The governor's office has provided this transcript of Gov. Arnold Schwarzenegger's press conference today:

Read the full text on the flip.

The governor's office has downgraded its original estimate of the number of part time workers who will lose their jobs to 10,300. That's less than half the original 22,000 first estimated when Gov. Arnold Schwarzenegger's draft order to cut jobs and pay was released last week. About 33,000 part timers work for the state.

The State Controller's Office has released a spreadsheet, which you can read by clicking here, tallying the potential layoffs of part-time state employees, by county, by department. The spreadsheet includes the total number of workers, though thousands are expected to be exempted because they perform critical life and safety functions. State fair workers also will be exempted, according to the Department of Finance.

Schools chief Jack O'Connell:
"I am deeply concerned about the seriousness of the fiscal crisis facing the state that prompted the Governor to issue his Executive Order today. As referenced in the order, constitutional officers are being urged to 'assist in the implementation...and to implement similar mitigation measures that will help to preserve the State's cash supply during this budget impasse.'
"The California Department of Education (CDE) will be taking steps in the coming days to implement our own cost-reduction measures, as appropriate. However, I do not support the Governor's order to reduce state employees' pay. I commend Controller John Chiang for announcing that he will continue to pay all state employees their full salaries. I am also maintaining the services of retired annuitants, permanent intermittent employees, seasonal employees, temporary help workers, and student assistants. All CDE employees are valued and important assets of this organization, and we all deserve to continue to work and be paid."

Democratic Senate President Pro Tem Don Perata:
"This regrettable action undermines the state's shaky economy, inflicts hardship on 200,000 hard-working Californians who have nothing to do with the state's budget stalemate and reduces services to everyone who visits a DMV office, expects safe highways or needs other state assistance."
"Cutting state services reduces the quality of life for all Californians; that's why the Democrats have a plan that avoids gutting education, health care, higher education and transportation by balancing the budget with a mix of cuts and new revenue."
"The Governor's suggestion that the Legislature did nothing on the budget prior to May 14 shows how little attention he has paid to this process. The Senate held 67 subcommittee and full budget committee hearings going through the Governor's proposal line by line. In mid-February, we took $7 billion in bipartisan budget actions - enough to solve half of the state's deficit."
"On May 14, the Governor proposed a revised budget with a $7 billion hole in it. The Budget Conference Committee fixed this by balancing the budget in six weeks."
"If the Governor disagrees with the conference committee's plan for filling the hole in his budget, we're open to his suggestions on possible alternatives."
"On Monday, the Senate will hold a hearing examining the far-reaching impact of the Governor's executive order."

Democratic Assembly Speaker Karen Bass:
"I'm disappointed with the Governor's decision. It is an unwise and unfortunate move to cause economic strife to public servants and their families who are working hard and playing by the rules. We are not going to let this decision get in the way of our mission which is to deliver a budget that reflects the values of Californians. We are continuing to make progress and I remain hopeful we will have a budget on his desk in the next few days."

Senate Republican Leader Dave Cogdill:
"The Governor's action today underscores the severity of the state's fiscal situation. The reality, highlighted by the Governor's action, is that California's budget process must be reformed. It is the only way to avoid these types of drastic measures in the future. Republicans are working to pass a responsible budget - one that will reform our system without hurting taxpayers or the economy."

Republican Assemblyman Greg Aghazarian:
"While I appreciate the Governor's leadership on this budget crisis, I cannot support reducing the salaries of our state employees to minimum wage.
If our state workers had the power to pass a budget, then it might be appropriate to hold them accountable, but that's not where the responsibility lies according to our State Constitution. I cannot predict when a budget will be passed, but I do know this, when it does happen it will be because we worked to achieve bipartisan solutions.
I understand what the Governor is trying to accomplish with this action, but I must respectfully disagree and urge the Governor to reconsider his executive order."

Republican Assemblyman Ted Gaines of Roseville:"I find the Governor's action unfortunate. I take the responsibility given to me by my constituents very seriously, and I want to reach a budget agreement as soon as possible. My Republican colleagues and I have put forward several common-sense ideas we believe will fix our broken system once and for all, and I will continue to advocate for complete budget reform in order to avoid such drastic measures in the future."

