-- Layoffs, higher employee contributions, and layoffs in lieu of furloughs?
Date: 1/8/2010
No one expected a single drop of good news in the release of Gov. Arnold Schwarzenegger's last budget of his administration today. What everyone was waiting anxiously for, however, was news on how bad it would be.
The governor's budget, as with all budgets issued by the chief executive in January, is only a starting point for budget negotiations, and should never be taken at face value. Rarely does the real budget ever look like the initially proposed one. This year's budget proposal, however, is not to be dismissed, for unlike most others, it will still have a profound impact on the state and its employees for the following reasons:
- The gimmicks tried in the past to balance the budget have been exhausted
- In his press conference today, the governor announced that the furloughs would end as of June 30 of this year, but the same amount of savings equivalent to the furloughs still need to be achieved.
- The state is facing a $6.6 billion shortfall for the remaining fiscal year (primarily due to the fact that the budget gimmicks last year didn't work) and a $13.3 billion gap for the coming fiscal year
- The governor and many Republicans in the Legislature have vowed not to increase taxes that would reduce the need for draconian budget cuts
- Many budget cuts last year left agencies running at barely operational levels; additional cuts could possibly mean the elimination of entire programs.
CSLEA is carefully monitoring the budget proposals, and although the hits to our members' departments do not appear to be as extreme as those of other bargaining units, things can change, as the legislative analyst and legislative leaders weigh in with their proposals during budget hearings.
In brief, the governor's budget calls for:
- a permanent 5 percent pay reduction
- a requirement on state employees to pick up 5 percent of the state's contribution to PERS
- a 5 percent reduction in payroll, mainly through layoffs, attrition, or hiring cheaper employees.
CSLEA President Alan Barcelona said in response to the employee portion of the budget, "While the governor's proposal to end furloughs starting July 1 is welcomed, the way in which he means to do it will not alleviate by one dollar the financial pain our public safety professionals are feeling. That it is spread equally among all state employees is of no comfort whatsoever."
The Jan. 8 release of the governor's final state budget calls for $82.9 billion in General Fund expenditures for the Fiscal Year 2010-2011, which commences on July 1. That amount is around $3 billion less than the current year's budget. The 5 percent pay reductions, higher pension contributions, and reduction in payroll seeks to save $1.6 billion of the projected $19.9 billion deficit over the next 18 months.
If the governor fails to achieve nearly $7 billion in increased federal funds, he plans to reduce payroll costs by another 5 percent in some, as of now, unidentified manner. Barcelona said "state employees have borne the brunt of the state's fiscal problems. CSLEA intends to vigorously defend its members' compensation at both the bargaining table, in the Legislature, and if need be, in the courts."
Contract Negotiations
It's still unclear what path the governor will take to achieve employee savings. When asked at his Jan. 8 press conference, "Do you plan to negotiate at the bargaining table with the unions for these savings?" His reply was, "...no, I plan to work with legislative leadership to implement them legislatively."
But on a conference call immediately following his press conference, the Department of Personnel Administration's chief negotiator, Julie Chapman, said DPA will be negotiating with all the bargaining units to come to an agreement.
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