Gov. Arnold Schwarzenegger says he'll slash wages for as many as 200,000 state employees and lay off 22,000 temporary workers until the state has a budget – but he'd better keep a few lawyers around because he may find himself in an epic legal battle.
Schwarzenegger's melodramatic act, which first surfaced last week and was tentatively scheduled to happen on Monday, now has been postponed. "The first day of savings will be Thursday," spokesman Aaron McLear said, "so the governor will invoke his executive authority Thursday to ensure the state has enough cash to cover its costs."
Ostensibly, Schwarzenegger's action is to save money because the state is running short, but Controller John Chiang says there's enough to last through September. And the state could borrow to cover its bills even without a budget.
The real reason, it's apparent, is to pressure the Legislature to resolve its deep partisan differences over spending, taxes and Schwarzenegger's demand for a "budget reform" that would include a cap on spending growth. And a three-day delay, one assumes, is to create more anxiety among state workers and more media attention and generate more pressure.
Chiang has vowed to continue writing paychecks for full salaries, rather than the federal minimum wage specified in the draft of Schwarzenegger's executive order, and that's the nub of the looming legal dispute.
The governor's action is based on a 2003 state Supreme Court decision that resulted from a previous budget wrangle. The court declared that "state law contractually guarantees that state employees ultimately will receive their full salary for work performed during a budget impasse, but state law does not authorize the controller to disburse state funds to the employees until an applicable appropriation has been enacted." During an impasse, the court implied, the state must pay workers only the federal minimum wage, now $6.55 per hour.
The Governor's Office is arguing, in essence, that if Chiang issues paychecks without a budget, it would violate that ruling. Chiang maintains that were he not to pay workers full salaries, they could sue.
"I don't want to subject the state of California to legal liability," Chiang said. "Under the Fair Labor Standards Act, if we do not pay full wage, we may be subject to treble damages that would only exacerbate an already difficult financial situation."
"I believe that it is potentially illegal," Chiang continued. "The court did not decide as to the proper amount to be paid. So why would we want to test it when there is very little upside and significant downside at risk?"
The legal picture grew even more muddled when state Sen. Dean Florez, D-Shafter, obtained an opinion from the legislative counsel's office that the governor cannot order Chiang to perform his job in a certain way.
It's a game of legal who-will-blink-first? chicken, but then the whole budget battle falls into that category.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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