Late last week I received a statement from an anonymous state employee working at the Employment Development Department, which included some pretty stunning allegations about how Arnold Schwarzenegger and the Legislature are dealing with state workers. For example, the Governor would reduce all state employee salaries by 5%, including ones not paid out of the General Fund but through other dedicated resources, including federal dollars. Our budget deficit is a General Fund crisis, not a crisis of those other resources, and so there is absolutely no necessity to reduce those salaries. In addition, the Governor has proposed furloughing such workers, an illegal action since state law excludes Special Fund workers from these types of job reductions. The State Compensation Insurance Fund just successfully sued the Governor over this matter.
Perhaps worst of all, the Governor and the Legislature have in recent years used special fund money to balance the budget. This is EXACTLY what Props. 1D and 1E would have done, moving dedicated funds into the General Fund. And yet the Governor and a compliant legislature goes ahead and does it anyway when the funds at risk are more murky and have lower-profile champions. This parallels the Governor, despite failing with Prop. 1A, budgeting a $4.5 billion dollar reserve for the upcoming fiscal year, despite the "rainy day" we're currently facing, essentially moving forward in violation of the will of the voters with a spending cap.
Democratic lawmakers are floating a plan to use that projected reserve, but resist augmenting that with new revenues, leading to $19 billion in additional cuts and borrowing from local governments, really a terrible plan considering the alternative options on fees. The unions are getting impatient with the lack of leadership, and advocacy groups seem more interested not in working with them but just going the heck around them. This note at the bottom of the LAT piece from Lenny Goldberg is the buried lede:
The next step for unions could be going directly to voters. One labor-backed group, the California Tax Reform Assn., has prepared a possible ballot measure to repeal the three corporate tax cuts Democrats agreed to in the last year to get GOP support for the budget.
"It's ready to go," said Lenny Goldberg, the group's executive director.
Reading the statement from the state employee, which I've posted on the flip, gives you some of the reasons why workers feel they have no allies in Sacramento anymore.
Arnold Twitters in that he got "permission" to enact the budget cuts on home health care workers and still qualify for all federal stimulus money in the health care sector. Cap Weekly has more.
The state of California has received permission from the federal government to cut wages of home healthcare workers without fear of losing federal stimulus dollars.
The ruling comes as a victory for the Schwarzenegger administration, and a defeat for the Service Employees International Union which had sought federal intervention to stop the cuts.
Cuts in home healthcare worker pay were part of the budget solution passed by Gov. Schwarzenegger and legislative leaders in February. As part of his May budget revision, Schwarzenegger has proposed further cuts for in-home support workers. The Legislature cut IHSS worker pay by $2 per hour, lowering wages from $12.10 to $10.10 per hour. The cuts saved the state an estimated $74 million.
It's important to note that, while these cuts suck and will really hurt IHSS workers, they are relatively minor compared to the cuts in health care and education Schwarzenegger wants to enact, while still qualifying for stimulus money. So the Administration can still wield some power here. But obviously this is a bad sign. The Governor should not be allowed to essentially reverse the effect of the stimulus on his own. In fact, he ought to just resign.
Schwarzenegger said he received the voters' message "loud and clear: an overwhelming majority of people told Sacramento, 'Go and do your work yourself, don't come to us with your problems...."
"The message was clear from the people, go all out and make those cuts and live within your means," he said.
Voters were so worked up, in fact, that they turned out in the lowest numbers in state history, and they voted down the same borrowing gimmicks and spending cuts for successful programs that will now compose the Governor's agenda. Let me suggest that I don't believe in his message-taking ability.
Marc Cooper actually has a decent column on Arnold's total failure.
UPDATED at the top, as the Governor lays off 5,000 state workers, the perfect thing to get California working again. He's basically borrowing from the Whitman playbook here. See below for why that's crazy.
It's a long way until the 2010 Governor's race, but I think Calitics needs to do our part in pointing out that Meg Whitman is frequently full of crap. She's seized on this idea that California's problems can merely be solved by firing all the state employees. Now, first of all, California has the second-lowest rate of state employees per capita in the entire nation, a conveniently forgotten fact by eMeg and the rest of the swinging corporate raiders in the Yacht Party. Next, as Josh Richman explains:
"We haven't looked hard enough at where we can cut. We can lay off 20,000 to 30,000 state employees while prioritizing public safety and teachers," Whitman told the Long Beach Chamber of Commerce. "We shouldn't have to lay off teachers, we need to lay off bureaucrats."
Fact is, "cut the bloated bureaucracy" has been a GOP rallying cry for decades, and yet whenever the study, the audit or the blue-ribbon commission report comes back, we're suddently talking about far less "waste, fraud and abuse" than they'd implied. Is there some fat to cut? Sure. Should we? Probably. Will it fix this deficit? Not even close.
