California stops paying its legislators. What happens now?

The decision by a California official to stop paying state legislators until they pass a balanced budget means Democrats are under increasing pressure to act.

California voters' pioneering attempt to force their lawmakers to pass a balanced, on-time budget is heaping new pressure on the state's Democratic legislators, analysts say.

State Controller John Chiang decided Tuesday that voter-approved Proposition 25, passed last November, requires him to withhold the paychecks of state legislators for the foreseeable future, saying the budget passed by the Democratic-controlled Legislature on June 15 was not balanced. Prop. 25 requires legislators to pass a balanced budget by June 15 or forfeit their pay for each budget-less day thereafter.

That leaves Democrats facing the same conundrum as before, though now without pay: Do they embrace a massive all-cuts budget to shore up the $9.6 billion deficit or compromise with Republicans on a plan to extend certain tax rates set to expire?

Republicans having shown no sign of budging for months: They will allow a special election on extending the tax rates only if Democrats allow spending-cap and pension-reform measures to appear on the ballot, too. Meanwhile, Gov. Jerry Brown (D) says he might release his own all-cuts budget proposal.

That leaves the ball in the Democrats' court, say analysts.

“The pressure is on the Democrats; they are in charge,” says Tony Quinn, co-editor of the California Target Book, in an e-mail. “They can have the tax election Governor Brown wants, but only if they are willing to put a spending cap and pension reform on the same ballot."

"Thus far, the public-employee unions have pressured the Democrats not to do this. But it is the only way to move the process along," he adds. "Either compromise with the Republicans over the tax election, or do a full-cuts budget. There is no other choice.”

Prop. 25 is providing the impetus for forcing legislators to come up with another budget that works, says Hal Dash, CEO of Cerrell Associates, a Democratic consultancy in Los Angeles.

"This does have the leverage the people wanted it to have,” he says. “Now [legislators] have to get back to the negotiating table, and what makes you respond quicker: The governor yelling at you, or no money for groceries? Feeding your family and putting gas in the car wins every time.”

The outcome might not please California voters. Indeed, Brown might be hoping that an all-cuts budget proposal horrifies California voters enough that they force Republicans to compromise. But it is a risk.

Republicans have introduced their own all-cuts budget proposal, though critics including Brown say it relies on accounting tricks and gimmicks. Still, Republicans could embrace an all-cuts budget.

“We believe the best use of our energy at this time is crafting a no-tax-increase budget that the people of California want and deserve,” says Sabrina Lockhart, spokeswoman for Assembly minority leader Connie Conway, in an e-mail. “Republicans have already shown there is a path to close the budget gap without tax hikes, while protecting education and public safety.”

Democratic Assembly Speaker John Pérez has said in a statement that he worries that Controller Chiang's decision will embolden Republicans. He called the decision "wrong."

Other legislators have released statements complaining of how hard their pocketbooks are being hit.

"John Chiang just wants to sit there and beat up on the unpopular kids," said Democratic Assemblyman Mike Gatto in a statement. "I now have to explain to my wife and daughter that we won't be able to pay the bills because a politician chose to grandstand at our expense."

Some Democrats have said they might challenge the decision in court.

But Alicia Trost, press secretary for Democratic Senate majority leader Darrell Steinberg, says in an e-mail that "everyone is focused on getting a budget by July 1.”

President Pro Tem Steinberg’s first choice would be to get the needed Republican votes for "bridge" revenue to provide funding for critical services between the expiration of the key tax rates on June 30 and a potential special election on extending them, she says.

Without that, she adds, the governor will have to make clear what "options he is willing to sign."

But Chiang’s ruling is not the primary motivating force, Ms. Trost says: “Preventing a long budget stalemate, which only frustrates the public more – and rightly so – is our biggest motivator.”