2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 14 1 5 1 6 1 7 1 8 1 9 20 21 22 23 24 25 26 27 28 ORIGINAL FREDRIC D. WOOCHER (SBN 96689) GiULiA C. S. GOOD STEFANI (SBN 262228) STRUMWASSER & WOOCHER LLP 10940 Wilshire Boule vard, Suite 2000 Lo s Angeles, Califomia 90024 Telephone: (310) 576-1233 Facsimile: (310)319-0156 E-mail: [email protected]ARTHUR G. SCOTLAND (SBN 62705) P.O. Box 189206 Sacramento, CA 95818-9206 Telephone: (916)225-1301 E-mail: [email protected]Attorneys for Plaintiffs HD/POORSED By : M A R - 5 2012 M. PUR CELL DEPUTYCLERK SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SACRAMENTO DARRELL STEINBERG, in his capacity a s PRESIDENT PRO TEMPORE OF THE CAL IFOR NI A SENATE ; JOHN A . PEREZ, in his capacity a s SPEAKER OF THE CALIFORNIA ASSE MBLY, Plaintiffs, JOHN CHIANG, in h is capacity a s CALIFORNL\ STATE CONTROLLER; DOES I-X, Defendants. CASE NO. 34-2012-00117584 Exempt From Filing Fees Pursuant to Gov. Code § 6103 PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITI ES I N SUPPORT OF MOTI ON FOR JUDGMENT ON THE PLEADINGS Date: April 10,2012 Time: 2: 0 0 p.m. Dept.: 5 3 Judge: Hon. David I . Brown Resei-vation #1675296 Action Filed: January 24, 2012 Printed on Recycled Paper PLAINTIFFS' MEMO OF POINTS & AUTHORITIES iso MOTION FO R JUDGMENT ON PLEADINGS
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FREDRIC D. WOOCHER (SBN 96689)GiULiA C. S. GOOD STEFANI (SBN 262228)STRUMWASSER & WOOCHER LLP10940 Wilshire Boulevard, Suite 2000Los Angeles, Califomia 90024Telephone: (310) 576-1233
1 issue an executive order suspending or reducing the required transfers into the Budget Stabilization
2 Account for any fiscal year. (Ibid.) Third, together with a companion bond measure approved by
3 the voters at the same election (Proposition 57), Proposition 58 authorized the issuance of a $15
4 billion deficit-financing bond to "wipe the slate clean" and help eliminate the existing cumulative
5 budget deficit, while simultaneously adding language to the Constitufion that would prohibit most
6 borrowing to cover budget deficits in the future. (Ibid. ; see Cal. Const., art. X V I , § 1.3.)
7 The so-called "balanced budget' provision of Proposifion 58 is specifically at issue in the
8 instant litigation. It provides:
9 "For the 2004-05 fiscal year, or any subsequent fiscal year, the Legislature may notsend to the Govemor for consideration, nor may the Governor sign into law, a budget
10 bill that would appropriate from the General Fund, for that fiscal year, a total amountthat, when combined with all appropriations from the General Fund for that fiscal
11 year made as of the date of the budget bill 's passage, and the amount of any GeneralFund moneys transferred to the Budget Stabilization Account for that fiscal year
12 pursuant to Section 20 of Article X V I , exceeds General Fund revenues for that fiscalyear estimated as of the date of the budget bill 's passage. That estimate of General
13 Fund revenues shall be set forth in the budget bill passed by the Legislature." (Art.IV, §12, subd. (g).)
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Under Proposition 58's fomiula, then, the Legislature must set forth in the budget bill an
estimate of General Fund revenues for the coming fiscal year, and that estimate must exceed or equal
the sum of three amounts: (1) appropriations from the General Fund for the fiscal year as proposed
in the budget bill; (2) other appropriations "from the General Fund for that fiscal year made as of the
date of the budget bill 's passage," and (3) any moneys transferred from the General Fund to the
Budget Stabilization Account for that fiscal year. Significantly, Proposition 58 does not require that
the Legislature's estimate of General Fund revenues be based solely upon the law already in effect
at the time of the budget bill's passage. Further, the measure's formula considers only General Fund
appropriations that either have been "made" under the laws in existence as of the date of the budget
bill 's passage or have been proposed in the budget bill itself; it gives no consideration to other
General Fund appropriations that may be contained in or result from the subsequent passage of one
or more trailer bills.
