After enduring more than a year of unpaid monthly furlough days, state workers could see their pay cut to minimum wage until Sacramento strikes a budget accord this summer, according to a memo from Gov. Arnold Schwarzenegger's administration sent Wednesday.
Schwarzenegger is pushing for the pay cut as yet another overdue state spending plan looms. But the man charged with writing workers' paychecks, Controller John Chiang, said he would defy the order.
The new fiscal year begins July 1, but with lawmakers and Schwarzenegger all but resigned to missing that deadline, the annual wrangling has begun over which of California's bills will be paid with no budget in place.
The memo from Department of Personnel Director Debbie Endsley to state department heads said that "absent a state budget," the governor would seek to slash workers' pay to minimum wage until the impasse is over.
Schwarzenegger spokesman Aaron McLear said the administration is following the law. Unions representing state workers don't see it that way.
"I think that the governor's doing this for purely political purposes," said Dave Low, a lobbyist for the California School Employees Assn.
Chiang spokesman Garin Casaleggio said the controller will continue "paying employees their full salary." Not doing so would risk running afoul of overtime and retirement-contribution laws, he said. Plus, the state's computer system, "built 40 years ago," would be strained to make the changes.
A lower court has already ruled against Chiang, a Democrat, on the minimum-wage issue, in a case dating to a 2008 confrontation with the governor. The controller is now holding out for a ruling in his appeal before the 3rd District Court of Appeals, which heard the case earlier this week.
McLear accused Chiang of ignoring the law.
"That's why we're in court," he said.
At stake is the size of paychecks for more than 200,000 workers, whose wages could be slashed as of July 1, though pay is issued at the end of the month. Once a budget is signed, those workers would be entitled to full back pay.
For that reason, Casaleggio called the minimum-wage threat "a trick that does nothing to solve the budget problems." California faces an estimated $19.1-billion deficit.
Schwarzenegger has previously used the threat of shrunken paychecks to press budget negotiations in the Legislature. This year, Democratic lawmakers have yet to unify behind a plan to counter the governor's severe May budget proposal, which called for the elimination of welfare and child care in the state.
The wage cut is also a critical bargaining chip in ongoing labor talks. Immunity from being paid minimum wage was one of the key concessions that four public labor unions won in tentative deals with Schwarzenegger last week that rolled back retirement benefits.
"It's a huge issue with our members," said Pam Manwiller, chief negotiator for the 5,400-member unit of the American Federation of State, County and Municipal Employees, which agreed to a contract.
The contracts, if ratified, also protect members from further furloughs, which Endsley said in Wednesday's memo the governor "retains the right and authority to order … if necessary to address a fiscal and cash crisis."
The final furlough day for state employees, who have had three unpaid days each month since last summer, was scheduled to be last Friday.