The budget deficit now looks to be about $21.3 billion; it would be about $15 billion if voters approved Propositions 1C, 1D and 1E next week, but that almost certainly ain't gonna happen. And $21 billion isn't 30,000 jobs, as George Skelton so eloquently put it back in February:
According to the state budget document, there is the equivalent of 205,000 full-time jobs controlled by the governor. There actually are more workers than that because some are part-time. Do the math based on 16 months, since that's now the time frame of the projected deficit, assuming a balanced-budget package could be implemented by March 1.
You could lay off all those state workers - rid yourself of their pay and benefits - and save only $24.4 billion.
Meanwhile, you would have dumped 160,000 convicted felons onto the streets because all the prisons were closed after the guards and wardens were fired. There'd be no Highway Patrol because all the officers were canned. State parks would be closed because there were no fee-collectors or rangers.
Truth is the savings wouldn't even add up to $24.4 billion because some of those employees are paid out of small special funds that are self-sustaining.
If these people were in an empty trash bin, they'd still clamor to "cut the waste."
Let me again commend Chris Kelly's Meg Whitman week on the Huffington Post, he's doing an oppo research job that should practically ensure him a spot on any number of campaign staffs. I particularly like the part detailing the $1.78 million she stole from Goldman Sachs, which for all I know might make her a folk hero.
Next year oughta be fun.
...by the way, I'm not letting other Yacht Party gubernatorial hopefuls off the hook either, like Tom Campbell. He predictably dissembles about California's low per-pupil spending on K-12 education, making the same debunked "hey, the schools have plenty of money" claim that Dan Walters likes to peddle. Allow me to introduce them both to Julia Rosen circa April 2008, which by the way is before the even deeper cuts to schools made in the February budget agreement.
Gov. Schwarzenegger is giving a speech right now at the Commonwealth Club in San Francisco, the kickoff of his campaign for the state budget items in the May 19 special election. In some remarks released earlier, it's clear Arnold is highlighting - and is most concerned about - the spending cap.
"Our state capital is a town that feeds on dysfunction. The special interests, left and right, need the process to be dysfunctional. That is how they control Sacramento. That is how they prevent change."
[snip]
"But now we have an agreement, passed by two-thirds of the legislature, that puts on the ballot serious budget reform, including a spending limit and a rainy day fund.
"And the very interests, the far left and the far right, that prefer dysfunction over change have already launched a campaign to confuse people and defeat the reform. But this time they are not going to succeed."
Arnold probably sees this as a selling point, that if Democrats are against his plan, and Republicans are against his plan, then it must be just right. But this Goldilocks centrism masks the extremism of the spending cap plan, which would ratchet down revenues and cut vital services permanently. It also represents a serious miscalculation on the part of the Governor, who apparently still thinks his post-partisan message actually works in this state. That's the same political genius that has Schwarzenegger polling worse than Carly Fiorina in potential 2010 Senate matchups against Barbara Boxer. And even Schwarzenegger's own strategists seem to know that he cannot be the public face of the special election, lest he doom it to failure.
Opponents of the measures say their private polling has shown linking the initiatives to the governor drives down support of the measures. That has been echoed by some supporters of the ballot measures, who have also started testing potential campaign messages.
But (campaign strategist) Adam Mendelsohn said Schwarzenegger's star power and his ability to get news coverage is still a great asset for the campaign.
"There is no elected official in this state capable of dominating coverage like Arnold Schwarzenegger. The chattering class loves to look at his approval numbers and then cast dispersions, but communicating in a campaign is a lot more complex than just looking at approval numbers."
Uh, yeah, Mr. Mendelsohn, that's the PROBLEM. He's extremely unpopular with everyone but the Dan Weintraubs of the world. And there aren't 17 million Dan Weintraubs living here.
The spending cap, with something for everyone to hate, is particularly vulnerable in the special election. Republicans have been calling for a hard cap for years, if not decades, but they've become so blinded by the Heads on a Stick faction of their party that they cannot look past the short-term of two years of tax increases and realize what they would be getting. But the Yacht Party infantry clearly doesn't care: heck, they're trying to recall Roy Ashburn, who's termed out in 2010 anyway. So their entire side, or at least everyone who wants to be elected in a primary, is lining up against 1A. Meg Whitman has come out against it.
Republican gubernatorial candidate Meg Whitman has already announced her opposition to Proposition 1A, and Whitman spokesman Mitch Zak did not rule out the possibility that Whitman would spend money against the measure.
"She's been very outspoken in her opposition to 1A," Zak said. "We've not made a decision how that opposition manifests at this point. We're keeping our options open."
The Flash Report is claiming that Steve Poizner will oppose the measure as well, and he is hinting at contributing funding.
After a long, closed-door meeting Tuesday, Assembly Democrats remain divided over the budget-balancing ballot measure at the heart of the May 19 special election, Proposition 1A, which would impose a cap and raise taxes.
"Our caucus had a very long discussion on this," Assembly Speaker Karen Bass told Capitol Weekly. "There are a number of members who are supportive of 1A, there are several members who are opposed to 1A, and there are many others who are trying to decide. We are working through this and we will have another caucus next week," she said Tuesday evening.