As mentioned above. Proposition 58 also recognized that the estimates and projecfions that
are used in formulating the budget before the fiscal year even begins are necessarily just that —
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISO M O T I O N FOR JUDGMENT ON PLEADINGS
1 The "stick" portion of Proposition 25 was set forth in the addition of subdivision (h) to article
2 IV , secfion 12, which calls for the forfeiture of legislators' pay i f the budget bill is not passed by
3 midnight on June 15, effective from that date until the day that the budget bill is presented to the
4 Governor. Article IV , section 12, subdivision (h), provides:
5 "Notwithstanding any other provision of lavv or ofthis Constitution,... in any yearin vvhich the budget bill is not passed by the Legislature by midnight on June 15,
6 there shall be no appropriation from the current budget or future budget to pay anysalaiy or reimbursement for travel or living expenses for Members of the Legislature
7 during any regular or special session for the period from midnight on June 15 untilthe day that the budget bill ispresented to the Govemor. No salary or reimbursement
8 for travel or living expenses forfeited pursuant to this subdivision shall be paidretroactively."
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D. B U D G E T E V E N T S OF J U N E 2011
On January 10, 2011, the Govemor submitted his proposed budget for fiscal year 2011-12
to the Legislature. That same day, the Senate Budget & Fiscal Review Con-unittee Chair introduced
the Governor's budget bill in the Senate, denominated Senate Bill No. 69 ("SB 69"), and the Chair
of the Assembly Committee on Budget introduced the Governor's budget bill in the Assembly,
denominated Assembly Bill No. 98 ("AB 98").
The Legislature's primary budget bill, SB 69, itemized proposed state expenditures, identified
a fund for each appropriation, and utilized a coding scheme and general organizational structure
compatible with the Governor's Budget. (SB 69 (2011-12 Reg. Sess.) [attached as Exh. 1 to
Plaintiffs' RJN].) SB 69's subject, per its title, was: "A n act making appropriations for support of
the govemment of the State of California and for several public purposes in accordance with the
provisions ofSection 12 of Article IV of the Constitution of the State of California, to take effect
immediately. Budget Bil l . " (Ibid.) In addition to making these appropriafions, SB 69 set forth that
" [ f ]o r purposes of subdivision (g) of Section 12 o f Ar t i c l e IV of the Califomia Constitution, the
esfimate of General Fund revenues for the 2011-12 fiscal year pursuant to this act, as passed by the
Legislature, is $86,842,200,000." (Id., § 35.50, subd. (c).) SB 69 passed the Assembly and Senate
by majorityvote in each house on March 17, 2011.
AB 98 amended SB 69. Collectively, the two bills constituted the Legislature's budget bill
PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISOM O T I O N FOR JUDGMENT ON PLEADINGS
for the 2011-12 fiscal year.' (See AB 98 (2011-12 Reg. Sess.) [attached as Exh. 2 to Plainfif fs '
RJN].) Among other revisions, AB 98 a m e n d e d the Legislature's estima te of General Fund reven ues
for the f iscal year, setfing the esfimate at $87,803,300,000. (M, §426.) AB 98 a lso idenf i f ied a l is t
o f a pproximately one hundre d Sen ate and Assembly bills "providing for appropriations related to
the Budge t Bill within the m e a n i n g of subdivision (e) ofSection 12 of Article IV of the Califomia
Con stitution ." (Id., § 427.) AB 98 passed the Assembly an d Senate bymajority votes on June 15,
2011. (Assem. J. (2011-12 Reg. Sess.), pp. 1946-1948; Sen. J. (2011-12 Reg. Sess.), pp. 1433-
1436.) At approximately 5:00 p.m. that same day, the Legislature presented its budge t bill, as set
forth in SB 6 9 a s a m e n d e d by AB 9 8 , to the Go vemo r. (Ibid.)
On June 16, 2011, the Go vemo r re tumed SB 69 a n d AB 9 8 to the Le gislature without his
signature, thereby vetoing the Legislature's budget bill. In the accompanying message, th e Governor
commen ded Demo crats in the Legislature for "their tremen do us e f forts to balance the budget in the
absence of Republican cooperation," specif ically re ferencing their "valiant e f forts to a d d r e s s
Califom ia's budge t crisis by en acting $11 bill ion in pain ful cuts and other solufions." (Governo r 's
Veto Message to Assembly on AB 98 (June 16, 2011), Assem. J. (2011-12 Reg. Sess.), p. 1984
[attached as Exh. 6 to Plaintif fs ' RJN].) The Go vemo r expressed his concern, however, that the
budget submitted to him did not contain an equitable mixture of both spending cuts and re venue
increases — what he referred to as " a balanced solution " to the state's structural deficit — and that,
a s a result, "[i]t con tinues big de ficits for years to come and adds billion s of dollars of new debt. .. .
