Steinberg v. Chiang , 223 Cal. App. 4th 338 ( 2014 )

Filed 1/24/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
DARRELL STEINBERG, as President pro C071498
Tempore, etc., et al.,
(Super. Ct. No.
Plaintiffs and Respondents, 34-2012-00117584-CU-MC-GDS)
v.
JOHN CHIANG, as State Controller, etc.,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Sacramento County, David I.
Brown, Judge. Affirmed.
Diane F. Boyer-Vine, Legislative Counsel, Jeffrey A. DeLand, Chief Deputy
Legislative Counsel; Strumwasser & Woocher, Fredric D. Woocher and Michael J.
Strumwasser for Plaintiffs and Respondents.
Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney
General, Mark R. Beckington and Ross C. Moody, Deputy Attorneys General, for
Defendant and Appellant.
1
Defendant John Chiang, in his official capacity as State Controller (Controller),
appeals from a declaratory judgment in favor of plaintiffs Darrell Steinberg and John
Pérez in their respective official capacities as President pro Tempore of the Senate and
Speaker of the Assembly (collectively, the Legislature). The trial court concluded that
the Legislature complies with the constitutional provision for a balanced budget when it
enacts a budget bill in which its revenue estimates for the coming fiscal year exceed the
total of existing appropriations for the fiscal year, new appropriations proposed in the
budget bill for the fiscal year, and any transfer to the reserve fund. At that point, the
Controller does not have the authority to make an independent assessment that the budget
bill is not in fact balanced because it relies on revenues not yet authorized in existing law
(or in enrolled legislation),1 and on that basis withhold the salaries of legislators as a
penalty for failing to enact a timely budget.
The Controller appeals, contending declaratory relief should have been denied
because this action does not represent an actual controversy, or because his undisputed
power to audit the lawfulness of any request for a warrant entitles him to determine
whether a budget is in fact balanced regardless of any legislative declaration to that
effect. Because the parties are in an ongoing relationship in which this existing dispute
over the Controller’s asserted authority can arise again in the future, which presents a
question of law regarding the interpretation of provisions of the state Constitution in the
context of facts inherent in any future such dispute, we do not find a declaration of rights
to be purely advisory. On the merits, we agree with the trial court that the Controller has
failed to identify any basis for the exercise of a power to audit the accuracy of legislative
estimates of revenues. We therefore shall affirm the judgment.
1 Enrolled bills have passed both houses of the Legislature and have been sent to the
Governor for approval or veto. (Kaufman & Broad Communities, Inc. v. Performance
Plastering, Inc. (2005) 133 Cal.App.4th 26, 40.)
2
FACTUAL AND PROCEDURAL BACKGROUND
The pertinent facts are few. In 2011, the Legislature passed a budget bill on
June 15 and sent it to the Governor for signature. The Legislature estimated revenues for
the coming fiscal year of $87.8 billion dollars (rounded), and the appropriations in the
budget bill (in combination with existing appropriations for the fiscal year) totaled $86.6
billion dollars (rounded).2 The Governor vetoed it on the next day, declaring that it did
not present a “balanced solution” of spending cuts and revenue increases to address the
“big deficits for years to come.”
The Controller then undertook a determination of whether the budget bill
complied with the constitutional provision for a balanced budget. (Cal. Const., art. IV,
§ 12, subd. (g) [the “balanced budget” provision].)3 Finding inter alia that some of the
identified revenues were based on four bills that the Legislature had yet to pass, the
Controller declared on June 21 that the Legislature failed to enact a balanced budget by
midnight on June 15, which therefore subjected its members to the penalty contained in
a 2010 constitutional amendment for failing to enact a budget bill before June 16:
forfeiture of their salaries until the presentation of a balanced budget bill to the
2 The Governor had previously suspended the mandated minimum transfer to the Budget
Stabilization Account for the upcoming fiscal year (Cal. Const., art. XVI, § 20, subd. (e)),
which had a reserve of $1.26 billion (rounded).
3 In pertinent part, the provision states, “the Legislature may not send to the Governor
for consideration, nor may the Governor sign into law, a budget bill that would
appropriate from the General Fund, for that fiscal year, a total amount that, when
combined with all appropriations from the General Fund for that fiscal year made as of
the date of the budget bill’s passage, and the amount of any General Fund moneys
transferred to the Budget Stabilization Account . . . , exceeds General Fund revenues for
that fiscal year estimated as of the date of the budget bill’s passage. That estimate of
General Fund revenues shall be set forth in the budget bill passed by the Legislature.”
(Cal. Const., art. IV, § 12, subd. (g).)
3
Governor.4 (Cal. Const., art. IV, § 12, subds. (c)(3) & (h) [the timely budget and
forfeiture provisions.)5 The Legislature passed a balanced budget on June 28, which the
Governor signed into law on June 30.