Looks like Bass will have a lot more colleagues to boot out of committee assignments. You'll remember that she punished the three Democrats who actually voted against the spending cap on the floor back in February. Now a good bit of the caucus is revolting.
The caucus did vote to support 1B through 1F, and that's probably because they know that there's going to be more cuts coming down the road, and voters opposing the revenue-enhancing items on the ballot will make their job harder.
But, she added, "I'm hearing that we are going to have a $4 billion dollar (revenue) hole, so if the ballot measures don't pass, then it becomes $9 billion or $10 billion hole."
As I said, the crisis continues.
So I'm seeing the anti-tax groups, progressive advocates, the big money in the GOP, half the Assembly Democratic caucus, all against 1A. On the pro side, Arnold, George Skelton, and Steve Westly, who says 1A will "instill much needed fiscal discipline". Yeah, poor people and the blind, get some fiscal discipline, you scumbags!
The wildcard remains the unions, who with even a little bit of financial backing could tip the scales on 1A. SEIU and AFSCME have delayed formal positions until later this month. But the Administration is trying to intimidate them into going along with it.
Here's why it matters to state workers: Last week, the Association of California State Supervisors asked administration officials if the governor would still lay off employees, or if he would abandon the plan since lawmakers have passed a budget.
(Remember, state workers' twice-monthly furlough is just part of how the governor wants to cut costs. Layoff warnings went to 20,000 of the state's least senior employees last month. Half could lose their jobs, officials have said.)
The administration's answer, from notes taken by an association representative: "We hope the five budget-related propositions pass ... . If the propositions do not pass, we will be in a worse situation, with more furloughs and layoffs."
This is despite the fact that 1A would have NO IMPACT whatsoever on the immediate bottom line; in fact, passing it would hurt the budget for state workers more than defeating it. "Vote like your job depends on it... because it does." That must be the working motto.
The question is, will the intimidation work? Obviously, the fact that the tax increase extensions in 1A are practically hidden on the ballot is going to arouse anger amongst the Heads on a Stick crowd. And progressive advocates are sticking to principle that an artificial spending cap has failed wherever it's been tried and is wrong for the state. In the mythical middle you have the vain Mr. Schwarzenegger, desperately trying to stay relevant. Ultimately, this is a referendum on him.
UPDATE: And here we go. The League of Women Voters just announced they're opposing 1A, along with 1C, 1D, and 1E (selling the lottery and moving money from voter-approved funds for children's programs and mental health). This is big if it's a harbinger of how other groups will line up.
So there is going to be a reconvening of the State Senate today at 10am. I know, that's what they said yesterday. But the plan from Sen. Steinberg is to keep the Senate on the floor until 27 members vote for passage and the crisis is (temporarily) averted. Meanwhile, 20,000 layoff notices and the closure of $3.8 billion in state public works projects will take place today. Things like projects to eliminate arsenic in Live Oak in the Central Valley. You know, dispensable things. And the Times has a bead on the three Assembly members who plan to vote in favor - Roger Niello, Anthony Adams and Minority Leader Mike Villines. This is a representative sample of the countervailing forces that Yacht Party members have to deal with.
Adams, a bearded 37-year-old who was elected in 2006 after working for San Bernardino County as its legislative liaison to Sacramento and Washington, has said he would provide the Assembly's third GOP vote.
"It's unconscionable that we let this state go over the cliff," Adams said in an interview. "My job is to get the best possible deal for Republicans."
Adams faces reelection next year, and his support for the budget package has antitax advocates interested in lining up a challenger in the GOP primary. And because he represents a swing district, Adams must also worry about a general-election challenge from a Democrat.Adams said he had not asked for specific concessions for his vote, or for assurances that he would get assistance to fend off election challenges.
"I'm not trying to find some soft landing," he said, "although my wife is going to kill me if she hears that."
They are not rewarded for their vote, and they fear their own "head on a stick" party members more than the opposition. And so you get this gridlock.
It occurs to me that what Steinberg is doing is what progressives have asked Harry Reid to do in the US Senate for years now. When GOP obstructionists threaten to filibuster key legislation, we always say "Make them filibuster! Make them stand up in the well of the Senate and talk endlessly about how we can't afford to provide health care for children, or how we have to offer more tax cuts to the wealthiest 1%. Let the whole country see it!" Well, we're basically doing that. The 15 members of the Yacht Party caucus in the Senate will be locked down and forced to reiterate their arguments indefinitely.
Problem is, the whole country won't be seeing it, the whole state won't be seeing it, in fact almost nobody will be seeing it. This is the true failure of a lack of political awareness in California, and a lack of political media. The pressure points are nearly impossible to hit. A lot of lawmakers will get tired and need to "bring your toothbrush," as Steinberg said, but there's precious little drama outside of Sacramento. And yet the decisions made in that chamber will undoubtedly impact the entire national economy, not just us.
But that is also good, in a sense, because it means that a sliver of opinion makers descending on the phone lines of the legislature can seen like an army. I'm going to reprint the email alert that Brian sent out last night, which you may have received, because I think he captured the situation perfectly. The leadership is making them filibuster. Now it's up to us to put on the pressure.