[Tl] We ca n — a n d must — do better." (Ibid.f
' A B 98 'S subject, as declared in its fitle, was: "A n act to amend and supplement the Budget
Act of 2011 . . . to take effect immediately. Budget Bil l . " The Legislative Counsel's Digest for
AB 98 explained that "SB 69 . . . would make appropriations for support of state govemment for the
2011-12 fiscal year," and "[AB 98] would make revisions to those appropriations." (AB 98 (2011 -12
Reg. Sess.).)
^Contrary to the Controller's characterization, the Govemor's veto message d id not indicate
that he believed that the Legislature's June 15 budget bill was not "balanced" in accordance vvithProposition 58's formula. Rather, using the same terminology that he had consistently employed in
describing the "budget solutions" he proposed for addressing the state's ongoing deficits, the
Governor bemoaned that due to the Republicans' continuing refusal to allow the electorate to vote
on extending certain temporaiy taxes, the Legislature's budget bill d id not include an appropriately
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PLAINTIFFS' MEMO OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENTON PLEADINGS
Legislature in der iving its reve nue e stima te, but which ha d n o t ye t been en a cted as of the date of the
budget bill's passage.^ (Id., p. 3.) The Controller a lso a d d e d in a n additional $1,478 billion to the
Legislature's "expenditures" to account for the supposed "unde rfunding" o f education. Finally, th e
Controller added $770.1 mill ion in "expenditures" for something he enf i t led "Liquidaf ion of
Encumbran ces," w ithout explaining what that f igure wa s supposed to represent. The Controller
relied on these alleged "miscalculations" to con clude tha t the Legislature's June 15, 2011, budget
bill d id not mee t the requiremen ts of Proposition 58 . (Id., p. 1.) The Con troller then d eclared the
legislators' payand l iving expenses to have been for fe i ted f rom June 16 until "the day that the
budget bil l is presented to the Govern or." (Ibid .)
In the meantime, the Legislature was busy reconsidering the budget bill fol lowing its return
from the Govemor. On June 28, 2011, the Senate and Assembly enrolled and presented to the
Governor SB 87 — a new budget bill fo r the 2011-12 fiscal year. On June 30, 2011, the Govemor
signed the Legislature's budget bill and enacted the 2011-12 Budget Act into law.
A R G U M E N T
In a declaratory relief action, a motion for judgment on the pleadings is an appropriate means
of obtaining an adjudication of the rights of the parties when those rights can be determined as a
matter of law from the face of the pleadings and judicially noticeable matters. (Code Civ. Proc, §
438, subd. (d); see Schabarum v. California Legislaiure (1998) 60 Cal.App.4th 1205, 1216 ["The
standard for granting a motion for judgment on the pleadings is essentially the same as that
applicable to a general demun-er, that is, under the state of the pleadings, together with matters that
The four such bills singled out by the Controller included tw o pending Senate bills, one of
vvhich was a budget trailer bill, and two pending Assembly bills, both of which were related to the
budget. Although the Controller added the estimated revenue impact of these bills to the"expenditures" column in his analysis of the budget, the basis for his objection vvas that the addifional
revenues that they were projected to produce could not reliablybe counted on, so the amounts should
actually have been subtracted from the "revenues" column instead. Doing so, however, would have
blatantly exposed the fact that the Controller vvas doing nothing more than second-guessing the
Legislature's estimate of General Fund revenues fo r the upcoming fiscal year.
The Controller a lso identi f ied one additional Sena te bil l that would, w hen passed, cost the
state $94 million. The Con troller s imilarty e rron eously categorized this ad dif ion al projected
"savings" as additional "revenues" in his analysis. (Ibid.)
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PLAINTIFFS' MEM O OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENT ON PLEADINGS
may be judicially noticed, it appears that a party is enfitled to judgment as a matter of law."]. ) Where
the answer raises no material issues of fact and states no valid defense to the acfion, the plain t i f f i s
entified tojudgment on the pleadings. (Knoffv. Cityelc. ofSan Francisco (1969) 1 Cal.App.3d 184,
200.)