The Legislature never sought direct judicial review of the Controller’s action.
Instead, the Legislature filed the instant action in January 2012, seeking a declaration that
it complies with the balanced budget provision of the state Constitution when it passes a
budget bill in which appropriations (and monies transferred to the reserve account) do not
exceed the legislative estimate of revenues, and that the Controller cannot thereafter
make a determination that the budget bill was not in fact a balanced budget enacted on or
before June 15, or enforce that decision by declaring legislative salaries forfeited until the
enactment of a balanced budget. The parties made cross-motions for judgment on the
4 The Controller also asserted that the Legislature had not fully funded the mandated
minimal level of funding for education (Cal. Const., art. XVI, § 8; California Teachers
Assn. v. Hayes (1992) 5 Cal.App.4th 1513, 1517-1518), although acknowledging that the
Legislature could suspend this guarantee on a two-thirds vote. While the Controller
adverts to this identified shortfall in the statement of the facts, the Controller’s argument
is based on the identification of revenues not yet authorized in law; we accordingly deem
this other basis for the decision to withhold legislative salaries to be abandoned.
(108 Holdings, Ltd. v. City of Rohnert Park (2006) 136 Cal.App.4th 186, 193, fn. 3.)
Similarly abandoned is an otherwise unexplained figure in the analysis of the budget
(labeled “Liquidation of Encumbrances” and reflecting a reassignment of $770.1 million
to expenditures from the Budget Stabilization Account), which is not even mentioned in
the Controller’s brief on appeal.
5 These two provisions state, in relevant part, “The Legislature shall pass the budget bill
by midnight on June 15 of each year” and “in any year in which the budget bill is not
passed by the Legislature by midnight on June 15, there shall [not] be [any] appropriation
from the current budget or future budget to pay any salary or reimbursement for travel or
living expenses for Members of the Legislature . . . for the period from midnight on June
15 until the day that the budget bill is presented to the Governor. No salary or
reimbursement for travel or living expenses forfeited pursuant to the subdivision shall be
paid retroactively.” (Cal. Const., art. IV, § 12, subds. (c)(3) & (h), respectively.)
4
pleadings. The trial court issued a lengthy minute order explaining the basis for issuing
the requested declaratory judgment. This timely appeal followed.
DISCUSSION
I. An Actual Controversy Is Present in Which Relief Is Proper
Whether a probable future dispute over legal rights between parties is sufficiently
ripe to represent an “actual controversy” within the meaning of the statute authorizing
declaratory relief (Code Civ. Proc., § 1060), as opposed to purely hypothetical concerns,
is a question of law that we review de novo on appeal. (Environmental Defense Project
of Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885 (Environmental
Defense).)6 Whether such actual controversy merits declaratory relief as necessary and
proper (Code Civ. Proc., § 1061) is a decision within the discretion of the trial court
(Environmental Defense, at p. 885) except in the extreme circumstances where relief is
“entirely appropriate” such that a trial court would abuse its discretion in denying relief
(e.g., where there is an ongoing dispute over rights between parties that have an ongoing
relationship, even if the dispute arises from past events, and where a declaration provides
guidance for future behavior) or where relief would never be necessary or proper (e.g., a
past dispute between parties lacking an ongoing relationship) (Osseous Technologies of
6 In Environmental Defense, supra, 158 Cal.App.4th at page 885, we noted without
elaboration another decision of this court that purported to apply an abuse of discretion
standard to this question of law. (Teachers’ Retirement Bd. v. Genest (2007)
154 Cal.App.4th 1012, 1040 (Genest), citing California Water & Telephone Co. v.
County of Los Angeles (1967) 253 Cal.App.2d 16, 23-24.) However, the authority Genest
cited actually involved the separate question of whether declaratory relief was necessary
or proper. Moreover, the analysis in Genest amounted to our de novo review of the
question rather than examining whether the trial court’s ruling was reasonable. As a
result, Genest does not provide a basis for departing from the well-established standard of
review.
5
America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 365, 367,
370).
In the present case, the parties have an ongoing relationship in the distribution of
legislative salaries, and a continuing dispute over whether the facts of the events of 2011
(for which there is a reasonable expectation of recurrence) provide a basis for the legal
authority that the Controller claimed and continues to claim. (Environmental Defense,
supra, 158 Cal.App.4th at p. 887.) We reached a similar conclusion in Gilb v. Chiang
(2010) 186 Cal.App.4th 444, 459-460 (Gilb), where even though the dispute arose out of
the Controller’s past refusal to abide with an executive directive to withhold warrants in
excess of federal minimum wage until a budget for the current fiscal year was signed, this
was a dispute reasonably likely to recur, given the Legislature’s then repeated failures to
enact timely budget bills and the clear indication that the Controller would refuse to abide
by a similar executive directive in the future, and thus presented an actual controversy.
