Jul 24, 2008 12:40 am US/Pacific
Schwarzenegger May Cut Pay For State Workers
SACRAMENTO (CBS 5 / AP) ―
California Gov. Arnold Schwarzenegger threatened Wednesday to defer wages beginning Aug. 1 for 200,000 state employees — paying them the federal minimum wage of $6.55 an hour until lawmakers finally reach a budget deal.
A spokesman for the governor, Aaron McLear, confirmed an executive order for the pay cuts had been drafted as one of several options Schwarzenegger's considering as California faces a cash shortfall.
"Because the Legislature has failed to produce a budget over a month past their deadline and because we don't have a rainy day fund, the governor is looking at a number of options to make sure the state does not run out of cash," McLear said.
The governor's draft order contends that without the pay cuts, the state is at "a real and substantial risk" of not having enough money on hand to pay its bills in the near future.
The wage reductions would save the state an estimated $1 billion a month.
The governor could sign the executive order early next week authorizing the pay reductions to the federal minimum wage, which amounts to $1.45 an hour less than California's minimum wage.
State employees would receive their full salary retroactively once a budget deal is signed into law.
The draft of the order also indicated that state agencies would be prevented from hiring any nonessential employees and would be forced to terminate about 20,000 contracts with temporary workers, interns and contractors. There also would be a ban on most overtime.
Emergency, disaster and other critical workers would be exempt from the order.
The union that represents nearly half the affected workers, Service Employees International Union, said it already was seeking legal advice to block the action.
"We're victims of this budget crisis. It's not our fault that the state Legislature and Governor Schwarzenegger can't come together to pass a balanced budget," spokesman Jim Zamora said.
The union represents about 95,000 clerical, office and civilian workers throughout the state.
Schwarzenegger has repeatedly expressed frustration that Democrats and Republicans have been unable to compromise on a solution to the state's $15.2 billion budget deficit for the fiscal year that started July 1.
As legislative leaders have continued to meet, Schwarzenegger has ratcheted up his rhetoric over the stalled talks.
Legislative leaders in both houses have said they are working to meet an Aug. 1 deadline. Without a spending plan in place by then, the state will have to start negotiating on expensive loans to address the cash shortfall that will affect state coffers by the end of September.
The governor's finance spokesman, H.D. Palmer, said those loans will cost the state hundreds of millions of dollars more than the loans California typically takes out to cover temporary shortfalls at the start of the fiscal year.
A state Supreme Court ruling in 2003 prevents the state from completely suspending workers' pay. Federal labor law requires the state to pay at least the federal minimum wage. Employees who work overtime are entitled to their full pay.
However, political appointees who work for elected officials in the state Capitol are exempt from such laws and already face deferred paychecks for time worked in July. Those workers are accustomed to the temporary paycheck delays, since state lawmakers have had a budget in place by July 1 only a dozen times in the last 30 years.
Democrats are seeking to raise taxes by $8.2 billion, while Republicans want to balance the budget mostly through cuts. Schwarzenegger said that he will not sign a budget if it does not include long-term budget reform, such as a rainy day fund to help ease the state through tough economic times.
(© 2008 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