In this case, the pleadings establish the existence of an important and ongoing legal dispute
between the Legislature and the Controller regarding their respective rights and duties under the state
Constitution. As exemplified by his actions with respect to the FY 2011-12 budget, the Controller
asserts the right to review the Legislattire's estimate of General Fund revenues and appropriations
as set forth in the annual budget bill, to make his own assessment of whether the budget bill passed
by the Legislature complies vvith article IV , section 12, subdivision (g), and to unilaterally enforce
his opinion by deeming the salaries and expenses of the Members of the Legislature to have been
forfeited pursuant to subdivision (h) of that section. As we show below, however, the Controller is
misinteipreting and incorrectly applying these constitutional requirements, and heexceeds his l awful
authority and violates the separation of powers doctrine by interjecting himself in this manner into
the budget process, which the Constitution declares to be the exclusive responsibility of the
Legislature and the Governor.
I . THE L E G I S L A T U R E C O M P L I E S W I T H A R T I C L E IV, S E C T I O N 12,S U B D I V I S I O N (G), OF T H E C O N S T I T U T I O N W H E N IT S E N D S THEG O V E R N O R A B U D G E T B I L L P R O P O S I N G G E N E R A L F U N DA P P R O P R I A T I O N S T H A T , W H E N C O M B I N E D W I T H E X I S T I N GG E N E R A L F U N D A P P R O P R I A T I O N S AND ANY T R A N S F E R S TO T H EB U D G E T S T A B I L I Z A T I O N A C C O U N T , DO NOT E X C E E D THEL E G I S L A T U R E ' S E S T I M A T E O F G E N E R A L F U N D R E V E N U E S F O R T H EF I S C A L Y E A R
As set forth above, article IV , section 12, subdivision (g), of the Constitufion, added by
Proposition 58, provides that the Legislature may not send to the Govemor a budget bill that would
appropriate from the General Fund a total amount that, when combined with (1) all previous General
Fund appropriations already made for that fiscal year as of the date of the budget bill 's passage and
(2) the amount of any General Fund moneys transferred to the Budget Stabilization Account for that
fiscal year, exceeds the Legislature's estimate of General Fund revenues for that fiscal year as ofthe
date of the budget bill 's passage. (See pp. 5-7, supra.) Proposition 58 thus imposes a very specific
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PLAINTIFFS' MEMO OF POINTS & AUTHORITIES ISOMOTION FOR JUDGMENT ON PLEADINGS
limitation on the Legislature's budgetary prerogative: The Legislature must make and set forth in the
budget an estimate of General Fund revenues for the coming fiscal year, and the General Fund
appropriations proposed by the budget bill , when combined with the two amounts noted above,
cannot exceed that estimate. Pursuant to the plain meaning of the Constitution, when the Legislature
passes and sends to the Govemor a budget bill that complies with this specific condifion, the
requirements of article IV , secfion 12, subdivision (g), are satisfied.
The Controller does not dispute that, on its face, the 2011-12 Budget Bill enacted by the
Legislature on June 15, 2011, complied with Proposition 58's requirement. The Legislature
estimated that General Fund revenues for the 2011-12 fiscal year would be $87,803 billion (see
AB 98 (2011-12 Reg. Sess.), § 426 [amending SB 69, § 35.50]), and the amount of General Fund
appropriations proposed by the budget bill , when combined with General Fund appropriations made
by existing law for that fiscal year as of the date ofthe budget bill 's passage, totaled approximately
$86,550 billion — leaving a budgetary "reserve" of more than $1,252 billion. (See Controller's
Proposition 25 Budget Analysis [comparing estimated "expenditures" of $86,550,700,000 with
"revenues" of $87,803,000,000].) Yet the Controller took it upon himself to go beyond the
Legislature's calculations and conducted his own analysis of both the budget and the Constitution's
requirements, "adjusting" the Legislature's estimated revenues and expenditures by some $3 billion
and concluding that the Legislature's pay must be forfeited because this revised budget allegedly did
not satisfy article IV , secfion 12, subdivision (g). In doing so, the Controller both misinterpreted the
consfitutional requirements and unlavvfully interfered with a function exclusively assigned to the
Legislature.'