Unlike Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 172,
174 (speculative nature of possible projects and possible conditions on project permits
pursuant to challenged guidelines made declaratory relief inappropriate), Wilson &
Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1583 (statement
of general intent to acquire property through eminent domain presents too many
uncertainties to support declaration in favor of owner), or Sanctity of Human Life
Network v. California Highway Patrol (2003) 105 Cal.App.4th 858, 871-872 (too many
variables to issue declaration regarding right to display signs on overpasses in
circumstances other than case at bar), we do not need to guess at any additional facts that
are necessary to our resolution of the issue. Unlike Genest, supra, 154 Cal.App.4th at
pages 1043-1044 (prospect that the Legislature would again attempt to borrow retirement
funds in a manner ruled unauthorized is hypothetical), the Controller is continuing to
6
litigate his authority to withhold salaries if, as often is the case, the revenues’ estimate
appearing in a budget bill relies on sources not presently authorized.
In addition, the refusal to grant declaratory relief would work a serious hardship
on the Legislature. (Farm Sanctuary, Inc. v. Department of Food & Agriculture (1998)
63 Cal.App.4th 495, 502.) The Legislature should not be put in the position of risking the
forfeiture of future salary if its position is not sustained in a future confrontation with the
Controller, grounded on the Controller’s interpretation of the constitutional provisions at
issue here. Declaratory relief is cumulative of any other remedy. (Code Civ. Proc.,
§ 1062.) Availability of an alternative remedy, such as mandate in a future impasse
(Lungren v. Davis (1991) 234 Cal.App.3d 806, 809-810 [action in mandate to challenge
refusal to pay salary]), is not generally a basis for denial of declaratory relief (Filarsky v.
Superior Court (2002) 28 Cal.4th 419, 433 [noting exception where statutory remedy
indicates it is to be exclusive]; Ermolieff v. R. K. O. Radio Pictures (1942) 19 Cal.2d 543,
548; Holden v. Arnebergh (1968) 265 Cal.App.2d 87, 91-92 [court may decline to grant
declaratory relief where expeditious alternative remedy exists]). A mandate proceeding is
not necessarily expeditious. Each day consumed in the course of a mandate proceeding
against the Controller would represent the risk of another day of forfeited wages if the
Legislature ultimately did not prevail. We thus find that this action presents an actual
controversy, and the trial court reasonably found declaratory relief is necessary and
proper.
II. The Controller Cannot Second-guess Revenue Estimates
At the outset, we address the Legislature’s suggestion that the constitutional
forfeiture provision applies only to the timeliness of a budget bill and not any other
substantive constitutional requirement for the budget bill such as the balanced budget
provision or the single subject rule (Cal. Const., art. IV, § 9), a point the trial court
declined to address. We will assume, as a matter of in pari materia (Lexin v. Superior
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Court (2010) 47 Cal.4th 1050, 1091 [where different provisions address same purpose or
object, courts should construe them to give effect to all]), that in seeking to enforce the
timely presentation of a budget bill the electorate intended that the bill be otherwise valid,
rather than allow the Legislature to evade the timely budget provision with a sham bill
that does not satisfy other constitutional prerequisites.
We begin with a fundamental principle of our state Constitution: its grant of
lawmaking authority to the Legislature is plenary (except for the reserved rights of
initiative and referendum), which empowers that body to exercise this authority in any
manner that is not expressly or through necessary implication prohibited elsewhere in the
Constitution. As a result, we must resolve any ambiguity about legislative authority in
favor of the Legislature. (California Redevelopment Assn. v. Matosantos (2011)
53 Cal.4th 231, 253-254.)
All that the balanced budget provision prescribes for the budget bill is inclusion of
a legislative estimate of revenues “made as of the date of the budget bill’s passage” that
exceeds the combination of the total amount of appropriations in the bill, the existing
appropriations for the upcoming fiscal year, and transfers to the reserve fund. (Cal.
Const., art. IV, § 12, subd. (g).) The balanced budget provision does not prescribe the
manner in which the Legislature must calculate this estimate,7 the nature of the revenue
sources the Legislature may or may not take into account, or any role for the Controller in
overseeing the estimate. The constitutional text does not in any way expressly support
the Controller’s assertion that any revenue bills (which cannot be part of the budget bill
7 The Controller eschews any power to second-guess the Legislature’s forecast of the
amount of revenue that may flow from sources already authorized. “[T]he Controller . . .
does not have the authority (or ability) to question the reliability or achievability of any
of the [revenue] forecasts.”
8
itself)8 must be enrolled and sent to the Governor for signature before the constitutional
deadline of June 15. Indeed, the Controller overlooks the extent to which California
balances its budget with federal funds, the authorization for which is entirely outside the
control of the Legislature (and the predicted total of which bespeaks more legislative
artistry than accounting skills).
