Jerry Brown Vetoes California Budget, Cavanaugh on 10 O'Clock News Again Tonight

That didn't take long. Gov. Jerry Brown this morning vetoed the all-Democrats/no-Republicans budget passed out of the California legislature yesterday: 

The gimmick-laden, secret-tax-springing plan left the governor without much choice, given his prior rhetoric against "smoke and mirrors" budgeting. 

This was only the second time in the last 25 years that the California legislature has met the June 15 deadline for passing a budget. 

As I have been explaining on Fox KTTV's 10 O'Clock News all this week (I'll be back again tonight), the real purpose of meeting the deadline was to avoid a penalty voters mandated last year, which cuts off legislators' pay if they miss the deadline. 

The result of that haste (and only in government could it be considered hasty for hundreds of people to take only four months to generate a document) was a monstrosity disproportioned in every part, like to a chaos or an unlick'd bear whelp. I'm not sure producing a dummy document counts as progress toward sound budgeting, but in this economy even politicians can't afford to forego six-figure salaries. 

Brown gets considerable advantages out of throwing the bill back. While the smart media are reporting that this will give him additional time to negotiate with Republicans, the more interesting question is how he will use the opportunity to triangulate with the Republicans against his own party. He's right that this budget was unacceptable for many reasons, and while Brown has been backsliding since coming into office, he's too proud of his legendary cheapness to sign another piece of Swiss cheese. Just to name one example: This budget revived a controversial plan to sell and lease-back some government buildings. But in order to make it more palatable, Democrats included a provision that the buildings would revert to government ownership after a period of time. So effectively they were expecting somebody to pay the buyer's price for a building, eventually return it to the original seller, and in the meantime charge the seller enough rent to make it an attractive deal. Is there any way the government could get a buyer to agree to that deal without offering a rent so high that the state would end up losing money in the long run? Maybe there is. Please 'splain me in the comments.  

Going back to Cali? I don't think so. 

Update: Here's me kibbitzing about all this with the folks at my local Fox affiliate: 

Comments

[melman]

the state govt would get eaten alive in a commercial lease deal, these guys are sharks

the only hope for CA right now is a hostile takeover by the current Wisconsin government

[Episiarch]

Fuck 'em. They keep digging, and keep pulling stunts to try and get out of the hole, instead of doing something concrete. Seriously, fuck them.

[Pro Libertate]

The U.S. will bail them out if things get too awful. You know it's true, sickening as it may be. Californian politicians are banking on that.

[Joe M]

Ugh. They're like children who make a scene in order to get attention from their parents.

[Cunctator]

---"Seriously, fuck them."---

As a lifelong Californian, I agree.

[R C Dean]

So do they get their money if the bill they sent over was vetoed before the June 15 deadline expired?

[Appalachian Australian]

They do. If you think this is a weakness of Prop. 25, you're right. Legislators are now incentivised to pass unreasonable budgets they know a governor would not sign.

Isn't direct democracy wonderful?

[4chan]

There's some question about that since John Chiang, the CA controller controls the payroll. He can certainly gum things up for months if he wants to.

[Appalachian Australian]

He could start paying the legislators in warrants.

Maybe it's time for California to create its own currency. They could print as much as they needed to cover any budget shortfalls. I vote to call it the "Bear Republic Peso" ("dollar" is too imperialist sounding).

[Sudden]

Bear Republic Bitcoin. Pass it along with legalizing marijuana.

[Johnny Clamboat]

Is that the same John Chiang whose payroll system cannot change pay rates? I think the parasites' paychecks are safe.

http://reason.com/blog/2010/07.....kers-still

[4chan]

His excuse at the time was that it would take months to implement something as simple as that. (Which sounds BS, but lets assume that is true.)

Chiang's department had notice since last Nov. to implement this in case it was needed. Now if he hasn't done so yet for the eventuality? That would be a story.