'The provision upon which the Controller relied to deem the Legislature's pay to be forfeited— article IV , section 12, subdivision (h) — provides for the forfeiture of legislators' salary and
expense reimbursements "in any year in which the budget bill is not passed by the Legislature by
midnight on June 15." That provision, which was added to the Constitufion by Proposition 25
specifically in order "to end budget delays . . . by requiring legislators to forfeit their pay i f the
Legislature fails to pass the budget on time" (Proposition 25, § 3, subd. (1) [Purpose and Intent]),
contains no statement that its forfeiture penalty also applies to an asserted violation of article IV ,
section 12, subdivision (g)'s separate requirement that the budget bill be "balanced" in accordance
vvith its prescribed formula. The Court need not resolve the issue of vvhether the Controller
incorrectly applied Proposifion 25's forfeiture penalty to an asserted violation of section 12,
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PLAINTIFFS' MEMO OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENT ON PLEADINGS
Under the express terms of article IV, section 12, subdivision (g), the "balancing"
requirement of that constitutional provision is satisfied vvhen the Legislature's estimate of General
Fund revenues for the coming fiscal year exceeds the combined total of three specific amounts:
(1) the appropriations from the General Fund for that fiscal year proposed in the budget bill itself;
(2) "all appropriations from the General Fund for that fiscal year made as of the date of the budget
bill 's passage"; and (3) "the amount of any General Fund moneys transferred to the Budget
StabilizafionAccount for that fiscal year."'" The Legislature's June 15th budget was indisputably
"balanced" according to this fonnula. The Controller nevertheless asserted that components of the
Legislature's budget were "incomplete" because in some instances the Legislature's revenue
estimates anticipated the passage of "trailer bills" that had not yet been enacted, and in other
instances the budget did not include appropriations that, in the Controller's view, would have to be
made in the future. None of the Controller's objections, however, finds any support in the very
specific language and requirements of the Constitution.
For example, the Controller faulted the Legislature for including$320 million in anticipated
revenues from a newhospital fee proposed in SB 335, even though that legislation had not yet been
enacted as of the date of the budget's adoption." But nothing in secfion 12, subdivision (g),
prohibits the Legislature from including in its estimate of General Fund revenues for the coming
fiscal year moneys that it believes wil l be generated as a result of the enactment of "trailer bills" like
SB 335. Indeed, it could hardly be otherwise, for under the single-subject rule of article IV,
secfion 9, the Legislature is constitutionally prohibited from including in the budget bill itself tax
subdivision (g), under the present circumstances, however, because — for the reasons discussed
herein — the Legislature unquestionably complied with the requirements of section 12,
subdivision (g), in timely enacting the June 15, 2011, budget bill .
'"For the 2011-12 fiscal year, the amount transferred to the Budget Stabilization Account was
zero, for the Governor had suspended the transfer requirement by executive order, in accordance witharticle X V I , section 20, subdivision (e). (See Executive Order B-07-11 (May 31,2011) [attached as
Exh. 11 to Plainfiffs' RJN].)
"SB 335, introduced on Februaiy 15, 2011, imposed a "quality assurance fee" on certain
hospitals. The Legislaturepassed the bill on August 29,2011, in a form structured to generate $320
million in revenues, and it was signed into lavv by the Governor on September 16, 2011. (See
Plaintiffs' RJN, Exh. 3.)
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISOM O T I O N FOR JUDGMENT ON PLEADINGS
increases, revenue enliancements, or other substantive changes to law that might be needed to fund
the bill 's appropriations or to implement the spending prionties refiected in the budget.' Thus, in
arrivingat its estimate of General Fund revenues for the fiscal year, the Legislature must necessarily
take into account the existence of "trailer bills" that have not yet been enacted at the time of the
budget's adoption. And as section 12, subdivision (g), recognizes, only the Legislature is
empowered to assess the likelihood that these pending bills wil l be passed and to project the impact
of their adoption on ftiture revenues.'
In short, pursuant to the plain meaning of the Constitution, the Controller's conclusion that
the June 15th budget bill violated article IV , section 12, subdivision (g), vvas erroneous as a matter
of law. The only constraint imposed by that consfitufional provision on the Legislature's discretion
in adopting the budget bill is that the amount of appropriations from the General Fund proposed in
the budget bill , vvhen combined with the appropriations already made from the General Fund for that
' Likewise, until the budget bill has been enacted into law, the Legislature is generally
prohibited from sending to the Governor for consideration "any bill appropriating ftinds for
expenditure during the fiscal year for which the budget bill is to be enacted." (Art. IV, § 12,
subd. (c)(4).) The "trailer bills" that enhance revenues, adjust program benefits, or make other
substanfive changes in lavv to implement the budget bill , as expressly addressed in article IV by
Proposifion 25, are "bills providing for appropriafions related to the budget bil l ," and thus aregenerally subject to this restriction. (See art. IV , § 12, subds. (d) & (e).)