Given this absence of any express language to support the Controller’s asserted
concern with vouchsafing the absence of any phantom revenues included in a budget
bill’s estimate, it would amount to “inappropriate judicial interference with the
prerogatives of a coordinate branch of government” to endorse his intrusion into the
budget process under “the guise of interpretation.” (Schabarum v. California Legislature
(1998) 60 Cal.App.4th 1205, 1218 (Schabarum).)
This does not mean the balanced budget provision is a dead letter. The Governor
can enforce it either through vetoing the budget as a whole or exercising his power to
veto line items to bring appropriations in balance with accurate revenues. (Cal. Const.,
art. IV, § 10, subds. (a) & (e); see Schabarum, supra, 60 Cal.App.4th at pp. 1240-1241
(dis. opn. of Morrison, J., [noting Governor’s oath to uphold Constitution in review of
whether limits on legislative spending in budget honored]).) Moreover, as with any
legislation, the judicial branch is the ultimate arbiter of its constitutionality (although we
eschew any attempt at pondering the form of action or the standard of review involved).
Given that constitutionally no role exists for the Controller to play because the
revenue estimate in the budget bill is not limited to existing law (or enrolled revenue
8 Under the single subject provision, the budget bill is limited to “ ‘ “the one subject
of appropriations to support the annual budget.” ’ ” (Association for Retarded Citizens v.
Department of Developmental Services (1985) 38 Cal.3d 384, 394, italics added, citing
with approval 64 Ops.Cal.Atty.Gen 910, 917 (1981), in turn citing 29 Ops.Cal.Atty.Gen.
161, 167 (1957) [all of which conclude budget bill cannot make substantive changes in
law].)
9
bills), his assertion—that the electorate necessarily implicated his existing audit function
before issuing warrants for legislative salaries in the enforcement of the balanced budget
and timely budget constitutional provisions—is beside the point. Additionally, its
underlying premise is incorrect.
It is true that the Legislature (to which the Constitution has delegated the task of
defining the duties and functions of constitutional officers) has vested the Controller with
the responsibility for determining the lawfulness of any disbursement of state money.
(Tirapelle v. Davis (1993) 20 Cal.App.4th 1317, 1327-1328 (Tirapelle); Gov. Code,
§§ 12410, 12440.) But this is primarily a ministerial function in which the Controller is
not authorized to review and approve or reject an agency’s approval of a disbursement if
it is within the scope of the legislative grant of discretion to the agency (which we likened
to jurisdiction in the “fundamental” sense); the Controller’s limited discretionary function
involves the determination of whether the factual circumstances of the claim come within
the scope of the agency’s approval. (Tirapelle, at pp. 1329-1330, 1335.) Thus, Madden
v. Riley (1942) 53 Cal.App.2d 814 noted that the Controller was authorized to exercise
discretion to determine whether a claim for approved travel expenses was in fact incurred
for the approved purpose, but his legal conclusion that the travel did not constitute “state
business” was not within his discretion to determine; we instead upheld the legal basis of
the approval and issued a writ against the Controller. (Madden, at pp. 819-820, 823-824.)
As a result, “Where a department or agency acts within the authority delegated to it by
the Legislature, the Controller must defer to the agency or department and leave review
of the [lawfulness of the] decision to the courts and/or the Legislature” (Tirapelle, supra,
20 Cal.App.4th at p. 1335), the latter of which has reserved the authority to review the
Controller’s rejection of a claim (id. at p. 1329, fn. 18). (Accord, Gilb, supra,
186 Cal.App.4th at p. 463 [if Controller believes agency’s action is unlawful, he or she
cannot simply disregard it but must seek judicial review].)
10
Consequently, where the Legislature is the entity acting indisputably within its
fundamental constitutional jurisdiction to enact what it designates as a balanced budget,
the Controller does not have audit authority to determine whether the budget bill is in fact
balanced.9 In addition, it would not make any sense as a matter of statutory interpretation
to believe the Legislature granted such statutory review authority in defining the
Controller’s powers where the Legislature in turn can ultimately override the Controller’s
decision. As a result, the Controller is not a party to the enactment of the budget bill.
DISPOSITION
The judgment is affirmed. (CERTIFIED FOR PUBLICATION.)
BUTZ , J.
We concur:
BLEASE , Acting P. J.
MURRAY , J.
9 Indeed, the judiciary is not entitled to go behind the face of legislation (except for
matters subject to judicial notice) to discern whether the facts supporting an enactment
are in fact constitutional. (Rankin v. Colgan (1891) 92 Cal. 605, 606-607; Stevenson v.
Colgan (1891) 91 Cal. 649, 650, 652; Schabarum, supra, 60 Cal.App.4th at pp. 1219-
1220, 1227; Frohliger v. Richardson (1923) 63 Cal.App. 209, 213-214.)
11