Budget +2: Paycheck Blues

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Question: When is 19 billion a smaller number than 200,000? Answer: When you're comparing California's budget gap, a still somewhat abstract reality,to the number of state workers now seriously worried that they're on the verge of seeing their paychecks cut by almost 75%.

You've heard folks say for some time that this year's budget impasse was different than ones in years past. After today's ruling in a state appeals court, you'd better believe it.

Photos: Sacramento Press Club, Governor's OfficeThis morning, the state's Third District Court of Appeals affirmed both a lower court ruling and a 2003 California Supreme Court ruling that most employees of the state aren't entitled to more than federal minimum wage if the state budget isn't in place by July 1.

The full ruling (PDF) is here.

The case pits Governor Arnold Schwarzenegger against Controller John Chiang and, while nearing its legal conclusion, is going to no doubt to be closely watched by legislators now haggling over the now 48-hour overdue state budget.

Friday's ruling by the appeals court, upholding a lower court ruling that some 200,000 state workers are only guaranteed minimum wage during a budget impasse, came less than a day after Schwarzenegger issued a directive to Chiang to reduce that pay.

This showdown began in 2008 and was dormant until just recently. But because the paychecks of so many rank-and-file employees now seem to be hanging by a very thin legal thread... this issue may quickly become the focal point of all of the pressure on budget talks in the Capitol.

The 44 page ruling issued this morning can effectively be boiled down to this: the 2003 ruling on minimum wage was correct... the Legislature has given wide ranging authority over worker paychecks to the state Department of Personnel Administration (DPA)... and the controller, while an important part of the fiscal process, doesn't have the discretion to stop DPA directives.

In other words, pretty much exactly what Schwarzenegger and his surrogates have been saying for some time.

Controller Chiang issued a statement this afternoon that suggested he still believes the fundamental question remains unanswered: what happens if the state payroll system can't carry out the order? For years, there's been an effort underway to replace an antiquated payroll computer system -- an ironic reality for that's home to the latest and greatest in high tech (could Steve Jobs help? Larry Ellison? Anyone?). Still, Chiang said today it's not just about the computers.

"This is not a simple software problem," he said in a written statement. "Reducing pay and then restoring it in a timely manner once a budget is enacted cannot be done without gross violations of law unless and until the state completes its overhaul of the state payroll system and payroll laws are changed."

Chiang maintains that federal labor laws will force the state to pay, in his words, "billions of dollars in fines and penalties" if state workers aren't immediately reimbursed for all withheld pay once the budget is enacted -- a task he says can't be carried out under the payroll system that exists.

The controller believes that the appeals court has agreed that minimum wage is a no-no if such action is "practically infeasible." But the ruling also seems to suggest that Chiang's role in such matters is largely "ministerial" -- i.e., he's there simply to carry out the process and not to decide whether the process is the right way to go.

Setting aside the important policy issues (and it's not really about money, as everyone agrees the state isn't on the verge of running out of cash), there are interesting political currents swirling here. Labor unions and their Democratic allies may hope that even if they ultimately lose the fight, the court battle plays out at a pace slow enough for budget talks to come closer to fruition. Schwarzenegger, apparently fully comfortable pulling the various levers of power he has as governor, likely sees benefit in lighting a fire under those same Democrats... as well as the single largest group of state workers, those represented by SEIU Local 1000. Remember that the governor has struck new labor deals -- including concessions on pensions -- with six other unions and bargaining groups, but not SEIU.

"We are California," chanted state workers who showed up for Wednesday's rally.It was SEIU's members who showed up in force on Wednesday to rally outside the state Capitol. Their message was largely about electing the right replacement to Schwarzenegger, but today's ruling makes it clear that the current chief executive isn't going to go quietly. And as the long budget-imposed furloughs for state workers end, a larger dilemma is now gaining ground: whether their salaries (average state pay: $65,484) gets dramatically reduced... an action that will have huge ripple effects in a state economy already ravaged by the recession.

Already, workers and their organizations are crying foul. One unique perspective was offered yesterday by Patty Velez, president of the California Association of Professional Scientists. Some of the workers represented by the group were dispatched to Louisiana to help with the oil disaster now lapping at the state's shores.

"Governor Schwarzenegger had no problem taking credit for ordering dozens of scientists to work long hours in support of the Gulf oil spill cleanup," said Velez in an emailed statement. "Our members will be saddened to hear that they may come back from 15 hour days in the Gulf to a minimum wage paycheck."

Bottom line: the 2010 budget impasse may go from ho-hum to intense... soon.

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • craised

    Progressives and liberals amaze me…they hammer any opposition to reign in spending (balanced budgets) because someone will get less but they basically ignore the $100 trillion+ of debt and insane future obligations coming in the future for the US that will obviously cause fiscal default and the consequences could make us a third world nation. We need to reign in foreign aid and all foreign military occupation too, this spending has been crazy too and the casualties of war are awful. We will still be spending billions and billions, but just spend what we bring in…its called a balanced budget and I do not know how any sane person cannot understand this

  • walter

    Finally these losers are getting paid what they are worth, minimum wage!!!
    CA has some of the laziest, dumbest, government workers of any state in the union.
    A huge paycut is coming, too bad this doesn’t apply to everyone in the CA government – every single one of you losers, is overpaid.
    villaraigosa sucks!

  • Pete

    Seems like another gimmick. We have to pay them their full back pay shortly. So what good is this temporary pay cut really going to do?

  • dean

    To be fair, the Gove]. should pay his state contractors minimum wages too. He wastes Billions on them, while flexing his flopping steroid enhanced muscle mass on state workers.

    Some californians are so stupid, they do not see the Billions wasted on sweet deals, they go after 200,000 hard working state employees instead. While state employees were sent home for almost 2 years of Friday Furlough, conractors earned Billions working Fridays and overtime. Good smart fiscal policy huh?

  • http://CapitalNotesBudget+2 Jim

    People like Walter are absolute idiots! I am not a state worker, but smart enough to know that all 200,000 of them can’t be lazy and dumb as Walter suggests. He surely takes advantage of some service or benefit made possible by some state worker every day, but is too dumb to realize it. He must think this stuff just happens… that it magically appears for his benefit because he is a deserving citizen.If he wants to point fingers it should be the Legislature. If they can’t get the job done then they should be fired immediately on July 1st. Let’s see if they can perform then!!