State Controller John Chiang had already announced that he would ignore Gov. Arnold Schwarzenegger's pay cut order. But here's the letter of the Democrat sent to the governor today outlining his opposition.

"To the extent that the Order attempts to govern the constitutional duties for which I was independently elected to perform and, because it is based on faulty legal and factual premises, I will not comply with the Order," Chiang wrote.

Read the full letter.

EXECUTIVE ORDER S-09-08

WHEREAS the constitutional deadline for enacting a state budget for Fiscal Year 2008-09 has passed without the enactment of a budget; and
WHEREAS in the absence of a budget, State government is constitutionally prohibited from making payments that are not compelled by either the State Constitution or federal law; and
WHEREAS until there is a state budget, the State has no authority to pay the following payments: (1) Vendors and Contractors for goods and services chargeable to Fiscal Year 2008-09; (2) Payroll for legislative staff, appointees, and exempt employees; (3) Payroll for other state employees beyond that required by federal labor law; (4) Highway User Taxes that are apportioned to the state, cities and counties for highway and road improvement projects; (5) Cal Grants to students in higher education; (6) Transfers to the Trial Courts; (7) Transfers to University of California, California State University, and Community Colleges; (8) Transportation Revolving Fund disbursements; (9) Non-revenue limit school payments; and (10) Payments for non-federally mandated social services programs such as Community Care Licensing, Adult Protective Services, State Only Foster Care; State Only Adoptions Assistance, and Cash Assistance Program for Immigrants; and (11) tax relief payments to low income seniors and disabled persons; and
WHEREAS on May 1, 2003, the California Supreme Court, in White v. Davis, issued a decision that, in conjunction with other pre-existing court orders, clarified that during a period that there is no state budget in place, federal labor laws require the State to pay its nonexempt FLSA employees either federal minimum wage or, for those employees that work overtime, their full salaries plus overtime; and
WHEREAS it is not known when a budget will be adopted for Fiscal Year 2008-09; and
WHEREAS as a result of the late budget, there is a real and substantial risk that the State will have insufficient cash to pay for state expenditures; and
WHEREAS since June 2008, the unprecedented number and size of fires in California has created states of emergency that have required additional and substantial expenditures of cash to ensure that there are sufficient resources to effectively fight these fires and save lives and homes; and
WHEREAS it is critical that the State be able to meet any unforeseen emergency such as fire, flood or public health emergency and to continue to make timely payments on constitutionally and federally-mandated obligations and existing obligations to pay holders of state bonds; and
WHEREAS due to the impending cash crisis and budget delay, the State may be forced to consider a Revenue Anticipation Warrant (RAW) at an exorbitant cost to the State, including hundreds of millions of dollars in credit enhancements, in order to make sure there is sufficient cash to pay for state expenditures; and
WHEREAS after the late adoption of a budget, there will be additional cash demands because all of the deferred payments that were not permitted to be made during the budget impasse will become due and payable; and
WHEREAS the late budget has resulted in loss of savings to the State in the amount of $164 million for July, and failure to enact a budget in August will result in additional loss of savings in the amount of $323 million; and
WHEREAS as a result of the late budget, additional mitigation measures must be implemented to offset the loss of savings and to ensure that there is sufficient cash to make the State's payments; and
WHEREAS the State employs nearly 22,000 retired annuitants, permanent intermittent employees, and seasonal employees and the State hires new employees at the rate of approximately 1,700 per month; and
WHEREAS except for services and functions of state government deemed critical by this Order, additional mitigation measures need to be taken to immediately reduce expenditures and preserve cash, including the following: (1) halting all hiring, transfers and promotions of employees, and contracting for individuals to perform services; (2) prohibition of overtime; (3) termination of the services of retired annuitants, permanent intermittent employees, seasonal employees, temporary help workers and, student assistants; and (4) suspension of personal services contracts.
NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, in accordance with the authority vested in me by the Constitution and the statutes of the State of California, do hereby issue the following orders to become effective immediately:
IT IS ORDERED that the services and functions of state government directly related to the preservation and protection of human life and safety, including but not limited to emergency and disaster response activities and the provision of 24-hour medical care, shall be deemed critical and exempt from this Order.
IT IS FURTHER ORDERED that except for services and functions of state government deemed critical and exempt by this Order, all State agencies and departments under my direct executive authority take immediate action effective July 31, 2008 to cease and desist hiring of employees (except in instances in which there is a bona fide offer and acceptance prior to the effective date of this Order), transferring employees between State agencies and departments, promoting employees, and contracting for individuals to perform services.
IT IS FURTHER ORDERED that except for services and functions of state government deemed critical and exempt by this Order and emergent situations to preserve and protect human life and safety, all State agencies and departments under my direct executive authority take immediate action to cease and desist authorization of all overtime for employees effective July 31, 2008.
IT IS FURTHER ORDERED that except for services and functions of state government deemed critical and exempt by this Order, all State agencies and departments under my direct executive authority take immediate action to terminate the services of the following five categories of employees and individuals effective July 31, 2008: (1) Retired Annuitants; (2) Permanent Intermittent Employees; (3) Seasonal Employees; (4) Temporary Help Workers; and (5) Student Assistants.
IT IS FURTHER ORDERED that except for services and functions of state government deemed critical and exempt by this Order and except for services provided pursuant to multi-year contracts for Information Technology systems and services, all State agencies and departments under my direct executive authority take immediate action to suspend all personal services contracts effective July 31, 2008.
IT IS FURTHER ORDERED that all Agency Secretaries and Department Directors shall take immediate action to implement this Order, and any other action that will reduce state expenditures.
IT IS FURTHER ORDERED that the Director of the Department of Finance shall establish an exemption process that Agency Secretaries shall utilize to determine if an exemption is justified based on critical services and functions, which may include either cost-reducing or revenue-producing services and functions that will help ensure that there is sufficient cash for the State to make its payments.
IT IS FURTHER ORDERED that Agency Secretaries and Cabinet-level Directors shall report their exemptions to the Cabinet Secretary and the Director of the Department of Finance within 24 hours of approving an exemption.
IT IS FURTHER ORDERED that the Director of the Department of Finance and Director of the Department of Personnel Administration shall work with the State Controller to develop and implement the necessary mechanisms, including but not limited to pay letters and computer programs, to comply with the California Supreme Court's White v. Davis opinion to pay federal minimum wage to those nonexempt FLSA employees who did not work any overtime.
IT IS FURTHER ORDERED that the necessary mechanisms to ensure compliance with the White v. Davis opinion must be in place to be effective for the August 2008 payroll.
IT IS HEREBY REQUESTED that during this budget impasse, the State Treasurer shall take all actions necessary to maintain the State's ability to pay its bond obligations, including payment of principal and interest with funds in the State Treasury, and shall take all actions that are necessary to protect the State's funds and investments.
IT IS FURTHER REQUESTED that other entities of State government not under my direct executive authority, including the California Public Utilities Commission, the University of California, the California State University, California Community Colleges, constitutional officers, the legislative branch (including the Legislative Counsel Bureau), and judicial branch, assist in the implementation of this Order and implement similar mitigation measures that will help to preserve the State's cash supply during this budget impasse.
IT IS FURTHER ORDERED that this Order shall remain in effect until such time as both a Fiscal Year 2008-09 Budget is adopted and the Director of the Department of Finance confirms an adequate cash balance exists to meet the State's fiscal obligations.
I FURTHER DIRECT that as soon as hereafter possible, this Order be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this Order.

