State Controller John Chiang Blocks Schwarzenegger's California State Employee Pay Cuts

So, if you make modest wages working for the state, which faces a $15 billion deficit, should you provide a no-interest loan for an open-ended period to your employer by taking a pay cut--while the big, big boss gets corporate perks and feels no pain himself?

In a word, no.

The state controller of California, John Chiang, showed who was the real action hero yesterday by refusing to follow through on the executive order Governor Arnold Schwarzenegger signed to enact a temporary pay cut to over 200,000 state employees. Wages would be reduced to federal minimum wage of $6.55/hour, lower even than California's minimum wage of $8/hour.

Chiang's formal letter to the governor can be found here (pdf).

The governor's executive order also pink-slipped about 32,000 part-time, seasonal, and temporary workers.

In refusing to carry through the executive order, Chiang made several excellent points:

• the controller's office has the constitutional authority to ignore Schwarzenegger's executive order; the legislature has the authority to set wages, not the governor
• firing and reducing wages for state employees does not make good financial sense--"if we don't pay wages under federal law then we have to pay treble damages."
• the governor's rationale is to preserve cash in this crisis. But, Chiang points out, "We have funds to pay at current levels through Sept. We’ve always done the borrowing [needed] to tide us over anyway [during budget shortfalls]...and are prepared to do so again."
• the governor must file a lawsuit to force the controller to comply with his executive order. "It's a waste of taxpayer dollars" to do this, and probably wouldn't grind through the system until September or later, when it's likely the latest budget will already be signed.
• finally, the governor's ill-considered and punitive act opens the state of California up to a lawsuit, as we'd be in violation of the Fair Labor Standards Act. When asked if Schwarzenegger's order applied to all state employees or only some, Chiang elaborated by saying, "we can't just say who is exempt and who is covered under the law"--that is, those determinations aren't simply up to the state or the governor.

In short, John Chiang decried Schwarzenegger's order as one that forces state employees to carry the burden of the state assembly and the governor's office's failure to achieve consensus on a state budget.

Chiang said, "The downside is huge, the upside is little." He referenced a phone call his office received recently by a distressed state employee in the middle of a home purchase: "The lender demanded that she show a letter saying she was not going to be paid mininmum wage, Governor Schwarzenegger's executive order will jeopardize her buying a house." Chiang said, "People need to buy food, clothing, get their kids back to school. We should put people first. Show compassion, and do the right thing."

Congresswomen Hilda Solis has also been active on this issue--she immediately collected the signatures of 26 members of the California Congressional delegation together in a letter to the governor urging him to seek a solution other than the pay and job cuts he threatened, and now has enacted. She said, "We have one of the highest minimum wages in the country, to put [workers] at $6.55 is shameful."

The SEIU, the union that covers most of the workers affected by the cuts, points out that $6.55/hr for a family of four is $700/month below the federal poverty line.

Congresswoman Solis said, "Congress will work with you, but we need our communities to stand up against Arnold." She pointed out that "Workers have to provide for families, many are single-headed households. Let’s put Arnold Schwarzenegger on the federal minimum wage, take away corporate donations for him to stay at the Hyatt hotel across from the state capitol and take away his private jet."

The Sacramento Bee reports

Meanwhile, agency secretaries and department heads will have leeway to determine which employees can be exempted from receiving federal minimum wage because they serve a crucial health and safety capacity. That could reduce the total number of state employees subject to the wage cut below 200,000.

The state already has withheld paychecks from lawmakers, legislative staff and gubernatorial appointees since July 1, the first day of the fiscal year. They receive their full pay -- and lawmakers receive their full per diem in addition -- once the budget is signed. Schwarzenegger, whose net worth is more than $100 million, does not accept his $212,179 annual salary as governor.

When asked for his response to the fact that the governor has urged local banks to ease the financial burden on state workers by offering low interest loans, and some have complied, State Controller John Chiang answered, "We need a sound budget solution," not privatized stopgap measures that "set a bad precedent. Keep the governor focused on the budget."

You can find more information and make your views known here:

• California State Assembly Budget and petition to pass the budget
• California Democratic Party letters to the editor kit (customized for state residents)
• California Democratic Party petition supporting State Controller John Chiang's refusal to comply with Governor Schwarzenegger's executive order on legal grounds (open to all)
• Lt. Governor John Garamendi's letter to Schwarzenegger asking him to walk a mile in the shoes of a government worker who would make $262/week at the reduced wage of $6.55/hour

Cynematic blogs at P i l l o w b o o k. She'd like you to know that you can thank (or not) Schwarzenegger for personally advocating to GM that so many consumer High Mobility Multi-Purpose Vehicles (Humvees) be put on the road, guzzling gas at 8 mpg.

 

Comments

[Rob Page]

If Arnold has the authority to reduce the pay of state workers, and Mr. Chiang takes it upon himself to violate Arnold’s edict he could find himself charged with a number of felonies including, but not limited to, larceny, misappropriation of state funds, embezzlement, and misuse of state funds.

Mr. Chiang should and does know better.

[eliana]

Have you guys seen the new animated version of Get Your War On? Whichever side of the aisle you're on, I'm pretty sure you'll find this video funny, whether you're a terrorist, non-terrorist, or simply a neglected unlisted terrorist: http://www.236.com/video/2008/get_your_war_on_the_watch_list_1_8056.php

[cynematic]

Rob, that's just it, the Governator doesn't have the authority to chop wages at whim. Or why wouldn't he do that any time he has a budget shortfall?

Or are you an attorney? If so maybe you could comment in greater detail about the case that the legal counsel for the State Controller's office is using to back their noncompliance with the executive order, White v. Davis (2003), a California State Supreme ruling on a similar matter.