Gavin Newsom keeps money for state worker pay raises in budget as California deficit looms

Inflation-weary state workers likely will still receive raises this year despite a projected $22.5 billion budget shortfall.

Gov. Gavin Newsom’s proposed budget, released Tuesday morning, sets aside more than $487 million for increases in public employee compensation, as well as health care costs for active employees and retirees. The budget also includes funding to cover 2024 calendar year increases in health and dental premiums.

“Included in these costs are collectively bargained salary and benefit increases resulting from contract and side letter negotiations,” the budget summary read.

California state government’s total payroll topped $20.5 billion in 2021, according to the State Controller’s Office.

Contracts expire this summer for 14 state worker bargaining units, including SEIU Local 1000. Unions will return to the bargaining table in the coming months. The unions will almost certainly advocate for better pay to offset record-setting inflation.

Prior to Tuesday, securing raises appeared difficult with a projected multi-billion-dollar deficit and a recession on the horizon. During the COVID-19 recession, Newsom previously negotiated a furlough-like personal leave program with 230,000 state workers. The state cut worker pay by about 9.23% for a year. In exchange, workers received two paid leave days per month that they could bank for later, saving the state what the Legislative Analyst’s Office estimated was close to $2.4 billion.

That mandatory leave program ended in July 2021 when the state restored workers’ full pay, as well as their raises. Neither the governor nor his 2023 budget summary mentioned furloughs or paid leave programs.

This story was originally published January 10, 2023 at 11:28 AM.