Misuse of Gov.’s Role Alleged

California’s nonpartisan legislative analyst advised lawmakers this week that Gov. Arnold Schwarzenegger overstepped his authority when he ordered that cities and counties be immediately repaid billions of dollars lost when he cut the vehicle license fee.

The opinion from Legislative Analyst Elizabeth G. Hill, whom lawmakers of both parties look to for impartial advice on the budget, comes with Schwarzenegger in the midst of another unilateral action -- this one involving welfare cost-of-living increases. Both moves threaten to set up a confrontation in the Capitol and possibly in the courts over just how much power he has over state finances.

Upon taking office last month, Schwarzenegger revoked a $4-billion annual increase in the so-called car tax, which former Gov. Gray Davis had raised to help balance the state budget.

Because cities and counties depend on the tax to pay for public safety and other services, Schwarzenegger asked the Legislature to compensate for the loss by sending other money to local governments.

When lawmakers adjourned for the year without offering any solution, the governor declared a fiscal emergency and independently directed that cities and counties start being repaid from the state’s general fund.

In a letter made public Tuesday, Hill called the governor’s order to make $2.6 billion in payments without approval of the Legislature a “flagrant misuse” of his budget powers and “a serious infringement of legislative powers.”

Her declaration comes with the governor involved in another end-run around the Legislature: He is refusing to give welfare recipients a cost-of-living increase that his own administration earlier had acknowledged was owed under 1998 legislation that established conditions for reducing or raising the car tax. That law specified that if the tax was reduced, welfare recipients would get a cost-of-living increase.

Schwarzenegger’s freezing of $96 million in welfare payments has prompted a lawsuit from the Western Center on Law and Poverty, which argues that the governor’s action was a dangerous breach of the constitutional balance of powers.

Center attorney Clare Pastore said the 1998 law was clear. She said the administration even agreed when it asked the Legislature to sever the link between car tax cuts and increased welfare payments, and to block the monthly welfare increase of $25 per family that was supposed to take effect in October.

Without the increase, the maximum that a welfare family receives is about $700 per month.

When legislative leaders refused to grant the request, the governor decided to block the payments on his own.

“The larger theme here is we have a governor who is saying, ‘I don’t like the way things are, so I am going to say they are different,’ ” Pastore said. “That is not how things work in a country of laws.”

Department of Finance spokesman H.D. Palmer acknowledged that the administration had initially agreed, but said that when administration lawyers looked closer at the law they determined otherwise.

Senate Democrats, meanwhile, forwarded the legislative analyst’s findings in a letter to the administration Tuesday.

“We’re putting him on notice that [the payments to local governments were] of questionable legality and we’ll have to see what actions either constituent groups or the Legislature can take,” said Senate President Pro Tem John L. Burton (D-San Francisco).

So far, however, nobody has stepped forward to challenge the car-tax move in court. Though Democrats, who hold a majority in both state houses, are concerned about the governor usurping their power, they also worry about incurring the wrath of local police and fire departments by taking action that stops the flow of money to them.

“We are obviously concerned about the precedent when a governor takes it upon himself to attempt to appropriate money,” said Assembly Appropriations Committee Chairman Darrell Steinberg (D-Sacramento).

Legislative Republicans said the Democrats are afraid that voters would object if they tried to undo the governor’s emergency move with legislative action.

“I think what you have here ... is the Democrats wanting to do something very unpopular and therefore they don’t want to vote on it,” said Assemblyman John Campbell (R-Irvine). “They’ve looked for a way to do the unwanted without having to go on record.”

The administration, meanwhile, plans to start making its bimonthly car-tax “backfill” payments to local governments Friday unless a judge says not to.

“We believe we are on solid legal ground,” Palmer said.

He added that state Controller Steve Westly, a Democrat, supported the governor’s move and planned to send the checks. Westly’s office confirmed as much Tuesday.

“The controller’s office will provide the local government car-tax funds on Dec. 26 as required by the governor’s executive order,” said a statement from Chief Counsel Rick Chivaro. “Questions about the legality of the order will need to be resolved by the Legislature and the governor.”

But the analyst said it was “inappropriate” for the governor to authorize the payments by invoking a budget law known as Section 27, which gives Finance Director Donna Arduin emergency appropriation powers in the event of cost overruns for critical government services such as prisons and health care.

“The administration’s proposal represents both a flagrant misuse of Section 27.00 and a serious infringement of legislative powers,” Hill wrote, adding later in her four-page letter that “the controller has no authority” to write the checks.

Hill also wrote that the governor’s plan “represents a major revision to legislative policy and is completely disproportionate to the amount of spending authorized by the budget.”

Legislative Republicans said they stood by the governor’s plan. They said Democrats blocked efforts to get a reimbursement bill passed in the Legislature, so the governor had no choice but to make the payments by executive order. “We support the governor showing leadership,” said Assembly Republican Leader Kevin McCarthy (R-Bakersfield).

Democrats said they were planning to block the payments only until the governor offered a clear plan of how the payments would affect other state programs already budgeted to receive the money.

Anxious local governments continue to get caught amid the wrangling. Several officials were not pleased about Hill’s letter.

“This has been a roller-coaster of a process,” said Pat Leary of the California State Assn. of Counties. “This just adds more uncertainty.”

Sen. Deborah Ortiz (D-Sacramento) said Schwarzenegger’s moves were indicative of a governor who had clearly defined himself as willing to bypass the Legislature to proceed with what he believed was the will of the voters. She said it was now up to the Legislature to define itself.

“Unless we are aggressive in defining our role as a Legislature, we will be unable to do what it is we were elected to do,” she said. “It is an appropriate confrontation. It is one where we do not cede our power to the executive branch. This is not a partisan thing. We did this with Gray Davis too, when he declared our role as a Legislature was to implement his vision.”