Controller Won’t Implement 5% Pay Cuts : Finances: Gray Davis says that he will also make refunds to 3,300 state managers whose salaries were reduced in the budget crisis. His actions set the stage for a court battle with the governor.

Setting the stage for another court battle with Gov. Pete Wilson, state Controller Gray Davis announced Tuesday that he will not accede to the Republican governor’s demand that he give a 5% pay cut to 25,000 state employees in supervisory positions.

In a related budgetary development, the Health and Welfare Agency announced $60 million in reductions that will include the elimination of more than 1,300 positions and the layoff of roughly 400 state employees.

Davis, a Democrat, said that in addition to blocking the pay cuts aimed at supervisors, he will make refunds to 3,300 top managers whose pay was reduced in July because of the state budget crisis.

“The pay cuts requested by the Administration are not legal. I have no choice but to reject the request,” Davis said, announcing that he had ordered that all employees receive full pay except for the roughly 150 Administration officials, including the governor himself, who had specifically requested that their salaries be reduced 5%.

In justifying his action, Davis said the Administration failed to take a required survey of private- and public-sector jobs to determine whether those state employees whose pay would be cut are currently making 5% more than their counterparts holding comparable jobs elsewhere. Current law requires the state to make a “good faith” effort to meet prevailing wages paid for comparable work, Davis said. The controller also said he did not believe the Administration had complied with what he called a “statutory checklist” that protects workers’ rights.

Administration officials immediately said they will go to court to force Davis’ hand, insisting that the pay cuts are needed to meet a requirement in the state’s $55.7-billion budget that the cost of salaries and benefits be reduced by $350 million. The reduction was part of an agreement between Wilson and the Democratic-controlled Legislature to close a projected $14.3-billion budget deficit. The budget deal included more than $7 billion a year in tax increases.

Wilson, in a statement released by his office, warned that the controller’s action would mean even deeper budget cuts and more layoffs.

“Controller Davis’ actions are irresponsible. They aggravate the process of reducing government spending, which will mean Californians who are in need will suffer,” Wilson said.

The proposed reductions by the Health and Welfare Agency include a 30% cut in the Cancer Tumor Registry, which tracks cancer cases county by county, and a 40% reduction in the budget of the Birth Defects Monitoring Program. There also will be cuts in programs providing community care licensing, family day care and residential care for the elderly. The Foster Family Home Recruitment Program for Los Angeles County would be eliminated.

Health and Welfare Secretary Russell Gould said the budget cuts will hit other programs hard, causing delays in the adoption of drinking water standards required by state and federal laws, slowing down payment of Medi-Cal bills, and inconveniencing the public by slowing the retrieval of vital public records held by the state.

As for the controller’s refusal to pass along a 5% pay cut to supervisors, David J. Tirapelle, director of the Department of Personnel Administration, said legal papers will be filed by the end of the week. Tirapelle said the 25,000 supervisors whose pay he wants to cut are not covered by collective bargaining agreements.

“We will be going to court to impel him to implement the salary adjustments. We believe we clearly have the legal authority to address the salaries of excluded employees,” Tirapelle said.

Wilson and Davis have already clashed in court twice over budget-related issues, with Davis winning both times. Once Wilson tried unsuccessfully to block Davis and Supt. of Public Instruction Bill Honig from giving the Richmond School District an emergency loan. The other Wilson setback occurred when the governor tried to force Davis to charge state employees more for dental and medical benefits.

“If they want to go to court, that’s fine,” Davis said. “I’ve seen this movie before. Hopefully the Wilson Administration will learn it is important to comply with the law. If they don’t like the law they can try to get a change in the Legislature.”

Tirapelle said the Administration had counted on saving $29 million over the last 10 months of the current budget year, which ends June 30, 1992, by reducing the pay of supervisors by 5%.

Compounding the problem for the Administration is the fact that Assembly Democrats have blocked ratification of a landmark collective bargaining agreement with the California Correctional Peace Officers Assn. that would have saved the state $35 million over the course of the year by requiring 18,000 prison guards to take a 5% pay cut. Even though the union agreed to wage and benefit reductions, the issue got caught up in the fight between Wilson and the Legislature over reapportionment.

Tirapelle said the various actions to block the Administration efforts to reduce pay and benefits will translate directly into higher numbers of layoffs for state employees.

The Administration has announced that more than 3,000 state employees will ultimately be laid off.

State employee unions say the need to cut pay and benefits is being exaggerated by the Administration because it fails to account fully for 20,000 job vacancies.

But Tirapelle said many of the vacancies are in departments not under the general state operations budget, such as the California Highway Patrol, and that those jobs will be filled in the next few months.