State legislators are fuming at having their pay taken away because they couldn’t provide the governor with a balanced budget, which is, by the way, required by law. Salaries are not being “withheld” and then released after a budget is passed. No. Salaries and expenses are “permanently forfeited” each day without a balanced budget, according to the wording of Proposition 25, which was passed last November. No money back. We’re talking about $50,000 per day that stays in the state’s coffers.

As you’ve probably heard, the legislature gave Gov. Jerry Brown a budget on June 15, deadline day, and the next day the governor vetoed it. Then yesterday, the state controller, John Chiang says that his analysis of the vetoed state budget shows the spending plan was “incomplete and unbalanced,” meaning it doesn’t count as a proper budget. (Reports indicate that the numbers were sloppy at best; the budget total of $89.75 billion in spending provided only $87.9 billion in revenues, leaving an imbalance of $1.85 billion. Oops.) 

As the state budget circus rolls on once again, this is also the time of year that Caltrans starts preparing for a funding cutoff in August.
The nation’s largest state department of transportation will stop advertising new projects or awarding most new work if a budget solution is not reached by the end of this month. 

As Bill Davis, executive vice president of the Southern California Contractors Association, writes in the latest members-only e-newsletter, SCCAtterings, “As things stand now, Caltrans can continue to run the 793 projects (worth $10.6 billion) currently under construction...through August of this year. The only new work that may continue would be projects entirely funded by Prop. 1B bond and local funds – a very small number of projects.”

And as usual, Davis concedes that this annual budget imbroglio and the resulting Caltrans threat “is so unnecessary.” He says SCCA sponsored legislation (AB 1308) this year to allow continuous appropriation of the Highway User Tax Account (motor fuel tax), but it was bottled up in the Assembly Appropriations Committee to force the construction industry to support potential budget “solutions.”

“State gas taxes are collected every day as motorists and truckers fuel their vehicles, but under the state’s archaic funding mechanism tax money cannot be used without legislative approval – i.e. passage of the budget,” says Davis.

He says that to compound the problem, if contractors are ordered to stop work on their projects, Caltrans will be on the hook for the shutdown, security and restart costs – estimated at $600 million of dead waste at the current levels of construction.

“This issue is equally important to the state’s struggling economy and unemployment issues,” says Davis. “If work is shutdown it will mean the loss of 190,000 construction jobs; the delay on new projects will mean 82,800 new jobs will not be created.”