Thu, Aug

Gatto Retracts; Budget Issue Remains

PERSPECTIVE - Ignoring the obvious never turns out well.  Even politicians have to admit mistakes; the sooner they do, the better.  Congressman Weiner learned the lesson the hard way.

Assemblyman Mike Gatto’s remarks chastising State Controller Chiang (essentially categorizing him as the equivalent of a school yard bully), and adding how difficult it was going to be to tell his wife and infant child that he would not be able to pay the family’s bills, (link) were as worthy of a retraction as any.  

So, Gatto did the right thing and backed off.

The article in the Glendale Press [link] made it unclear if the apology was general as opposed to categorical, but it was still an acknowledgment that the assemblyman had inserted his foot in the mouth.  Many have made similar mistakes and many more will follow.

With that flap behind us, maybe we can all deal with the core issue: who decides if a budget is unbalanced and who makes the decision to cut the pay of the legislators.

Unfortunately, Prop 25 did not address this.  You have to wonder why.

Democratic legislators were heavily in favor of the initiative that would allow a budget passed by a simple majority and cessation of lawmakers’ pay if it was not passed timely.  Not inserting a process to deal with the technicalities indicates that the party leadership did not really want any restraints in developing a budget.

Governor Brown, to his credit, realized there would be a public outcry if he did not veto the budget. Controller Chiang could not ignore his fiduciary responsibilities to assure there was a reasonable and sound basis to spend taxpayer monies.  I only wish City Controller Greuel would take her responsibilities as seriously. Even without the salary penalty of Prop 25, he could have made a case to withhold payments against such a frivolous budget.

Chiang was correct to fill the vacuum created by Prop 25′s failure to assign enforcement responsibility.  If for nothing else other than by default, his office was the right one to call the shot on denying pay.  The legislature was responsible for developing the budget; therefore, the members lacked the independence to make the call.  Brown, too, had a vested interest in the budget and had his own proposal. Asking the courts to decide if the budget passed muster would allow the judicial arm to micromanage the state.

Since Chiang was not part of the process and shoulders the responsibility for cutting the checks, he was in the best position to pull the trigger on denying pay.

Controllers and CFOs, regardless of whether they work for the public or private sector, profit or non-profit organizations, have to be able to say “no” in order to head off reckless behavior.  They could be held civilly or even criminally responsible if they allow management to ignore its fundamental obligations to the stakeholders – be they taxpayers or investors.

The proposed budget was a fraud; to allow its implementation would have made Chiang a party to it and a target for accusations of dereliction of duty.

For the record, I opposed Prop 25.  [link]   Although I supported the concept of a budget approved by a majority vote, I felt it was a dangerous to implement it before the  independent redistricting commission was formed and had a shot at eliminating gerrymandered districts.  A shift away from districts dominated by ideologues to ones represented by more moderate members would go a long way to eliminating  insanity in Sacramento.

(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village.  He blogs at Village to Village and can be reached at:    [email protected]aol.com ) –cw

Tags: Mike Gatto, state budget, Prop 25, Governor Brown, Controller Chiang, Controller Greuel

Vol 9 Issue 51
Pub: June 28, 2011