Thursday, July 31, 2008

Bracing for steep pay cuts

SACRAMENTO — About 200,000 state employees are bracing for steep pay cuts as Gov. Arnold Schwarzenegger prepares to sign an executive order that would reduce their wages to the federal minimum wage — $6.55 an hour.

Schwarzenegger is slated to sign the order — which also includes laying off 22,000 part-time employees — today, the first day of the state's pay period. That has employees, legislators and public employee groups outraged and worried — especially because the budget negotiations appear to remain deadlocked.

"I'm hearing from a lot of people who feel it's heartless for a multimillionaire to do this to working people who have to stretch every dollar to make it," said Assemblywoman Loni Hancock, D-Berkeley. "It's a complete lack of empathy for what the ordinary working family is going through."

Schwarzenegger has said cuts in the wages of state workers are necessary because the state is expected to run short on revenues beginning on Friday. Now, more than a month after missing the constitutional deadline to pass a budget, Schwarzenegger and legislators have failed to agree on how to resolve an estimated $15.2 billion cash shortfall.

Schwarzenegger isn't simply trying to buy time for budget negotiations to pick up, a spokesman said.

"This is separate from that," said Aaron McLear. "It's making sure the state doesn't run out of cash."

The pay cuts would amount to about $1 billion a Advertisementmonth in savings, and the layoffs would save about $25 million, according to H.D. Palmer, spokesman for the state Department of Finance. They would apply to all employees covered by the federal Fair Labor Standards Act, although those in medical, emergency and law enforcement positions would be exempt, as would professional and supervisorial employees.

Even if he does sign the executive order, however, it may never come to pass. State Controller John Chiang has vowed to continue paying workers at their usual wages. If the governor were to challenge Chiang in court, a budget could be resolved by the time a legal battle were to conclude.

Still, state workers aren't feeling exactly sanguine.

"I have no cushion," said an employee with the Employment Development Department who asked not to be identified for fear of retaliation. "Without my paycheck, I wouldn't be able to pay mortgage, small car payment, my utility, with whatever it comes out to monthly" at the minimum wage, which is $1,048 a month for a full-time employee.

Democrats blame Republicans for refusing to accept tax increases after having made more than $12 billion in cuts in the past three budgets, and Republicans say Democrats should look into making more cuts in services.

"We know the state is running out of cash and that it's a huge problem," said Sen. Tom Torlakson, D-Antioch, the chairman of the Appropriations Committee. "But we don't believe taking it out on the workers and not paying them is logical; nor will it work. This doesn't motivate either side to get the budget done."

Senate Republican leader Dave Cogdill, R-Modesto, and Assembly GOP leader Mike Villines, R-Fresno, both called the plan "drastic" but said they hoped it would inspire lawmakers to get the budget done.

Public employee groups accused Schwarzenegger of holding state workers "hostage" to budget negotiations.

"The governor is doing this as part of a big political game," said Jim Zamora, spokesman for the Service Employees International Union Local 1000, which represents 95,000 state employees. "But the consequences of this game are being suffered by state employees who don't have a vote."

Docking workers' pay risks exacerbating California's current economic crisis, said Assemblyman Mark DeSaulnier, D-Concord.

"It causes unnecessary angst and concern and right now, state workers are out earning and spending in what's a difficult time," DeSaulnier said. "Eliminating that payroll is probably not the best thing for the economy."

If the governor indeed goes through with signing the executive order, it could hurt a Republican brand that's already at a low point, said Melissa Michelson, political science professor at Cal State East Bay.

"Do Republicans really want this to be blamed on them," she said. "This will get traced back to Republicans holding back their share of the two-thirds vote and the governor's office. This certainly reinforces the stereotype of Republicans being out of touch with the working class, especially in a period of economic downturn."

Assemblyman Guy Houston, R-San Ramon, called it a tool to deal with the budget crisis.

"The state is running low on cash, and we're looking for any kind of tool to stretch our cash flow," Houston said. "This is being portrayed as an out and out (slap at workers) but it's just a deferral of money until the state gets money and can afford to pay its workers."

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