'•'Conversely, the Controller also took the Legislature's budget bill to task for allegedly not
appropriating enough money from the General Fund to cover certain state spending needs or
obligations that he believed would arise in the future. (See Controller's Proposition 25 Budget
Analysis, supra [June 15 budget underftinded Proposifion 98 requirement by more than $ 1.3 billion;
June 15 budget assumes $209 million savings from more-efficient correcfional administration at the
local level].) By its explicit temis, however, section 12, subdivision (g)'s "balanced budget' formula
does not include consideration of General Fund appropriations for the fiscal year that are neither
proposed in the budget bill nor "made as of the date of the budget bill 's passage." Again, this is for
good reason: Whether the supposedly "underfunded" spending obligations identified by theController would in fact require that General Fund appropriations be made in the future is entirely
speculative, as it hinges upon what trailer bills may yet be passed by the Legislature (e.g., a statutory
reduction of benefits under an existing state spending program) or upon any of myriad other actions
that the Legislature might take to address the alleged shortfall (such as suspension of the
Proposition 98 spending obligation). The critical point is that Proposition 58's formula is concemed
with the amount of General Fund appropriations that the Legislature has either proposed in the budget
bill or has already authorized by law to be spent on the enumerated programs as ofthe date of the
budget bill 's passage, not vvith vvhether the Controller or anyone else believes that additional funds
should be appropriated in the future to meet the state's needs.
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISOMOTION FOR JUDGMENT ON PLEADINGS
fiscal year as of the date of the budget bill's passage, must not exceed the Legislature's estimate of
revenues for the coming fiscal year. Such a limitation on the Legislature's law-making authority
under the Constitution must be strictly construed. As the Court emphasized in Pacific Legal
Foundation v. Brown (1981) 29 Cal.3d 168:
" I f there is any doubt as to the Legislature's povver to act in any given case, the doubtshould be resolved in favor of the Legislature's action. Such restrictions andlimitations [imposed by the Constitution] are to be construed strictly, and are not tobe extended to include matters not covered by the language used." (Id. at p. 180[citations omitted; emphasis in original].) ' ' '
When the General Fund appropriation amounts specified by section 12, subdivision (g), do
not exceed the Legislature's estimate of General Fund revenues set forth in the budget bill — as was
the case with the Legislature's June 15, 2011, budget — that constitutional requirement has been
satisfied, plain and simple. The Controller therefore went beyond the limited terms and restrictions
imposed by the Constitution by adding into his budget calculation hundreds of millions of dollars
in "appropriations" that had not been made by the Legislature at the time ofthe budget bill 's passage,
and by removing from the Legislature's estimate of future revenues hundreds of millions of dollars
of funding that was projected for the coming fiscal year as a result of pending, but not yet enacted,
legislafion.
More fundamentally, section 12, subdivision (g), grants the exclusive authority for
determining the estimate of General Fund revenues to the Legislature, and it neither sets forth any
criteria that could be said to restrict the Legislature's discretion in the preparation of that revenue
estimate, nor does it assign to any other officer or agency any role in reviewing the validity of the
Legislature's projection. It has long been established that "[t]he enactment of a budget bill is a
legislative function; it is both a right and a duty that is expressly placed upon the Legislature and the
'''This rule of strict construcfion applies fully to constitutional inifiatives such as
Proposition 58:
"The rule has so long been such an integral part of our system of constitutional
adjudication that anyone drafting a proposed constitutional amendment must be
presumed to act in light of it. For such a person the rule can be simply stated: To the
extent you intend to restrict the Legislature's exercise ofthe legislative prerogative,
you must do so by clear and unequivocal language." (Schabarum v. California
Legislature, supra, 60 Cal.App.4th at p. 1218 fn. 6.)