Incredibly, forcing people to take off two days a month against their will not only lowered morale and increased inefficiency at state agencies, it didn't put much of a dent in the budget crisis. Revenues are still coming in short and will for the forseeable future. So the Governor put the hammer down.
Gov. Arnold Schwarzenegger will move to lay off as many as 10,000 state workers if lawmakers fail to pass a plan to close California's nearly $42-billion deficit by the end of the week, an administration spokesman said this morning.
Schwarzenegger's press secretary, Aaron McLear, said at a media briefing that the administration would send out pink slips Friday, absent a budget deal. The layoff process generally takes about six months for state employees due to union rules and other legal considerations, and bureaucratic procedures the state must follow. The move would save the state $150 million annually if the jobs are eliminated by July 1, according to McLear.
This would have been a good thing for the Governor to be working on, I don't know, yesterday, instead of jetting to Idaho. It turns out that Arnold was making a scheduled appearance at the Special Olympics - but he cancelled a similarly scheduled appearance at the Republican National Convention when budget talks were ongoing last year, and if anything the crisis is worse now. This is another case of Arnold making stern pronouncements in the media instead of doing his job. He is a failed governor and frankly the press are the only people who will listen to him.
...I should mention that George Skelton came out yesterday for lowering the 2/3 requirements for budgets AND taxes, albeit on the latter he added a caveat that tax increases can't be used to grow government above the rates of inflation and population growth. I'm not much for the caveat, but Skelton is a bellweather for the media elite in California, so this is important.
The Schwarzenegger Administration unveiled a new budget plan today, calling for more tax hikes and increased borrowing. One notable omission from the plan was Arnold Schwarzenegger himself.
"We are facing a major crisis, probably the most challenging budget situation the state has ever faced," said Mike Genest, Schwarzenegger's finance director. "The governor believes in acting immediately."
Schwarzenegger is out of state and vacationing at the family residence in Sun Valley, Idaho.
That's some amusing juxtaposition from the Sacramento Bee.
On to the proposal, which is little more than just a warmed-over recapitulation of earlier proposals the Governor has made, with some new elements from right out of fantasyland.
That plan called for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees. It also called for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.
The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children's health services; changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.
If there's one thing the private sector is desperate to do right now, that's take it's carefully guarded cash and give it to the state with the worst bond rating in the country. They're really dying to get that done.
The real patterns we see here are familiar to all of Arnold's budget - a deep lack of concern for the most marginalized elements of society, and a hearty desire to break unions. Schwarzenegger's lowest point as a politician as maybe as a person was getting blown out in the 2005 special election. He still believes the ideas he put forward in that election were sound, and blames unions for his defeat. Thus you see Arnold going after union members' livelihoods, insisting on state employee furloughs and generally trying to roll back labor protections that this state has held for decades.
In addition, there's a recognition that this budget hole is impossible to fill without a magic angel. The proposal names that angel "private borrowing," but that's just not going to happen. The angel is going to have to be federal relief from a stimulus package. California reducing its public spending by $10-15 billion at a time when no other entity can pump money into the economy is counter-productive and deeply dangerous to any recovery. The feds are going to have to make up the gap.
Finally, a new proposal looking at the entire $40 billion dollar deficit suggests that the Governor isn't interested in going forward with the $18 billion dollar work-around budget which he has been negotiating with Democratic leaders. That would be a mistake, because of the exponential effect of continuing to do nothing in the immediate term. Then again, if he were interested in action, the Last Action Hero wouldn't be in Idaho right about now.
...if you want to go through it yourself, the budget plan is here.
...statements from legislative leaders on the flip.
Dan Smith reports that we're nearing a deal on the work-around budget which would cover half of the state's projected deficit between now and mid-2010.
"The areas of negotiations have significantly narrowed, and on those issues we're very close," said Senate President Pro Tem Darrell Steinberg, D-Sacramento.
Steinberg and Assembly Speaker Karen Bass, D-Los Angeles, talked via videophone to Schwarzenegger, who is vacationing in Idaho. Talks will continue over the weekend, with leaders hoping lawmakers can be called back to Sacramento by the end of next week to approve a final deal.
Schwarzenegger spokesman Aaron McLear said Democrats are "moving closer" to the governor's demands for deeper spending cuts and an economic stimulus package. "But we don't have any agreements," McLear said.
We know that the main sticking point issues were: 1) eliminating CEQA for certain infrastructure projects, 2) privatizing a lot of those public works contracts and 3) cutting state worker holidays and overtime. So the fact that Democrats are "moving closer" to those positions isn't exactly heartening, although it's contradicted somewhat later in the piece.
Bass said Democrats are trying to meet the governor's desire to stimulate private investment in public projects without hurting public employees by shifting their jobs to contractors.
The Democrats believe changes to state employee pay must be hashed out at the bargaining table between unions and the administration. "There's no question that state workers know that they're going to be part of the solution as well, but we also think it's very important to respect their ability to have a say in how that is done," Steinberg said.