________________________________
ARNOLD SCHWARZENEGGER
Governor of California

ATTEST:

________________________________
DEBRA BOWEN

Secretary of State

###

The State Worker column that kicks off in The Bee today points out that Gov. Arnold Schwarzenegger's plan to cut pay and jobs dulls the State of California's already lackluster image as a boss -- just as the administration is prodding managers and directors to present the bureaucracy as "an employer of choice."

You can click here to read The Bee's analysis of who will lose their jobs. Capitol Bureau reporter John Hill figures that the Governor's executive order will, among other cuts, terminate about 5,700 retired annuitants who work part time. Most of those positions are skilled jobs in engineering, accounting, IT and the like.

Last November, the state started the Boomerang program, and online registry that puts retired state workers in part-time state jobs that match their skills. The state says it's a win-win: retirees get some extra cash and agencies get an experienced worker who costs less than a full-time employee. The program is so new, however, that the state doesn't yet know how many people have used it to return to work.

In a previous post, The State Worker asked how losing part timers and interns would affect your work. More than 40 of you commented. Will Schwarzenegger's threat to summarily terminate retired annuitants hurt Boomerang? And if retirees are cut, how many will come back once a budget deal is done? Does your department or agency depend on retired annuitants for key jobs?

I'd like to share your stories with Sacramento Bee readers who might not visit this blog. E-mail me via the link below and include your name and department if you can help. 

State Treasurer Bill Lockyer this morning criticized Gov. Arnold Schwarzenegger's plan to cut state worker pay via executive order on Thursday. He listed four reasons that the plan is a bad idea:

Legal challenges: "Since most of collective bargaining agreements have expired, it's arguably an unfair labor practice," Lockyer said. Like Controller John Chiang, Lockyer believes that lawsuits will follow the executive order. In such cases, courts often award three times the actual amount of money lost, the so-called "treble damages" penalty for willful conduct.

Logistical challenges: The state's payroll system is "archaic" and, Lockyer estimates, that it could take up to three months simply to make the computations to adjust tens of thousands of individual pay checks to the federal minimum $6.55 per hour. He also figures that employees would have to be paid interest on the difference once a budget is passed, adding another layer of administrative headache.

Bad management: Cutting pay would hurt state workers' morale. Other state officials like J. Clark Kelso, the federal reciever who is trying to turn around the state's prisons, recognize that just the threat is enough to demoralize public employees, so he sent off this e-mail to his staff.

No political punch: Schwarzenegger is trying to send a message to deadlocked legislators, but  "I don't think (a state worker pay cut) has any impact on the budget negotiations whatsoever," Lockyer said.

The state teachers' retirement fund next month will take up whether to add tobacco investments to its portfolio. In a wide-ranging discussion with The Sacramento Bee's Capitol Bureau this morning, State Treasurer and CalSTRS board member Bill Lockyer, pictured above, said he remains opposed to the idea.

"I'm not sure we ought to be investing in products that kill our members," he said.

CalSTRS, which has about $162 billion in assets, earlier this month reported that its investments during the last fiscal year lost 3.7 percent. It's worth noting that CalPERS, the nation's biggest public pension fund with $269 billion in assets also had an off year, losing about 2.4 percent.

Tobacco stocks have been off limits for both funds for about eight years, when Lockyer's predecessor, Phil Angeledes, successfully led a push to dump them.

Since that time, tobacco stocks have soared in value. CalSTRS figures it wold have banked up to $1 billion if it had stayed in the game.

Lockyer, however, believes tobacco stocks could be poised for a downturn. New legal cases in Florida and elsewhere are playing out, he said today.

"And it's not as if the money that wasn't in tobacco ... was in a mattress," he said. "It was invested in other things."

Of course, as The State Worker noted last week, sex, booze and gambling are funding California's two biggest public pensions, CalPERS and CalSTRS. Visitors to the blog had a spirited debate over whether "sin" stocks should fund public employee retirement.

Ted Costa, the guy behind the Gray Davis recall that opened Arnold Schwarzenegger's path to the Capitol, is predicting that the financial crisis in Vallejo is the leading edge of a public employee pay and pension tsunami soon to wash over other California cities and counties. 

That's not a new observation, but then Costa lays out several ways that Vallejo should trim employee expenses to save money.

You can click here to read Costa's Vallejo turnaround plan. The changes include revoking a retroactive 1 percent increase in the city's pension formula, setting a higher retirement age, reducing compensated absences and adjusting reciprocity formulas to discourage pension spiking.

Here's where state workers come in: Let's say that Vallejo follows the Costa plan and it works. Would other cities and counties seize on Vallejo's success to enact similar changes? And if those cities and counties successfully changed their policies, would state officials feel pressure to do the same? Does the Vallejo story have implications for state workers?