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENT ON PLEADINGS
Governor by our state Constitution." (Schabarum v. California Legislature, supra, 60 Cal.App.4th
at p. 1214; see, e.g., art. IV , § 12, subd. (f) ["The Legislature may control the submission, approval,
and enforcement of budgets . . . ."].) The Legislature's exclusive constitutional responsibility for
adopting the budget is refiected in section 12, subdivision (g)'s explicit declarafion that the "estimate
of General Fund revenues shall be set forth in the budget bill passed by the Legislature." Notably
absent in that subdivision or elsewhere in the Consfitution is any provision empowering the
Controller to review the Legislature's exercise of its constitutional authority and to substitute his
own judgment for that of the Legislature with respect to the budget bill 's estimate of General Fund
revenues.'
To the contrary, the courts have steadfastly held that when the policymaking role of the
Legislature necessitates that it engage in certain fact-finding processes as "an indispensable incident
and auxiliary to the proper exercise of the legislative power," it is not the function of any other
branch of government — includingeven the judiciaiy — to reweigh or to question the validity of the
Legislature's detenninations. (Schabarum v. California Legislature, supra, 60 Cal.App.4th at
p. 1219.) As the Supreme Court admonished more than a century ago:
"When the right to enact a law depends upon the existence of facts, it is the duty of
the legislature, before passing the bill, and of the govemor before approving it , tobecome satisfied in some appropriate way that the facts exist, and no authority isconfeiTed upon the courts to hear evidence, and detemiine, as a question of fact,whether these co-ordinate departments of the state government have properlydischarged such duty. The authority and duty to ascertain the facts which ought tocontrol legislative action are, from the necessity of the case, devolved by theconstitution upon those to whom it has given the power to legislate, and theirdecision that the facts exist is conclusive upon the courts, in the absence of anexplicit provision in the constitution giving the judiciary the right to review suchaction." (Steven.son v. Colgan (1891) 91 Cal. 649, 652.)
Pursuant to article IV , section 12, subdivision (g), it is the constitutional responsibility of the
Legislature, before passing the budget bill, to estimate General Fund revenues for the coming fiscal
year and to satisf)' itself that the aniount of the budget bill's appropriations from the General Fund,
when combined with all previous appropriations made from the General Fund for that fiscal year as
' Indeed, even the Governor, who has the authority under the Constitution to veto a budget
bill in its entirety or to "reduce or eliminate one or more iteins of appropriation''' (art. IV, § 10,
subd. (e) [emphasis added]), has no power to increase, reduce or eliminate the Legislature's estimate
of General Fund revenues set forth in the budget bill.
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PLAINTIFFS' MEMO OF POIN TS & AUTHORITIES ISO MOTION FOR JUDGMENTON PLEADINGS
within cuirent staffing levels, and these functions are not current responsibilities of the
Controller.'" (Controller's Analysis of ACA 13, p. 1 [emphasis added] [attached as Exh. 13 to
Plaintiffs' RJN, p. 1].) The Controller went on to explain that his office did not have sufficient
historical data to be able to provide accurate estimates of General Fund revenues for each fiscal year,
that representafives of the Controller's office would need to be included in all legislative meetings
discussing bills that might have an impact on the General Fund in order to gauge their impacts on
the current or upcoming budget bill , and that "[t]o accomplish these tasks, 34 full-t ime and 10 three-
year limited-temi positions would be required," at an estimated cost of more than $6 million per
year. ( M , pp. 2-3.)'
In short, the Controller had it right in February 2011, and he got it wrong four months later
in June: As demonstrated by the Controller's erroneous interpretation and application of section 12,
subdivision (g), to the FY 2011-12 budget bill , he does not have either the factual basis or the
necessary expertise to determine whether the budget bill passed by the Legislature complies with that
section's requirements. More importantly, he does not have the legal authority to do so — at least
in the absence of a constitutional amendment that would give that responsibility to the Controller.
II . T H E C O N T R O L L E R HAS NO A U T H O R I T Y TO S E C O N D - G U E S S T H E
L E G I S L A T U R E ' S B U D G E T E S T I M A T E S AND TO D E E M THEL E G I S L A T U R E ' S PAY TO BE F O R F E I T E D B A S E D U P O N HIS OWNA N A L Y S I S OF W H E T H E R THE B U D G E T B I L L S A T I S F I E S THEC O N S T I T U T I O N ' S R E Q U I R E M E N T S
In addition to having misinterpreted the specific requirements imposed on the Legislature's
enactment of the budget bill by the Constitution, the Controller exceeded his authority by interjecting
himself into the budget-making process at all , and he violated the separation of powers doctrine by
deeming the Legislature's pay to be forfeited based upon his own analysis and adjustment of the
Legislature's budget calculations. As noted above, article IV , section 12, of the Constitufion assigns
the responsibility for adopfing a budget in compliance vvith its provisions to the Legislature and the
Governor, and neither the Consfitufion nor any statute grants the Controller's office any role in that
process, much less the power to declare the Legislature's pay to be forfeited based upon the
'*ACA 13 was referred to the Assembly Committee on Budget in April 2011, but has not been
scheduled for hearing by the Committee.