Privatization is simply not the answer, it has no relevance on budget savings (cost overruns exist in the private world, too) and is just a way for Arnold to reward his Chamber of Commerce pals.
But what's notable here is that these are meetings between the Governor and the Democratic leadership, and the Republicans have been completely frozen out due to their inability to play nice with others. The byzantine plan for a majority vote on fee increases and tax shifts is still operative, and if it survives the subsequent legal challenge, suddenly the Yacht Party would be powerless. The Very Serious pundits have already turned against Yacht Party rhetoric on spending as the source of the problem, and even the most casual observer understands that the 2/3 rule is destroying the state. There ought to be a formal voting down of 2/3 (even this work-around will be insufficient to approve a new budget in June, which requires a 2/3 vote) but this is a creative solution to a crisis largely created by the rulemaking structure of the body and Republican intransigence (not to mention Arnold's vehicle license fee slash, the dumbest first act by a Governor in many a year).
There were news reports galore about Arnold Schwarzenegger signing the $143 billion dollar state budget (hey, four more of those and they can bail out Wall Street!), but not so many reports about the $515 million he cut out. Marty Omoto enlightens us.
A wide range of senior programs - including the Multipurpose Senior Services Program (MSSP), Alzhiemers Resource Centers, were especially hard hit with additional cuts by the Governor.
Also hit hard was the CalWORKS program - California's "welfare to work" program that serves thousands of low income children and families - many of them with special needs and disabilities, was hardest hit by the line item veto, with an additional $70 million reduction on top of what the Legislature approved in the budget bill passed last week.
Two programs overseen by the Department of Social Services, Adult Protective Services and Deaf Access Program were also hit with additional reductions. The reduction to Adult Protective Services was especially significant - and a reduction that was fought earlier this year by advocates.
Alzheimer resource centers, nutrition programs for seniors, the Home Delivered Meals program, the Deaf Access Program, Medi-Cal, Healthy Families, the Alcohol and Drug Program, and the Department of Mental Health - these are just a few programs and departments that got their funding cut. The common thread is that they all involve struggling communities of need. Nice guy, that Arnold. He even cut the California Discount Prescription Drug Fund by $2 million - this was part of one of Schwarzenegger's main accomplishments in 2006. Read Omoto's post for the details. Oh, and those 10,000 state employees who were fired as a result of insufficient funds? Don't bother coming back to work.
State Finance Director Micheal Genest this afternoon said that the state employees whose jobs were a casualty of California's budget impasse won't be rehired this budget year.
Gov. Arnold Schwarzenegger's executive order on July 31 terminated about 10,000 part-time and retired annuitant positions, curbed overtime and suspended some contracts.
"We expect the order to remain in effect the rest of the (fiscal) year," Genest said to reporters shortly after Schwarzenegger signed the budget.
We talk about removing the 2/3 requirement and bringing some sanity to the budget process. And the people will have a chance to weigh in on parts of this budget in 2009. But these heartless cuts are never put up for vote, and it's important to remember that it matters who's sitting at the Governor's desk in 2010.
You may remember that Arnold Schwarzenegger sued John Chiang in state court to follow his order, and his dream, of cutting all state worker salaries to the minimum wage while we wait for a budget. The court date was set for September 12, which salvaged the salaries for the month of August. Chiang's next move was to partner with some labor allies and move the lawsuit into the federal courts. This not only would delay the question of whether or not Chiang needs to follow the order, but removes a serious liability problem for the state, because if they slashed salaries per a state court order and then had it overturned by the feds, they would be on the hook for expensive penalties and payments.
This afternoon, controller spokesman Jacob Roper delivered this bit of news via e-mail to the State Worker:
Since the case has moved to the Federal court, the Sept 12th superior court hearing will not be held. A group of labor organizations has filed a motion to move the case from the Eastern Federal district to the Northern district, and a hearing on that motion is scheduled for October 31.
Roper also restated the controller's position that cutting salaries to minimum wage would be a massive, time-consuming reprogramming task, "so there is no reason to believe that minimum wage checks would be issued anytime soon."
While the lingering budget crisis is still incredibly painful for all manner of Californians, with missed payments sure to come if nothing is settled by the end of the month, at least the state workers have John Chiang in their corner, fighting for their interests. And this is mirrored by the stirring testimony of everyday workers who are losing their benefits and the control of their lives as the Yacht Party turns up its nose and turns its back on the people. John Chiang is doing his part, and Republican rank and file citizens are putting on the pressure in selected districts; the only way to ultimately win this fight is at the ballot box.
One of the few bright spots of this 8-week budget roller coaster has been the leadership of State Controller John Chiang, who stood up and simply said "no" to the shock doctrine tactics of the Governor and his attempts to slash state worker salaries to the minimum wage and eliminate the jobs of thousands of others. Schwarzenegger's talk of compromise among the legislature and right-wing Republicans didn't extend to state workers, and he took Chiang to court to force him to uphold his executive order. As a result of Chiang at least offering resistance, the workers have a reprieve for August.