Lt. Gov. John Garamendi this morning sent a letter to the Gov. Arnold Schwarzenegger, asking him to "walk a week in a state worker's shoes" before signing an executive order on Thursday that would slash their pay to $6.55 an hour:

July 29, 2008

The Honorable Arnold Schwarzenegger

Governor of California

State Capitol Building, 1^st Floor

Sacramento, CA 95814

Dear Governor Schwarzenegger:

I write to you today regarding the proposed executive order to reduce the minimum wage of 200,000 of California's state workers to the federal minimum wage of $6.55 an hour.

As you contemplate signing this executive order, please ask yourself - how would you feed and care for your family on $262 per week ($1,048 per month)?  How would your hardworking staff fare on these minimal earnings?  Could you and your family do it for one week?

It is our duty, as elected officials of this great State, to find solutions to the many challenging problems that face California, such as the state budget.  Those solutions should always look to improve the quality of life for all Californians, not impede it. 

Please walk a week in a state worker's shoes before you sign this executive order and imagine yourself and your family surviving on $262 per week.

Sincerely,

JOHN GARAMENDI

Lieutenant Governor

Is Garamendi posturing here, or do you think that he and other politicians who have criticized the governor's pay cut plan are posturing?  How long will the budget impasse continue?

It could go much longer. My colleague Steve Wiegand today lists California's five latest budgets on Capitol Alert. Could this year's budget impasse will set a new record? And how long after the budget gets done will state workers get new contracts?

In the flood of news last week about the governor's pay reduction order for state workers, you may have missed this broadcast on KXJZ about a bill that would open CalPERS to private sector retirement investments.

The discussion includes AB 2940 author Assemblyman Kevin de Leon (D-Los Angeles), Bill Duclus of the Retired Public Employees Association of California and Michael Moreno, a lobbyist with AARP.

CalPERS declined an invitation by the radio station to be part of the debate. It took a "neutral, if amended" position on the bill in May.

If you want to get more info on the bill, you can click here for the draft legislation. CalPERS' analysis is here. Remember, though, that de Leon has revised the bill since that analysis went to the fund's board.

We'll let the media release sent out this morning do the talking:

MEDIA ADVISORY
July 28, 2008
SACRAMENTO, CA

Assemblymember Dave Jones, who represents Sacramento, will join Courage Campaign Chair Rick Jacobs.

WHY: 

"We launched our "Stop Arnold" campaign because what the governor is trying to do is absolutely outrageous and unconscionable," said Rick Jacobs, Chair of the Courage Campaign.  "We had no idea it would spark a grassroots firestorm and become one of the most widely supported Courage Campaign actions ever.  In just four days, 28,016 concerned citizens signed the petition, including thousands of our friends from True Majority and CREDO Mobile, as well and the leaders of the California legislature."

The Courage Campaign is an online organizing network empowering nearly 100,000 members and supporters to make 2008 a new era for progressive politics in California.

Rick Jacobs is the founder and chair of the Courage Campaign.  He chaired Howard Dean's presidential campaign in California. He is also the co-founder of Brave New Films and a featured contributor to Arianna Huffington's Huffingtonpost.com.  Rick has an extensive background as an investor and senior executive.

Working for the State of California has downsides. Sure, the pay and benefits can be pretty good if you stick with it long enough. Then again, the governor could suddenly push a plan to whack your pay. And then there's the aggravation of your livelihood being a punchline.

Comedian Dane Cook's riff in this 2-minute YouTube video suggests that going to a DMV office is slightly less painful than a punch in the face. Web sites like officediversions.com have sections dedicated to poking fun at government workers. You've heard the jokes. Maybe even told a few yourself.

You have to wonder if any of that was part of the political calculus behind Gov. Arnold Schwarzenegger's threat to cut state workers' pay to $6.55 per hour. The formula goes something like this: The outrage of 200,000 state workers is less than the support from millions of Californians who want a budget passed and who don't sympathize with California's bureaucratic corps.

In other words, why risk using a popular group or program for political leverage when state workers are handy? 

Michael Shires, a Pepperdine University associate professor of public policy who wrote "Why is Government So Expensive?" put it this way in a phone interview with The State Worker: "California's state employees have a big PR problem. People see more and more money going into government and not a lot more coming out."