[P Brooks]

the buildings would revert to government ownership after a period of time. So effectively they were expecting somebody to pay the buyer's price for a building, eventually return it to the original seller, and in the meantime charge the seller enough rent to make it an attractive deal.

Why do I immediately assume a private company which tried to structure a deal this way would be getting a visit from the SEC (and/or the FBI) in short order?

[Appalachian Australian]

A "sale" where ownership reverts back to the original owner is quite common and is generally known as something like a 99-year lease (which governments are also doing en masse with things like toll roads).

I'm fully in favour of leasebacks but not when assets are mortgaged over a long period to cover a single year's budget shortfall, which was popular in the states for the past few years.

[Joshua]

Yeah, but the 99-year lease is where person A lets person B use the property for 99 years in exchange for $. Cali wants to set up something where Cali lets person B charge them rent for 20 years in exchange for cash up front.

[Appalachian Australian]

I'm just counting the days until my cheques from the state are replaced with warrants.

Those cheques are supposed to be going up 37% when they're mailed in June; why they're going up will be left as an exercise to the reader.

[American]

They're going up because you refuse to spell "check" correctly, you crypto-limey!

[Lord Humungus]

ahem, he's a crypto-digger.

[R C Dean]

So effectively they were expecting somebody to pay the buyer's price for a building, eventually return it to the original seller, and in the meantime charge the seller enough rent to make it an attractive deal. Is there any way the government could get a buyer to agree to that deal without offering a rent so high that the state would end up losing money in the long run?

Of course, nobody would pay to buy fee simple title if they aren't getting fee simple title. The price would be for a limited term estate in the property, which of course is far less.

Naw, the reversion was put in as a poison pill, so they could count the "revenue" even though nobody would ever take the deal, and no revenue would ever show up.

[fishfry]

Note that under the recent law passed by the voters, the legislators would have forfeited their pay till a budget was passed. Now they've passed a budget so they can get paid; and Brown has vetoed the budget so that California still has no budget. So much for what the voters thought they were voting for.

[Appalachian Australian]

The budget can now be passed with a simple majority instead of 2/3rds.

I assume most voters didn't bother to read the initiative, but that's the meat of what they voted for. The "losing pay" thing was a gimmick.

[Amakudari]

Maybe. But I recall a good number of folks who California who blamed the budget failures on the inability of the legislature to pass it with a simple majority.

[juris imprudent]

Hmm, interesting point. This budget would require a 2/3rds majority to override the veto. If they introduce a new budget bill, haven't they admitted they didn't submit a budget on time?

[P Brooks]

A "sale" where ownership reverts back to the original owner is quite common and is generally known as something like a 99-year lease

Maybe I'm a victim of patriarchal definition-based language oppression, but a "sale" is a "sale" and a "lease" is a "lease".

I do not have anything resembling a true understanding of the deal, but what appears to be happening here is the state attempting to borrow against assets without admitting what they are doing. Depending on the reason, this could be construed as "fraud"; it's an ugly word, but sometimes it's the only one to use.

[Appalachian Australian]

The legislature can't commit fraud -- by definition, the laws it passes are the laws of the land, unless found unconstitutional by a court.

And here in California, the constitution gets changed at the whim of the voter, which is why we have goofy situations like Prop. 23 and our constitution is as thick as a telephone book.

[Paul]

And here in California, the constitution gets changed at the whim of the voter, which is why we have goofy situations like Prop. 23 and our constitution is as thick as a telephone book.

I thought this concept was Progressive Heaven?

[Bar Student]

I'm studying real property right now and there are plenty of ways to legally do this.

[Sudden]

What it is is a leasehold estate interest. Its essentially a fee simple property interest for a specified period of time that then reverts back to the lessor. Although it is an uncommon property ownership form, it is legally recognized.

[Resto Druid FTW]

Right you are... a leasehold. Kinda like what you sign if you were renting an apartment. Typically, they hold a faction of the value that fee simple transfers hold.

[Barry D]

So wait...