State workers targeted by a gubernatorial order to cut their pay to federal minimum wage have dodged that bullet - at least for August.
A Sacramento Superior Court judge Wednesday set a hearing to decide the pay dispute for Sept. 12, too late to affect this month's state payroll.
Judge Timothy Frawley's timetable ensures that 145,000 state employees and an additional 30,000 managers and supervisors will receive full pay for August.
This doesn't happen unless Chiang goes to back for those employees. And the grassroots in California is grateful. Frank Russo reports on a meeting in Oakland:
California Controller John Chiang spoke to the Alameda County Democratic Lawyer's Club yesterday at a small restaurant in Oakland and had a lot to say about the state employee pay order. But he had a lot more to say, about his approach to government, helping average Californians, and his values and philosophy about government while speaking for over a half hour without notes and then taking questions.
From the beginning, he was treated as a rock star-introduced by club President Meredith Brown, as "the man who stood up to the man." He covered a lot of territory-and was paid rapt attention as he challenged this body of lawyers to continue their good work for the betterment of society. He even worked in themes from the Obama campaign, as he prepares to speak at the Democratic National Convention in Denver and appear on the national stage. Josh Richman, a reporter and "blogger" for the Oakland Tribune attended this meeting and you can see his write up for a feel of what transpired as well.
Read the whole thing for Chiang's comments, which are great. Hopefully he'll repeat them at the DNC this week. Amazing what can happen to Democrats if they stand up for themselves, isn't it?
UPDATE: The big issue, as Russo details in a separate post, is making sure this case is decided in federal court and not state court. Otherwise, California could be on the hook for billions in fines. Read the post at the link.
Just a quick update on the latest on Gov. Schwarzenegger's slashing of state worker salaries. After John Chiang refused to carry out the executive order, today Arnold sued him.
Schwarzenegger's Department of Personnel Administration filed a lawsuit against Chiang late Monday in Sacramento County Superior Court. The suit says the state Constitution and several sections of law prohibit the state from paying full wages without approval of a budget.
"Except where payments are self-executing under the California Constitution, the state has no authority to pay state employees their full salaries where it does not have an appropriation such as in this case, where there is no budget for fiscal year 2008-2009," the lawsuit says.
Chiang, a Democrat, has balked at making the pay cuts, saying the state has enough money to cover its needs into October.
"The governor has created a solution to a problem that does not exist...," Chiang said in a statement after the lawsuit was filed.
This has become less about fiscal responsibility during a budget crisis and more about an authoritarian demanding his way. As for the original intention of the order, to force a compromise on the budget, that's, er, not happening.
Schwarzenegger met Monday with the Legislature's Democratic leaders to try to reach a budget compromise.
"We're still talking. We haven't thrown anything at each other," Senate President Pro Tem Don Perata, D-Oakland, said after emerging from the governor's office.
Arnold Schwarzenegger didn't just vow to keep taxes low, he ran an entire campaign in 2006 based on scaring people into believing that his opponent would raise taxes by $18 billion dollars. None of it was true, but he hammered away at it. In the one and only debate he chided Phil Angelides, saying "you love taxes" and other nonsense. Dan Weintraub even remembered this spiel:
"They get into their car, they're taxed. They go to the gas station, they're taxed. They go for lunch, they're taxed. This goes on all day long. Tax, tax, tax, tax, tax. Even when they go to bed, you can go to bed in fear that you are going to be taxed while you're sleeping, that there is a sleeping tax."
The admission of defeat, that there's no way to balance this budget without revenue increases, is truly astonishing. What's more, the broad-based sales tax he's proposing, the most regressive imaginable, really would tax Californians at virtually every point of the day. He's become a caricature (if he wasn't one already).
The proposal amounts to an admission of failure. Running in 2003 as a novice politician after careers as a bodybuilder and actor, Schwarzenegger thought he could cut taxes, control spending and balance the budget, ending what he called "those crazy deficits." But the fiscal and economic problem was more complicated than he knew, and the politics far more vexing.
Schwarzenegger did cut taxes. He campaigned on a pledge to roll back the vehicle license fee, or "car tax," which his predecessor, Gray Davis, had tripled. And on Schwarzenegger's first day in office, the new governor issued an executive order reducing the tax by two-thirds.
But controlling spending proved far more difficult, as, ironically, that first tax-cut order foretold. The car tax against which Schwarzenegger had railed, while controlled by the state, was actually a source of revenue for local governments. And so when Schwarzenegger reduced it, he also made good on a pledge to pay cities and counties what was then $4billion a year to make up for what they lost when he cut the car tax.
The state, however, did not have that money to spare, and the payments to cities and counties added to the deficit Schwarzenegger had vowed to eliminate. That obligation to local government has since grown to $6 billion - not coincidentally the same amount that would be raised by the sales tax increase Schwarzenegger now supports.
The VLF was the original sin here, but not the only one. The problem is structural and the VLF would have only delayed the inevitable. The truth is that the state is only built for success, never for a downturn like we're currently having. And so this results in gimmicks like slashing state employee salaries and putting them in the middle of a budget spat, or borrowing more and more to pass the deficit on to our children and grandchildren.
