Schwarzenegger Declares Fiscal Emergency in California

Wednesday, 28 Jul 2010 06:50 PM

 

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Gov. Arnold Schwarzenegger on Wednesday brought back furloughs for thousands of state workers until California passes a budget that addresses a $19 billion deficit.

Schwarzenegger released a new executive order requiring state workers to take three unpaid days off per month starting in August. State workers were furloughed a total of 46 days when Schwarzenegger issued a similar order in February 2009, which translated to a pay cut of about 14 percent.

Those furloughs just ended in June.

It's unclear how long the latest round of furloughs could last, as Schwarzenegger and lawmakers enter the fifth week of the new fiscal year without a balaaanced budget. Earlier this week, the governor hinted that he might not sign a budget before he leaves office next January unless it includes pension, tax and spending reforms.

"Without a budget in place that addresses our $19 billion budget deficit, every day of delay brings California closer to a fiscal meltdown," Schwarzenegger said in a statement. "Our cash situation leaves me no choice but to once again furlough state workers until the Legislature produces a budget I can sign."

State Controller John Chiang has warned he will start issuing IOUs in August or September if the budget stalemate drags on in the Legislature. Chiang said the cash-saving measure is necessary because the state is projected to run out of cash in October.

The new order exempts employees who work for departments that collect revenue, such as the Franchise Tax Board, and public safety agencies, including the California Highway Patrol.

It also exempts about 37,000 workers in six unions that recently reached tentative labor agreements with the administration. Those unions agreed for their members to contribute more of their salaries toward their pension benefits and to take one day of unpaid personal leave a month, the equivalent of a nearly 5 percent pay cut.

The latest furlough will affect about 156,000 of the state's 237,000 workers. The Schwarzenegger administration estimated it will achieve $80 million in general fund savings and nearly $150 million in overall savings per month.

The furlough puts pressure on remaining unions that have not agreed to the governor's demands for pension changes.

Schwarzenegger's last furlough order triggered more than two dozen lawsuits, but the administration said the furloughs achieved about $1 billion in general fund savings and $2.2 billion in overall savings during the state's last budget crisis.

Unions also have been fighting the governor's efforts to impose the federal minimum wage $7.25 per hour while the state operates without a budget.

"To once again force state employees to take unpaid furloughs is just another punitive measure by Gov. Schwarzenegger because he couldn't impose minimum wage," said Patty Velez, president of the California Association of Professional Scientists, which represents 3,000 state employees.

The state Assembly's Republican leader, Martin Garrick, said Democrats who control the Legislature were to blame because they have refused to make cuts that Republicans, including Schwarzenegger, have demanded.

"I believe they've brought it on themselves and their constituents — and mine — that have been furloughed, because they haven't made the reductions," Garrick said in a telephone interview. "The longer we go, the deeper the cuts have to be."

Democrats have vowed to protect education and social service programs, such as CalWORKS, the state's welfare-to-work program. They have proposed delaying corporate tax breaks and a new oil tax.

"It's shocking that every single one of the governor's budget moves deliberately hurt people," said Shannon Murphy, spokeswoman for Assembly Speaker John Perez.

Carolyn Schneider, an executive assistant for the California Air Resources Board, said the furloughs have already caused financial stress. She and her husband cut back on vacations and haven't been saving as much as they would like for college for their two children, ages 4 and 13.

But given the choice between a furlough and a permanent pay cut under the governor's plan, Schneider said, "I'd rather have furloughs than the pay cut and still have to work."

——

Associated Press Writer Don Thompson contributed to this report.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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