Do you agree? What's behind all the jokes and stereotyping of state workers? Is it harmless fun, or does it indicate something deeper? Can state workers or their unions do anything to improve their public relations? 

Being the Governor of California isn't like being the general of an army. As the growing furor over Gov. Arnold Schwarzenegger's threat to temporarily chop state worker wages to $6.55 per hour illustrates, folks on the lower rungs can fight back or just ignore you.

I've posted an internal e-mail below that Federal Receiver J. Clark Kelso sent to all Prison Health Care staff. The State Worker hears that it was prompted by his concern that staff morale might take a hit, just as he is beginning to implement the turnaround plan to improve health care in California's 33 prisons.

Kelso "doesn't think it's appropriate" for state health care workers in the prison system to have to take time to run around applying for loans since "health care services in prison is a life or death, 24/7 job," e-mailed Luis Patino, spokesman for the Federal Prison Health Care Receivership.

"(Kelso) also feels that we can't restrict or control clinical services such as oncology which are life-or death services," Patino said. "And, he knows that there is a precedent of representatives of the Federal Court stepping in to override state hiring freezes and other personnel actions when they interfere with progress of remedial plans."

Here's the Kelso e-mail:

Dear California Prison Health Care Services Team Member,

    No doubt you have heard or read media reports about the Governor's proposed plan to ensure that the state maintains adequate cash flow by temporarily lowering state workers' salaries to the federal minimum wage of $6.55 per hour. You may have also heard or read conflicting reports from Controller John Chiang's office that he will continue to send state worker's their full paycheck.
    Exercising the power granted to him by the Federal Court to act as the Secretary of CDCR with respect to medical care matters, Federal Receiver, J. Clark Kelso, has decided that the overriding federal interests of the Receivership require that all employees who work for the Receiver shall be exempt from the executive order.
    This means that you will not see any changes in your pay as a result of the current budget crisis.
    Thank you for your continued hard work, professionalism and commitment to improving prison health care.

The State Worker this afternoon interviewed Terry Halleck, president and chief executive of The Golden 1. We asked about the credit union's plans to offer loans to state workers should Governor Arnold Schwarzenegger go through with plans to temporarily cut pay for most state workers to $6.55 per hour, or roughly $1,000 per month.

We reported on the details of The Golden 1's state worker loan programs. The big thing to note: Members with direct deposit before July 1 qualify for a zero-interest loan. Existing members who signed up for direct deposit after that date can get a loan, but at a 4.99 percent interest rate. The program is available only to state employees who were members of The Golden 1 Credit Union as of June 30

The Golden 1 isn't the only financial institution offering state worker loans in the event of a paycheck reduction.  Schools Financial Credit Union and River City Bank, have similar "budget impasse" deals for state employees.

But The Golden 1 counts about 100,000 state workers among its 680,000 members, so it's the big dog in the kennel.

Some bits from the Halleck interview follow. We'll have more Saturday in The Bee's print  and online editions.

On why Golden 1 will offer the loans to state workers: "State employees started Golden 1 here in Sacramento, 75 years ago. As a credit union we're always looking to give back to our members and support them in times of need. State employees shouldn't have to default on loans or go without food during a budget delay."

On what it costs the credit union to offer state worker budget impasse loans: "It's an opportunity cost. We would have otherwise had those funds in investments, so we're giving up the opportunity to invest the money and instead crediting it to members' accounts."

On what this does for The Golden 1's marketing: "We gain a few (members). I think more importantly, though, the ones that trust the credit union have that trust reinforced because we're there for them every year. We have been for years."

On challenges the economy's downturn presents for the state worker loan programs:    "It really isn't (harder). I don't look at it as being harder. All financial institutions have been impacted by the economy and real estate conditions. We're affected by that, obviously, but it's never been a consideration to not (offer state worker loans)."

On how budget impasse lending has become routine: "It's always a possibility (that the budget won't pass by the June 30 deadline). It's become routine. We know it's a possibility every year and we're prepared every year to stand by the state employees. This year 851 legislative staffers and gubernatorial appointees have received $1.7 million in loans so far."