(The latest on the wage cuts, by the way, is that the governor is demanding that his order be followed, which John Chiang will refuse, leading to a likely lawsuit. Chiang really is a hero in all of this, and he's filling a leadership vacuum. Marcus Breton has a nice profile today.)
Schwarzenegger has never concerned himself with the business of governing - he preferred slogans to policy. And with the policy going to crap, the slogans sound more hollow - especially the one that goes "tax, tax, tax, tax, tax."
It's really the ultimate way for this state employee wage cut to end up - turns out that the payroll generation is so antiquated, they can't change it to reflect the new salary structure for months.
State Controller John Chiang said Monday an antiquated state computer system makes it impossible to adjust the state payroll quickly to issue minimum-wage checks to state workers. He said it would take at least six months to make the change.
The Democratic controller has vowed to defy Gov. Arnold Schwarzenegger's executive order directing the state to pay workers the federal minimum wage of $6.55 per hour until a budget agreement is reached. He has previously asserted that the Republican governor's order is based on an untested 2003 state Supreme Court legal opinion and that he will continue issuing full paychecks to state employees.
But in a meeting with The Bee Capitol Bureau on Monday, Chiang said that even if Schwarzenegger's legal reasoning were sound, the state could not logistically retool its outdated payroll system in a matter of weeks, as the governor has asked. If the change were eventually made, Chiang also said it would take an additional nine to 10 months to issue checks to employees for their full back pay.
We've seen this in LA County with errors in paychecks to teachers, which resulted in major repayments and "treble" damages, which require the government to pay three times as much in damages to those affected.
Of course, the state could always update their payroll systems - which would require more revenue. Or they could just throw more manpower at the problem - which would require hiring those state workers that Arnold tried to fire (which agencies are promptly not firing).
It's really a tragicomedy over there in Sacramento.
I'm preaching to the choir here when I say that laying off all those state workers was penny-wise and pound-foolish. Another sickening facet of all that is that Arnold and his cronies don't even know just how pound-foolish it was. Well, they know it was a bit fool-hardy, they just aren't sure how much. Because, you know, they didn't really study that:
But state officials said Thursday that they couldn't predict how much state services will suffer now that Gov. Arnold Schwarzenegger has laid off an estimated 10,300 temporary workers.
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"I think that whenever you have layoffs and you do that, it will have an impact," Schwarzenegger said. "... In the private sector, we read every day stories where companies have to lay off. That means there is less productivity there. So we have to tighten our belt, everyone has to tighten our belt." (SacBee 8/1/08)
Everybody has to tighten our belt, yet that doesn't extend to the entirety of the state? Sure, we have to tighten our belts, but we can't sacrifice the strength of our government. There is no further "fat" to cut from the bone. Yet, I guess we'll just roll the dice and hope that it doesn't burn us too bad. Pun intended.
I was on a conference call earlier with State Controller John Chiang and Rep. Hilda Solis about the Governor's callous executive order, and both delivered predictably strong comments. Chiang, who has told the governor he will refuse to comply with the order, blasted Schwarzenegger, saying "state workers shouldn't be put in the middle of a political battle," and that this was a nakedly punitive attempt against California's state employee unions, which the whom the Governor has always held a grudge (they helped deep-six his "reform" agenda in 2005). Rep. Solis was even more outraged, saying "let's put him on the federal minimum wage, and get rid of the special interests paying for his hotel room across the street from the Capitol, and see how he likes it." She rocks.
Chiang has made his decision, and now only litigation can force him to carry out the Governor's order (and Chiang discouraged litigation as a "waste of time.") But we expect these kind of statements from Democrats. Take a look at this one from Republican Greg Aghazarian:
"While I appreciate the Governor's leadership on this budget crisis, I cannot support reducing the salaries of our state employees to minimum wage.
If our state workers had the power to pass a budget, then it might be appropriate to hold them accountable, but that's not where the responsibility lies according to our State Constitution. I cannot predict when a budget will be passed, but I do know this, when it does happen it will be because we worked to achieve bipartisan solutions.
I understand what the Governor is trying to accomplish with this action, but I must respectfully disagree and urge the Governor to reconsider his executive order."
Now, Aghazarian is talking out of both sides of his mouth. He's trying to win a Senate election against Lois Wolk in SD-05, and he wants to be seen as some kind of moderate when his record suggests the opposite. But the fact that he's gone off the reservation means that there's a lot of pressure to come out against the Governor on this one, putting him alone on an island of his own making. It's important to keep pounding away and make him completely unpopular and unable to help his party in the fall as a result of this stupid, heartless action.
The Governor has set up a Web site to answer employee questions about the wage cut. Predictably, it has no interactive function. If he allowed comments on it the server would be down.
OK, so check this out. Arnold signs the executive order slashing state employee salaries to $6.55 an hour, the federal minimum wage.
