Schwarzenegger Orders State Worker Pay Cuts, Layoffs

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Governor Schwarzenegger signed an executive order Thursday to cut state worker's wages, lay off thousands of part time and seasonal employees, and freeze overtime and hiring. Schwarzenegger said it's the only way to keep cash in California's coffers until the legislature passes a budget. But as KPCC's Julie Small reports, much of the Governor's order won't take effect.

Julie Small: Governor Schwarzenegger said the state will issue thousands of pink slips to part-time, seasonal, and temporary state workers. Full-time state staff will get paid just the federal minimum wage of $6.55 an hour until the budget's passed. When that happens, the governor said the state would reimburse them back wages, and he apologized for putting state workers in difficult straits.

Governor Arnold Schwarzenegger: But this is the only solution in order to get out of this problem.

Small: "The problem" is the state legislature hasn't passed a budget yet and California's cash reserves run out in September. Schwarzenegger's finance department estimates the pay cuts and layoffs will save the state roughly $2 billion a month.

But most of the governor's plan won't come to pass. State Controller John Chiang has refused to cut state worker pay – and he writes the checks.

John Chiang: I just think it causes too much potential harm to the public servants, to what they do for the state of California, for our legal position and our financial position here in California.

Small: Chiang said the state could be violating federal fair labor laws if it cuts workers' pay. He called the governor's reasons for issuing the executive order false.

Chiang: He wanted to do this to save the state money. We have sufficient cash to pay all of the obligations of the state through September.

Small: If the state runs out of cash, Controller Chiang plans to borrow. The only part of the governor's plan that will go through for certain: layoffs of temporary, part time, and seasonal workers.

Adrienne Suffin represents workers at the state's Employment Development Department. She says layoffs won't mean savings for the state.

Adrienne Suffin: Legally when you fire someone, you have to pay them all the money you owe them. So you have to pay them all their vacation, all the time that they've accrued. And that's going to be very expensive for some of these people, because they haven't been able to take vacation time because of their workload.

Small: Suffin can't see a good reason for laying off workers who are so busy they can't take a vacation. She accused the governor of using state workers as political pawns. Many lawmakers agree, calling the governor's plan a political ploy to get them to pass a budget.

Schwarzenegger denied that he signed the executive order to pressure lawmakers, but was "optimistic" they'd pass one before the measure takes full effect.

Schwarzenegger: My intention is to get a budget within the next few days, and if that is the case then we will never have to use any of those kind of things, and everyone will get paid and some of the people will be hired back.

Small: The governor may get his wish. Legislative leaders have said they're making progress and expect to vote on a budget within a week or two.