrats are coming close to it.
The problem with this stipulation is very similar with the problem that until this year assailed California’s budget; it enables a small minority to hold the popular majority hostage (by refusing to allow revenue increases) until the minority gets what they want. In 2011 this happened; Democrats were unable to get a single Republican to agree to new revenues. So the budget is composed entirely of spending cuts, especially to California’s university system. Why is your college tuition going up? Because California Republican legislators refuse to allow the budget to be balanced any other way.
Still, a very imperfect budget is much better than no budget at all. Proposition 25 deserves to be commended for accomplishing that.