Sacramento’s economy gets a boost on Friday when state paychecks roll out with the first across-the-board raises many employees have received in years.
The hikes are modest: Two percent for state managers, supervisors, most service workers, psychiatric technicians, dentists and doctors; 1.5 percent for health and social services workers. An administrative assistant earning $4,888 in June, for example, made about $98 more in July before deductions. We’re talking a couple tanks of gas.
But those increases, plus a larger raise for Highway Patrol officers, will boost pay for about 150,000 employees under Gov. Jerry Brown’s authority. More than half of them work in the greater Sacramento area.
That translates into about $100 million flowing into the local economy in the coming year, University of the Pacific economist Jeff Michael said, roughly the same payroll impact as Sacramento’s downtown arena construction project.
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While the state raises are important to the local economy, Michael said, just as significant is the reassuring signal they send in this company town that its No. 1 employer is stable.
Not so long ago, state work was fraught with heavier workloads and stagnant pay, hiring freezes and downsizing. California’s economic swoon choked government revenue.
State payroll stagnated. Sacramento businesses suffered.
Just two years ago, Brown threatened more budget slashing – with more furloughs and job cuts – if taxpayers didn’t pass a temporary tax measure, Proposition 30. He persuaded the unions to accept furloughs. He pushed through public pension rollbacks. Pay raises? No way.
Then voters approved his five-year tax hike in November 2012. State furloughs ended seven months later.
“That was a huge fiscal and psychological boost,” Michael said, “because it was a change in the future trajectory of the area’s largest employer.”
Sacramento’s major industry has been on a roll ever since, enjoying a double-dip of a rebounding economy and higher tax rates.
For the first time in seven years, California ended the 2013-14 fiscal year in the black, the state controller reported last month. The state took in $4.3 billion more than it spent. It paid off $2.4 billion in outstanding loans and still had $1.9 billion in the bank.
Hiring freezes have thawed. The state government workforce, which shrank during Brown’s first two years in office, is projected to add a few thousand jobs this year.
Pay raises? Sure. And more on the way. About 50,000 employees who didn’t get a bump now will receive raises of between 3 percent and 4 percent, depending on their contracts. Unionized employees who got a raise now will receive a similar hike in July 2015.
It all adds up to stability, a state government returning to business as usual. For now.
“Proposition 30 isn’t forever,” Michael said. “Neither are economic expansions.”