Jerry Brown tells unions state payroll costs need to come down

State workers' pay is back on the budget chopping block.

Officials representing Gov. Jerry Brown met with state employee union leaders last week and delivered the news: A budget revision he'll release Monday includes a new proposal to cut payroll costs in the upcoming fiscal year.

The decision to take a bite out of state workers' pay comes amid a deepening California budget deficit that Brown pegged in January at $9.2 billion through 2012-13 but now is thought to be considerably more.

The sources, who declined to talk on the record because the administration asked all involved to keep the budget discussions secret, said Brown's representatives didn't outline specific cuts. They said the governor wants to cut payroll costs by at least 5 percent, and asked union leaders to come up with ways to make the reductions.

Brown has the authority to lay off workers, but any other reductions – a pay cut or furloughs, for example – require bargaining or legislation.

Asked about the meetings with labor, Department of Finance spokesman H.D. Palmer said, "The governor has already indicated that more difficult reductions will be required," because the state's budget deficit has grown since Brown issued his first budget proposal in January.

"The details of those reductions will be detailed in the May revision," Palmer said.

Brown is championing a November ballot measure that will ask voters to accept tax increases to relieve pressure on the budget.

If voters reject the proposal, Brown says deeper cuts will be necessary, particularly in school funding. Palmer declined to say whether the state worker pay cuts would be contingent on the outcome of the election.

GOP political strategist Wayne Johnson said that Brown's decision to propose employee cost cuts is more about "optics" than the fiscal math because, unlike local government budgets, state employees' pay makes up a relatively small percentage of the $85.9 billion budget that lawmakers passed last year.

Brown has made other moves to demonstrate he's serious about cost-cutting, including recalling some state employees' cellphones and reducing the government's car fleet.

"He's in campaign mode right now," Johnson said. "Whatever he's doing is geared toward moving poll numbers for his tax initiative."

State employees' pay and benefits have been targeted for years. Former GOP Gov. Arnold Schwarzenegger ordered layoffs, imposed furloughs and twice tried to withhold state workers' wages during budget stalemates with majority Democrats in the Legislature.

Brown criticized furloughs when he was running for office. He has the authority to order layoffs, but the process usually takes at least six months, and the savings often fall short of expectations.

Furloughs are an option only if the Senate and Assembly authorize Brown to execute them. The courts have ruled the policy falls under the Legislature's power to set wages and working conditions. That seems unlikely now, given Democrats' traditional ties with labor.

Brown would have to bargain other cost savings, such as outright pay cuts or higher employee contributions to pension or health benefits.

Just last month, Brown reached agreements with four unions representing roughly 24,000 employees.

Those deals extended the terms of pacts set to expire in July. Two of the contracts increased the state's health benefit costs by 9.5 percent for about 16,000 psychiatric technicians and equipment operators.

With the four extensions in place, the contracts covering roughly 180,000 state workers represented by 12 unions all expire within the first three days of July 2013.

• Read more articles by Jon Ortiz

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