Schwarzenegger orders pay cuts, layoffs for state workers
By Mike Zapler
Mercury News Sacramento Bureau
Article Launched: 08/01/2008 01:30:33 AM PDT
Pay cuts, layoffs orderedCalifornia DMV employee Cassandra Sausedo holds a sign Thursday in San Jose calling for lawmakers to pass a state budget. Earlier in the day, Gov. Arnold Schwarzenegger ordered pay for up to 200,000 state workers cut to minimum wage and laid off more than 10,000 others, blaming a looming cash crunch.
With hours cut, worker faces pinch. Although the governor portrayed the unprecedented move as a money-saving maneuver, it was seen in the Capitol primarily as a way to intensify pressure to pass a budget. The state enters the second month of the fiscal year today without a spending plan, and faces the prospect of taking out high-cost loans from Wall Street if one isn't in place soon.
"Our state faces a looming cash crisis. This situation leaves me with no easy choices," Schwarzenegger said at a news conference. "This is not an action that I take lightly. I understand that this will affect people at a time when they are already struggling and so I want to apologize to all the state employees for having to do that."
The pay cuts would not take effect until September at the earliest, and a pitched political and legal battle may ensue to block them.
As for the layoffs, the administration has not yet specified which employees will be exempt, so it's unclear exactly how state services will be affected. Generally, the order calls for exceptions for those in public safety and emergency medical care jobs; department heads have until today to decide which workers are spared.
But one place where the public may notice a difference is at the Department of Motor Vehicles, which employs many part-time and temporary staffers who were expected to be laid off. That could mean longer waits for people registering their vehicles or seeking new driver's licenses.
Kellie Allyn arrived at the Los Gatos DMV branch at 3:10 p.m. Thursday to renew the registration on her Nissan Pathfinder and was turned away, even though the office typically closes at 5 p.m. A manager cited the governor's executive order, Allyn said.
"The whole place was packed with people trying to figure out how to get served," Allyn said. When she threatened to call the media to complain, an employee responded, "Go ahead. We're all getting laid off or minimum wage."
Still, there appeared to be behind-the-scenes jockeying Thursday afternoon to avoid some layoffs. One DMV worker in San Jose who assumed she would be let go was later told by her boss that her hours were being cut instead.
"Our workers have received mixed messages from their supervisors about which employees will be exempt and which employees will not be exempt," said Jim Zamora, spokesman for SEIU Local 1000, which represents 95,000 state workers. "Right now, confusion reigns in many state agencies."
Administration officials estimate the governor's directive could save as much as $1 billion a month once it is fully implemented. But State Controller John Chiang, who has the job of issuing paychecks, vowed to ignore the pay-cut order, so it's uncertain whether the bulk of those savings will materialize.
The layoffs and a freeze on hiring and overtime, which took effect immediately, will save about $80 million - pocket change in the scheme of California's $100 billion-plus general fund.
Moreover, many Capitol observers expect the budget to be resolved before the pay cut would take effect. Schwarzenegger himself said he's optimistic of a budget deal "in the next few days"; Democratic and Republican leaders say a few weeks is more likely.
That led many legislators to conclude the move was more political than practical.
"He can't force us to do anything different than we're already doing," said Assembly Speaker Karen Bass, D-Los Angeles. "He is under pressure and we're all under pressure. That's why I don't understand why this distraction was needed."
The immediate brunt of the governor's order will be felt by the estimated 10,300 part-time and temporary employees who received pink slips beginning Thursday afternoon. Although most workers will likely be offered their jobs back once a budget is signed, "there will be no guarantees," said David Gilb, director of the Department of Personnel Administration.
Because Chiang is elected independently and does not report to Schwarzenegger, it could take legal action by the governor to enforce the pay cut. Several legal experts told the Mercury News last week that the law favors Schwarzenegger's stance, though it's unlikely that a lawsuit would be decided before the budget stalemate ends.
Asked if he would pursue legal action if the controller ignores the executive order, Schwarzenegger said, "Whatever it takes, I will do."
If the governor succeeds, the state would cut the pay of up to 200,000 workers to the federal minimum wage of $6.55 an hour starting in September, assuming the budget is still unresolved. The affected workers, who are paid monthly, would receive their lost wages once a budget is signed.
Democrats and Republicans are at loggerheads over whether to close the $15.2 billion deficit primarily with tax increases or spending cuts. Negotiations have focused recently on a demand by Schwarzenegger and Republicans to limit future spending and establish a larger "rainy day" reserve. A compromise on that issue, those familiar with negotiations said, could open the door to an agreement on tax increases or ending tax breaks for companies or individuals.
