Budget +16: Paychecks Proceed

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There are going to be a lot of sighs breathed after today's court hearing on whether most state employees will get minimum wage on August 2 -- sighs of relief from workers and, perhaps, sighs of frustration from the administration of Governor Arnold Schwarzenegger when it comes to whether the law should be enforced.

Bottom line: full salaries will go out as planned, after a Sacramento judge refused -- for now -- to stop Controller John Chiang from issuing regular paychecks.

Judge Patrick Marlette heard arguments and counterarguments for about an hour this morning in his Sacramento courtroom in a hearing not actually on the actual merits of the case (minimum wage or not), but rather whether Chiang should be stopped from issuing normal paychecks for August.

One wonders whether a judge in another part of California -- somewhere other than the county that's home to a huge population facing a tremendously downsized paycheck -- would have ruled the same. Nonetheless, Judge Marlette told attorneys that he had to balance the enforcement of the law with the impact of smaller salaries at this late date for more than 200,000 workers.

"That's a pretty dramatic imbalance," said Marlette. And with that, he rejected a request to stop Chiang. For now, that is.

This fight has been going on for some time now, technically back to the administration of former governor Gray Davis but more notably for the last couple of years between Schwarzenegger and Chiang. Still, this morning's hearing raised a few interesting points worth noting even for those who have followed this closely.

First, the Schwarzenegger administration's attorney asked if Chiang, as he's said many times, can't make quickly adjust all of those salaries, why can't the controller's staff at least partially follow the law as set by the 2003 California Supreme Court ruling? "They can do it, but they don't want to do it," said plaintiff's attorney Christopher Thomas.

There wasn't a direct reply from Chiang's attorneys (hey, it's court not Crossfire), but the defense team did try to give some examples of the challenges faced when it comes to implementing an across-the-board withholding of all but $7.25 an hour. Attorney Steve Rosenthal told the court that the controller's office can at best do "a couple of thousand" manual changes in paychecks in a month. But even then, it's an imperfect process and that mistakes will be made. "We can't switch on and off the system," said Rosenthal. He also reminded the judge that the payroll system is in the process of being fixed. "This is not a permanent situation," he said.

Also noteworthy was a legal tussle over one of Chiang's key arguments over the last few weeks: that any state employee who works overtime (which triggers, all agree, full salary) must be paid complete wages immediately... or not. The governor's team told the court that those full wages can be paid a month late -- and not in the same pay period in which the hours were worked, thus trying to undercut the notion that the threat of OT derails any effort to reduce wages.

And finally, another argument by the controller's side of this tussle that the state's payroll computer woes are not a mystery. Chiang's attorney told the court that last summer, the Schwarzenegger budget team was presented with an official request for cash to fix the problem. A budget spokesman for the Guv today confirmed that the request was made, but countered that the request was made for an "unanticipated expense," which this clearly was not. Furthermore, countered Schwarzenegger's office, Controller Chiang could have asked the Legislature to appropriate money between then and now, but didn't.

While Judge Marlette made plans today to soon begin weighing the actual question at hand -- should the controller be forced to do this, or is it (in Chiang's words) "infeasible" -- he also sounded like a jurist who thinks the governor is on to something. Marlette told the parties at the outset today that this is "an extremely credible case on the merits."

But in the meantime, August paychecks will go out in their normal amounts. A spokesperson for Chiang said that paychecks will be written starting next Thursday, four days before the next scheduled hearing on this case. That means the next real date to watch is August 20 -- the date on which state worker paychecks for September begin to be processed.

Anyone want to take bets on the court fight being over by then?

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About John Myers

John Myers is senior editor of KQED's new 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. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • EarlRichards

    Why does not Schwarzenegger lower the price of gasoline along with wages and pensions? Lowering the price of gasoline and oil will give Californians more money to pump into the economy and pull the economy out of the recession. It is the high price of oil, that is prolonging the recession, increasing inflation and it is driving businesses away from California, not taxes. For California to remain competitive, Schwarzenegger must lower the cost of energy.

  • Dberry

    Good coverage of the issue Jon.
    -anxious state employee