Only a few minutes after being ordered to reduce the pay of 316,000 state workers to $7.25 an hour, California State Controller John Chiang appeared before the Glendale Kiwanis and explained why he opposed Gov. Arnold Schwarzenegger's drastic budget maneuver.
Chiang said the governor's order, an emergency measure enacted until the state Legislature adopts a budget for the fiscal year that began July 1, would violate federal labor law. He said several categories of state workers — prosecutors, doctors and college professors — are not covered by federal labor law and would receive no compensation under the governor's order. Not receiving a salary violates federal law, he said.
"Thirty-thousand people will receive zero because they are not protected under federal law," Chiang said. "Here is where we are going to have violations."
And federal penalties would ultimately hurt the taxpayers, he added.
"At the end of the day, it will cost us billions of dollars because of this minimum wage contest," Chiang said.
In a prepared statement, Chiang indicated he would appeal Friday's ruling by the 3rd District Court of Appeal.
"I will move quickly to ask the courts to definitively resolve the issue of whether our current payroll system is capable of complying with the minimum wage order in a way that protects taxpayers from billions of dollars in fines and penalties," he said.
Aaron McLear, press secretary for Gov. Arnold Schwarzenegger, said Friday that Chiang has lost every step of the way in court, and that the Legislature's failure is costing taxpayer money.
"The decision today underscores the fact that everyone loses when we have a budget impasse," McLear said. "Every day the Legislature fails to deliver a budget, it costs the state $50 million."
During his talk at the Glendale Elks Lodge, Chiang blasted lawmakers and the governor for contributing to a fiscal crisis tethered to the economic recession that began in 2007.
"Our fiscal failures are not all because of the financial crisis here and across the globe," Chiang said. "It is also because of political and fiscal mismanagement in Sacramento."
That two-thirds of lawmakers must approve a budget is also a major impediment, he said.
Democrats have a majority in the Legislature, but not enough to pass a budget on a party-line vote.
As a result, Chiang said, "the Legislature is really controlled by five or six Republicans … It is not a healthy way to run the eighth-largest economy in the world."