Mercury News Sacramento Bureau
Article Launched: 08/01/2008 01:30:33 AM PDT
Pay cuts, layoffs orderedCalifornia DMV employee Cassandra Sausedo holds a sign Thursday in San Jose calling for lawmakers to pass a state budget. Earlier in the day, Gov. Arnold Schwarzenegger ordered pay for up to 200,000 state workers cut to minimum wage and laid off more than 10,000 others, blaming a looming cash crunch.
With hours cut, worker faces pinch. Although the governor portrayed the unprecedented move as a money-saving maneuver, it was seen in the Capitol primarily as a way to intensify pressure to pass a budget. The state enters the second month of the fiscal year today without a spending plan, and faces the prospect of taking out high-cost loans from Wall Street if one isn't in place soon.
"Our state faces a looming cash crisis. This situation leaves me with no easy choices," Schwarzenegger said at a news conference. "This is not an action that I take lightly. I understand that this will affect people at a time when they are already struggling and so I want to apologize to all the state employees for having to do that."
The pay cuts would not take effect until September at the earliest, and a pitched political and legal battle may ensue to block them.
As for the layoffs, the administration has not yet specified which employees will be exempt, so it's unclear exactly how state services will be affected. Generally, the order calls for exceptions for those in public safety and emergency medical care jobs; department heads have until today to decide which workers are spared.
But one place where the public may notice a difference is at the Department of Motor Vehicles, which employs many part-time and temporary staffers who were expected to be laid off. That could mean longer waits for people registering their vehicles or seeking new driver's licenses.
Kellie Allyn arrived at the Los Gatos DMV branch at 3:10 p.m. Thursday to renew the registration on her Nissan Pathfinder and was turned away, even though the office typically closes at 5 p.m. A manager cited the governor's executive order, Allyn said.
"The whole place was packed with people trying to figure out how to get served," Allyn said. When she threatened to call the media to complain, an employee responded, "Go ahead. We're all getting laid off or minimum wage."
Still, there appeared to be behind-the-scenes jockeying Thursday afternoon to avoid some layoffs. One DMV worker in San Jose who assumed she would be let go was later told by her boss that her hours were being cut instead.
"Our workers have received mixed messages from their supervisors about which employees will be exempt and which employees will not be exempt," said Jim Zamora, spokesman for SEIU Local 1000, which represents 95,000 state workers. "Right now, confusion reigns in many state agencies."
Administration officials estimate the governor's directive could save as much as $1 billion a month once it is fully implemented. But State Controller John Chiang, who has the job of issuing paychecks, vowed to ignore the pay-cut order, so it's uncertain whether the bulk of those savings will materialize.
The layoffs and a freeze on hiring and overtime, which took effect immediately, will save about $80 million - pocket change in the scheme of California's $100 billion-plus general fund.
Moreover, many Capitol observers expect the budget to be resolved before the pay cut would take effect. Schwarzenegger himself said he's optimistic of a budget deal "in the next few days"; Democratic and Republican leaders say a few weeks is more likely.
That led many legislators to conclude the move was more political than practical.
"He can't force us to do anything different than we're already doing," said Assembly Speaker Karen Bass, D-Los Angeles. "He is under pressure and we're all under pressure. That's why I don't understand why this distraction was needed."
The immediate brunt of the governor's order will be felt by the estimated 10,300 part-time and temporary employees who received pink slips beginning Thursday afternoon. Although most workers will likely be offered their jobs back once a budget is signed, "there will be no guarantees," said David Gilb, director of the Department of Personnel Administration.
Because Chiang is elected independently and does not report to Schwarzenegger, it could take legal action by the governor to enforce the pay cut. Several legal experts told the Mercury News last week that the law favors Schwarzenegger's stance, though it's unlikely that a lawsuit would be decided before the budget stalemate ends.
Asked if he would pursue legal action if the controller ignores the executive order, Schwarzenegger said, "Whatever it takes, I will do."
If the governor succeeds, the state would cut the pay of up to 200,000 workers to the federal minimum wage of $6.55 an hour starting in September, assuming the budget is still unresolved. The affected workers, who are paid monthly, would receive their lost wages once a budget is signed.
Democrats and Republicans are at loggerheads over whether to close the $15.2 billion deficit primarily with tax increases or spending cuts. Negotiations have focused recently on a demand by Schwarzenegger and Republicans to limit future spending and establish a larger "rainy day" reserve. A compromise on that issue, those familiar with negotiations said, could open the door to an agreement on tax increases or ending tax breaks for companies or individuals.
Labels: California, layoffs, state government
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