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENT ON PLEADINGS
the paynient of money directed by law to be paid out of the State Treasury."
To the contrary, it has long been held that the Controller's responsibility to draw vvaiTants
fo r the expenditure of state ftinds does not include the authority to ascertain the validity of the
payment. Rather, "[t]he Controller's authority is generally said to be ministerial when the ainount
of an expenditure is set by lavv or entrusted to the discretion of another agency or branch of
government." (Tirapelle v. Davis, supra, 20 Cai.App.4th at p. 1329 ; accord, Gilb v. Chiang (20\0)
186 Cal.App.4th 444, 464.) In one of its earliest decisions examining the scope of the Controller's
authority, McCauley v. Brooks (1860) 16 Cal. 11 , the Supreme Court held that a writ of mandate
should issue compelling the Controller to issue certain warrants to a lessee who had entered into a
contract vvith the state pursuant to a stattite that gave the lessee the right to demand and receive
warrants from the Controller for the monthly payments named in the contract. Th e court in Tirapelle
V. Dcjvis described what happened next in the McCauley case:
"On petition fo r rehearing the Controller claimed an independent right which couldnot be controlled by mandate to determine the propriety of expenditures. The courtissued a lengthy opinion denying the petition for rehearing in order to rejectarguments of the Controller that the court regarded as 'preposterous' and'pernicious.' (16 Cal. at pp . 57, 64.) In its discussion the court pointed out that i f theController is vested with such independent authority then so also must be otherofficers such as the Treasurer, Secretary of State and the Govemor. (Id. at pp. 60-61.)
There would be nothing that would preclude the Treasurer from insisting upon theright to independently review and refuse to honor the warrants of the Controller, orthat would preclude the Secretary of State from reftising to perform the duties of thatoffice, such as certifying appointments and/or elections. (16 Cal. at pp . 60-61.) . . .I f this doctrine can be maintained, the government must cease to be one of law, andmust sink into merited contempt for its weakness and inefficiency. (Id. at p. 61.)"(Tirapelle v. Davis, supra, 20 Cal.App.4th at pp . 1330-1331.)'
'^As is obvious from the quoted passage, the Court in McCauley f imi ly rejected any notion
that the Controller had the independent authority to determine the validity of a legislative act or that
he could refuse to make payments to state officials based on his belief that they had not properlyperformed their duties:
"[The Controller's]duties are enumerated anddefined by the law, and they are, as we
have said, generally ofa purely ministerial character. He has no discretion as to the
issuance of warrants fo r appropriations fo r the public service. He cannot refuse his
warrants for the salaries of the Govemor and Judges, upon any notions that such
matters rest in his discretion, and that in his judgment those officers have not
performed their duties. . . . But ifhe cannot do this in the cases supposed, he cannot
do it in any case where a specific ministerial duty is enjoined." (16 Cal. at p. 55.)
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PLAINTIFFS' M E M O OF POINTS & AUTHORITIES ISO MOTION FOR JUDGMENT ON PLEADINGS
Attorneys for Defendant California State Controller John Chiang
IS I f electronic-mail service is indicated, by causing a true copy to be sent via
electronic transmission from Strumwasser & Woocher LLP's computer network in PortableDocument Format (PDF) this date to the e-mail address(es) stated, to the attention of the person(s)
named.
• I f fax service is indicated, by facsiinile transmission this date to the fax nuniber
stated, to the attention of the person named, pursuant to Code o f Ci v i l Procedure section 1013(f).
la I f ovemight service is indicated, by placing this date for collection by sending true
copies in sealed envelopes, addressed to each person as indicated, pursuant to Code of Civil
Procedure, section 1013(d). I am readily familiar with this firm's practice of collecting and
processing correspondence. Under that practice, it would be deposited vvith an overnight service
in Los Angeles County on that same day with an active account number shovvn for paynient, in theordinary course of business.
1 declare under penalty of perjuiy under the laws ofthe State of California that the above
is true and correct. Executed on March 5, 2012, at Los Angeles, California.