On why Golden 1 dings members who sign up after June 30: "When we have somebody who has already been on direct deposit, it's a lot easier for us operationally. We can use prior payroll data to pay them going forward.

"We're talking about up to 100,000 state employees. For people who haven't given us a direct deposit, it's a manual process. If somebody was an existing member without direct deposit we have to jump through a lot more hoops. It's a lot more work on our end.

"The other side is that its another incentive. We want your business long term. And we want to give back to active members."

Terry Halleck, The Golden 1 credit union's president and CEO told The State Worker this morning her company has finalized the plans for a two-tier "budget loan" program should Gov. Arnold Schwarzenegger cut state employee wages to the federal minimum $6.55.

The program would work like this:

• Members who had direct deposit with the credit union as of June 30 would be eligible for a zero-interest loan.
• Existing embers who sign up for direct deposit after June 30 would qualify for a loan at 4.99 percent.
• Both programs would only be available to state employees who were members of The Golden One as of June 30. 

Don't rush down to your local branch. The loans are contingent on the governor's wage cuts. "We won't have people sign loan documents until that happens," Halleck said. "It all depends on how (the budget talks) play out."

Here's CalPERS' official statement on what the budget mess and potential wage reduction means to state workers applying for retirement and retirees who are drawing benefits. In sum: "Nothing to see here. Move along."

The Governor's plan to cut wages if lawmakers don't reach a budget deal by the weekend had union workers protesting at the Capitol today. Reaction from state workers that I interviewed Wednesday for today's lead story in The Bee swung between angry and appalled. Heavy on the angry.

Move past the outrage and the disbelief, though, and it's probably entered your mind: What will I do if my pay gets cut to $6.55 per hour?

Several financial institutions, including The Golden 1, will likely step in with special loan programs to tide you over. Some already have programs in place that are serving  legislative employees who stopped getting paychecks on July 1.

Terry Halleck, President and CEO of the Sacramento-based credit union told me that budget impasse loans have "become routine" for The Golden 1, since it's the rare year that the state's budget comes in on time.

If state workers' pay is slashed, the credit union would quickly expand its outreach to its 100,000 state worker members. "We would quickly get word out," she said. "And I'm sure that our members would call us, too."

Schools Financial Credit Union issued this press release about its zero-interest state employee loan program earlier this month.

River City Bank for 10 years has helped its direct deposit customers working in the Senate and Assembly who lose their pay July 1 when the state's fiscal witching hour strikes. The bank covers checks and withdrawals on the accounts until the budget is finalized and the state makes good on its retroactive wage obligations.

Know of any other loan programs out there?

Next month, the California State Teachers' Retirement System is likely to take up whether to start buying tobacco stocks eight years after it dumped them. The debate will pit those who think the fund's highest calling is making money for its members against those who think it's wrong to make money from products linked to disease and addiction.

But what about other "sin" stocks? As the table below shows, CalSTRS and the California Public Employees' Retirement System invest in companies that make beer, promote gambling, sell adult magazines and operate adult clubs.

What do you think? Should the funds stay out of tobacco? What about other "sin" stocks?

1,172,637

 Click these links for the complete list of CalPERS' stock investments and CalSTRS' stock investments. Both lists reflect the funds' holdings as of Mar. 31 of this year.

The governor's warning that he'll fire some state workers and whack the pay of the rest if there's no budget by Monday has ticked off California's public employees -- and prompted us to unveil The State Worker blog a week ahead of schedule.

Our well-crafted plan was to debut this blog and an accompanying print column next week. Events dictate otherwise, and we're opening up the blog today.

We want to respond to your need for news and discussion on issues that are important to the state workforce. And nothing is bigger news right now than the governor's pending executive order.

If you haven't seen the draft of the controversial executive order, click here to check it out. You also can click here to read the California Supreme Court ruling that Schwarzenegger says underpins his legal authority to cut wages.

Dan Walters, the dean of state political coverage, is answering questions about the governor's pending order at his Web site, Capitol Q&A, which you can reach by clicking here.

Eventually, this issue will pass. A budget will get done. And this blog will roam far and wide for topics that interest you. We hope you'll submit ideas, throw us tips and keep us in line. We look forward to hearing from you.