Gov. proposes 5% cut in state employee salaries

Gov. Arnold Schwarzenegger on Thursday readied a proposal to cut state worker salaries by an additional 5% as local government officials lambasted his bid to take $2 billion from cities and counties to help curb the state’s growing budget deficit.

The governor’s proposed salary reduction would affect 235,000 state workers who already are taking mandatory unpaid furloughs to help the state grapple with a projected budget gap of $24.3 billion.

Combined with the furloughs, ordered by Schwarzenegger earlier this year, the new proposed salary cuts would push many state employees’ wages down by about 15%, saving the state $470 million.

“Everyone in the state is cutting back right now -- businesses, families,” said Matt David, a spokesman for Schwarzenegger. “The governor feels it’s very important that state workers do the same thing.”

The new proposal would not affect employees of the state Legislature or court system, another spokesman said.

Schwarzengger plans to formally announce the wage cuts today, along with additional budget cuts, for a total of $3 billion in savings. The governor is scheduled to address a joint session of the Legislature on Tuesday, after the last of a series of public hearings on the budget concludes.

On Thursday, dozens of local government representatives told a 10-member legislative budget panel that Schwarzenegger’s plan to tap them for $2 billion would force cities and counties to slash police and fire protection, shut libraries and cause a cascade of other troubles as they struggle to make ends meet.

The governor’s proposal, which involves borrowing local property tax money and repaying it within three years with interest, simply transfers the state’s fiscal woes to a rung of government that can least afford it.

“The only thing that does to our county is put us in a truly perfect fiscal storm,” said Supervisor Kim Vann of Colusa County, where budget cuts have resulted in layoffs, a spending freeze, an overcrowded jail and other troubles. “It will mean financial devastation.”

Schwarzenegger wants to take nearly $700 million from cities and $330 million more from special districts that provide fire protection, flood control, mosquito abatement and other services.

Counties could be hit particularly hard, with Schwarzenegger proposing to cut nearly $1 billion from their funding. Los Angeles County alone could lose $300 million, adding to deep revenue declines amid the sagging economy.

All told, the county could be subjected to spending cuts approaching 20% of its discretionary money.

“It’s beyond my wildest imagination. It’s like nothing I’ve ever seen before,” L.A. County Supervisor Don Knabe said in an interview. “Do I want a deputy sheriff pulled off the street? Do we close City Hall for a day? Do we close a library for a day?”

Meanwhile, proposals to eliminate the state’s Healthy Families insurance program for the working poor and reduce Medi-Cal-funded healthcare for the very poor could send patients streaming into county medical facilities -- adding even more cost for local governments. Local governments also could lose an additional $700 million slated for transportation projects.

Schwarzenegger said the deep deficit made it imperative that California borrow from local governments.

“We could not see any way out without, you know, having some help from the locals,” the governor said at an afternoon event outside the Capitol.

“They will get their interest and they will get their money back,” Schwarzenegger said. “. . . This is not like in the old days . . . where the state of California just grabbed that money and ran.”

In the early 1990s, the state siphoned millions from cities, counties and special districts without paying it back. A voter-approved ballot measure in 2004 prohibited those sorts of raids, but gave state lawmakers the power to borrow property tax dollars intended for local governments in an emergency as long as it was repaid in three years, with interest.

Meanwhile, the governor’s latest wage-cut proposal was greeted like a plague by state workers.

Yvonne Walker, president of Service Employees International Union Local 1000, which represents nearly half of all state workers, said employees have “already stepped up and made sacrifices.”

Instead of cutting salaries, she said, Schwarzenegger should cancel vendor contracts worth more than $5 billion and end “corporate tax loopholes that rob Californians of the state services they deserve.”

Schwarzenegger late last year forced state workers to take off two days a month without pay, amounting to about a 10% salary reduction. The new decrease, which would have to be approved by lawmakers during budget negotiations, would not come with any time off and would take effect with the new budget in July.

Schwarzenegger in recent weeks has proposed closing more than $21 billion of the budget gap mostly through drastic cuts to a variety of state programs that provide healthcare, welfare, education and law enforcement.

The $3 billion in additional budget cuts he plans to propose today include the wage cuts and additional reductions for education and health and human services, government sources said.

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eric.bailey@latimes.com

michael.rothfeld@latimes.com