Rejection of California state worker furloughs is upheld

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State worker furloughs are officially off. For now.

A state appeals court Thursday agreed with a lower court that Gov. Arnold Schwarzenegger cannot impose the mandatory unpaid days off on roughly 150,000 state employees.

The Schwarzenegger administration said it plans to appeal immediately to the California Supreme Court.

Late last month, the governor ordered three furlough days each month to conserve cash until California has a budget in place. On Thursday, the gridlock in Sacramento reached a new height — or low — as the standoff among state lawmakers became the fifth-longest in modern California history.

The state faces the possibility of issuing IOUs as early as the end of this month.

In the meantime, state facilities, including Department of Motor Vehicles offices, will remain open. The labor unions that had sued to stop the furloughs cheered the appeals court’s decision.

“Members won’t be cheated out of part of their paychecks, but there are still some legal battles to go,” said Bruce Blanning, executive director of Professional Engineers in California Government, which represents 11,000 state workers.

Alameda County Superior Court Judge Steven A. Brick had issued a temporary restraining order against the furloughs earlier this week, ruling that “the balance of hardships tips in favor” of the workers, who face “great or irreparable harm.” The state’s 1st District Court of Appeal agreed.

That means — unless the state Supreme Court intervenes — that worker furloughs are on hold until at least Sept. 13, when Brick is scheduled to hold another hearing.

“It’s just a big sigh of relief,” said Felix De La Torre, an attorney for the Service Employees International Union Local 1000, which represents nearly 100,000 state employees. Rank-and-file state workers were furloughed from February 2009 through June 2010.

Aaron McLear, a Schwarzenegger spokesman, said that “whether through more furloughs, pay cuts, or layoffs we will realize the intended savings to state employee compensation.” The governor had previously tried to slash state workers’ pay to the federal minimum wage during this summer’s budget impasse; that effort is also tied up in court.

A budget agreement in Sacramento would render much of the legal wrangling moot. But progress in the Capitol has been halting.

Democratic legislative leaders unveiled a united budget proposal last week that would raise income tax rates and the car tax while slashing the sales tax. Democrats have pitched the plan as a net tax break because some of their tax increases are deductible from federal taxes. But the nonpartisan Legislative Analyst’s Office said Wednesday that the plan would amount to a tax hike for the middle class — everyone earning from $20,000 per year to $200,000.

Schwarzenegger and legislative Republicans, meanwhile, have not publicly ceded any ground since a budget proposal in May that would leave California as the only state in the nation without a welfare program.

The longest budget stalemate in state history was in 2008, when the Legislature passed a budget on Sept. 16. The fiscal year began July 1.