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.
This 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.
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.