Paying thousands of state employees the federal minimum wage of $6.55 an hour, that is what Gov Arnold Schwarzenegger is threatening to do, until lawmakers reach a deal on California’s overdue state budget.
So far, no compromise has been reach by Democrats and Republicans on a solution to the state’s $15.2 billion budget deficit for the fiscal year, which started July 1. The governor has ratchedted up his rhetoric, because the stalemate continued.
The Republican governor is contemplating signing an executive order next week that would pay about 200,000 state workers the federal minimum wage, which is $1.45 an hour less than California’s minimum wage, said spokesman Aaron McLear.
And once a budget is signed, employees would receive their full salary retroactively.
“Because the Legislature has failed to produce a budget over a month past their deadline and because we don’t have a rainy day fund, the governor is looking at a number of options to make sure the state does not run out of cash”, Mr McLear said.
‘Loan the state cash’
State agencies would be prevented from hiring any nonessential employees and would be forced to terminate about 20 000 contracts with temporary workers, interns and contractors, also said a draft of the executive order.
Immediately terminating the contracts and suspending overtime would save the state about $100 million a month, estimates the administration. It would take several weeks to implement the deferred wages, which would save the state as much as $400 million a month, starting in late August.
State controller John Chiang, whose office pays state employees, criticised Mr Schwarzenegger’s threat as a political ploy that could end up costing the state even more in litigation fees.
“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”, Chiang said in a statement.
“Cutting workers’ salaries will do nothing meaningful to improve our cash position or help us make our priority payments.”
Nearly half the affected workers are represented by the Service Employees International Union, which was considering legal action to try to block the move, spokesman Jim Zamora said.
“We’re victims of this budget crisis. It’s not our fault that the state Legislature and Governor Schwarzenegger can’t come together to pass a balanced budget”, he said.
The union represents about 95,000 clerical, office and civilian workers throughout the state.
Emergency, disaster and other critical workers would be exempt from the order.
In both houses, legislative leaders said they are working to meet an August 1 deadline, because without a spending plan in place by then California will have to start negociating on expensive loans, in order to address a cash shortfall that will affect state coffers by the end of September.
On Tuesday, Mr Schwarzenegger said that he will not sign a budget that does not include long-term budget reform, like a rainy day fund to help ease the state through tough economic times. Both sides have their solution : Democrats are seeking to raise taxes by $8.2 billion and Republicans want to balance the budget mostly through cuts.