In a state where Democrats comprise 62.5% of the Senate and 65% of the Assembly, these problems are all the Republicans' fault?

This guy may have been an ass clown last time he was Governor, but now he has descended further. He sounds like Obama.

[Brandybuck]

In a state where Democrats comprise 62.5% of the Senate and 65% of the Assembly, these problems are all the Republicans' fault?

In California it is ALWAYS the Republicans fault. No exceptions.

[Barry D]

Two minutes' hate.

[P Brooks]

Maybe the California legislature should take the keys to the capitol to a pawn shop, and see what they can get.

[Appalachian Australian]

It would be like those episodes of Pawn Kings where they have to tell a customer their treasured heirloom has no market value.

[R C Dean]

Talk about an encumbered asset. Probably not worth a nickel.

[Au H20]

Will going broke finally stop Californians from lecturing me about how great, and progressive, and transcendent there state is? No? Really No?

Well, will it stop them from moving to better states like Colorado and attempting to repeat the same mistakes? No again, huh?

And this is why I can't bring myself to give a shit.

[MNG]

Good for Brown.

[ChrisO]

It will be curious to see what creative form of bankruptcy the feds eventually create for the state governments. That's where it's headed.

[Barry D]

California is too big to fail!

[Appalachian Australian]

It would be a form of bankruptcy much like Chrysler. The bondholders will be screwed, and the unions will end up owning 55% of the valuable assets.

[Barry D]

And Italy will get the rest, for free.

[GSL]

Sort of like California is now?

[Barry D]

Maybe he was suggesting that reducing union ownership to 55% could be an improvement. But of course, 55% is still a controlling interest.

[Paul]

Sort of like California is now?

No, currently California Unions own 72% of the valuable assets.

[GSL]

Though the bondholders are still screwed.

[GSL]

In Brown's defense, the budget he vetoed was an extraordinary pile of crap. The building sale isn't even the worst part of it. Contenders for that title include:

1. Defaulting on over $4B in payments to schools.
2. Assuming they could illegally raid First Five funds for $1B.
3. Assuming they could illegally impose a $150 fee on those living in fire zones.
4. Assuming they could raise the state's sales tax without a majority vote.
5. Assuming that forcing online retailers to collect sales taxes would work with no negative consequences.

[Colin]

What, no link to the LL Cool J vid?

http://www.youtube.com/watch?v=FdizL4on-Rc

Next time, we should threaten the legislators pensions instead of their pay. That would bring some action!

[GSL]

By the way, you've got to love the Dem leaders in the Legislature defending their budget as "responsible."

[BigBob]

Anyone who believes a word out of Perez or Steinberg's mouth has their head up their ass.

I do have to admit that my opinion of Brown went up slightly today, but I don't hold out hope of that becoming the norm.

[Joel]

So effectively they were expecting somebody to pay the buyer's price for a building, eventually return it to the original seller, and in the meantime charge the seller enough rent to make it an attractive deal. Is there any way the government could get a buyer to agree to that deal without offering a rent so high that the state would end up losing money in the long run?

No, but the state gets the money now and pays later. Since it isn't (techically) a loan, the Assembly can count the sale as revenue in this year so they can spend more and not worry about the expense until later, where they pay the rent without the initial injection of revenue (heroin?) of the sale.

[sevo]

"No, but the state gets the money now and pays later. Since it isn't (techically) a loan, the Assembly can count the sale as revenue in this year so they can spend more and not worry about the expense until later, where they pay the rent without the initial injection of revenue (heroin?) of the sale."
You have to wonder if the cameras were missing the snickers, snorts and chortles and nudges among these sleazebags as they voted on it.

[P Brooks]

Since it isn't (techically) a loan, the Assembly can count the sale as revenue in this year so they can spend more and not worry about the expense until later

This is what I was getting at yesterday. Or trying to.

[Joshua]

you referenced a hip hop song. RACIST!!!!!!!!

[Nike Dunk High]

thanks