At the same time, he's agreed to host a fundraiser in three weeks with Oregon Senator Gordon Smith (R). Here's the invite, courtesy his Democratic opponent Jeff Merkley:
The bottom of the invite says "Host and Photo Opportunities at $10,000 give/raise."
The annual salary for a state worker under the federal, based on a 40-hour work week and a 50-week year, is $13,100.
So Arnold thinks the cost of getting a picture with him is roughly equivalent to the cost of working for an entire year running his state government.
The Governor did what he said he would do today. He just cut the pay for over 200,000 state workers to the federal minimum of $6.55/hour and fired 22,000 temporary or seasonal workers. We do have someone fighting back and that is Democratic Controller John Chiang. SacBee:
While budget delays have nearly become an annual rite in the Capitol, Schwarzenegger argues that this year calls for drastic steps because the state has less cash due to a sour economy. The move could save roughly $1 billion per month, and the governor believes California will not have a sufficient cash reserve in September without the executive order.
But Democratic state Controller John Chiang disputes Schwarzenegger's view of the state's cash situation, insisting the state has enough cash to last through September without engaging in expensive borrowing. Chiang has vowed to defy part of the governor's order by paying state workers their full wages, though he cannot help temporary state employees retain their jobs.
There remains a high threshold for the federal minimum wage cut to take effect for 200,000 state workers. Most get paid at the end of the month, so the lawmakers would have to remain in a stalemate through the end of August. Even then, Chiang has said he intends to issue full paychecks at that time, so Schwarzenegger would have to sue the controller to ensure workers receive the federal minimum wage, a process that could take weeks or months and pose image problems for the governor.
Any minute my aunt, who works for the state is going to call me back. She called earlier today from a room filled with seasonal workers. I get the unhappy task of letting her know they all got fired.
Damn you Arnold. We didn't need to do this. Once the budget is passed, it is going to be a pain in the rear to process the paperwork and hire everyone back. The amount of pain and financial hardship this is going to cause is immense.
[UPDATE] Here is Speaker Bass's statement:
"I'm disappointed with the Governor's decision. It is an unwise and unfortunate move to cause economic strife to public servants and their families who are working hard and playing by the rules. We are not going to let this decision get in the way of our mission which is to deliver a budget that reflects the values of Californians. We are continuing to make progress and I remain hopeful we will have a budget on his desk in the next few days."
As we brace for the Governor's executive order slashing state employee salaries, the Senate Governmental Organization committee wants some answers.
Anticipating that Governor Arnold Schwarzenegger today will sign an executive order to cut state worker pay and terminate about 22,000 temporary, part-time and contract jobs, the Senate's Governmental Organization committee has called on Schwarzenegger to explain his rationale. The committee, chaired by Senator Dean Florez (D-Schafter), has scheduled the hearing for Monday at 10 a.m. Schwarzenegger is invited. Controller John Chiang and leaders of state worker unions will testify, according to a press advisory.
Florez, who sought the advisory opinion from the legislative counsel about this move (which showed that John Chiang has more than enough constitutional authority to deny the wage cut from going through), said in his press statement: "I think the Governor owes the public a full explanation as to why he has singled out the state's workforce with his executive order to cut their salaries."
Right on. Which is why you should keep calling Arnold and ruin his birthday by demanding an explanation of your own.
This is a good move by Florez, both from the standpoint of policy and politics.
The CDP sent out a message from Controller John Chiang about the proposed wage cut to state workers:
When I received word that Gov. Schwarzenegger was proposing to use California's state workers as pawns in the budget battle by cutting their pay to the federal minimum wage of $6.55, I said civil servants should not bear the brunt of the budget stalemate.
Since then, thousands of Californians have joined with me to protest the Governor's proposed -- and needless -- order to slash the pay of California's public servants. I want you to know I will stand strong against the Governor's threats.
Forcing public servants to involuntarily loan the State cash by foregoing their hard-earned paychecks puts an untenable burden on our teachers, health care workers and those who provide critical public services. That is just wrong.
Excellent. Chiang is really coming out like a hero in this.
Taking another tack, Lt. Governor John Garamendi sent a letter to the Governor (via the SacBee's new state worker blog:
Dear Governor Schwarzenegger:
I write to you today regarding the proposed executive order to reduce the minimum wage of 200,000 of California's state workers to the federal minimum wage of $6.55 an hour.
As you contemplate signing this executive order, please ask yourself - how would you feed and care for your family on $262 per week ($1,048 per month)? How would your hardworking staff fare on these minimal earnings? Could you and your family do it for one week?
It is our duty, as elected officials of this great State, to find solutions to the many challenging problems that face California, such as the state budget. Those solutions should always look to improve the quality of life for all Californians, not impede it.
Please walk a week in a state worker's shoes before you sign this executive order and imagine yourself and your family surviving on $262 per week.
This is reminiscent of the SEIU's "Walk A Day in My Shoes" program, as well as the challenge taken by members of Congress earlier this year to live on a food stamp budget for a week. It gets replicated because it works. Garamendi is taking the right approach to humanize the budget crisis.
