No raises? Why many CA state workers aren’t scheduled to get pay increase in July
The start of a new fiscal year in July often coincides with a pay bump for California’s state employees because that’s when raises, negotiated by unions, tend to take effect.
But this July many state workers will likely not get a general salary increase after the Newsom administration called all state employees’ unions back to the bargaining table last year to negotiate new agreements to help California address a multibillion dollar deficit.
One year later, California’s budget is in a more stable position compared to 2025, largely due to an unexpected surge in tax revenue from the technology sector. On Monday, Gov. Gavin Newsom and the Democrat-controlled Legislature announced a $351.7 budget agreement, which the governor described as “balanced, structurally sound, and leaves no projected deficit this fiscal year.”
Eligible state workers will still receive merit salary adjustments, which are based on employee performance, but unless the Newsom administration and unions agree to new deals, most state workers’ salaries won’t benefit from California’s improved budget.
Why did unions agree to no raises this year?
Seeking to close a $12 billion budget shortfall last year, the governor hoped to cut over $750 million from the state’s payroll expenses in salaries and wages.
Unions and the Newsom administration hammered out new agreements, which included several provisions to help cut down on California’s employee compensation costs. One of those outcomes was a program that reduced workers’ pay in exchange for credited time off. The state agreed to a commensurate pay raises to offset those salary reductions.
Each union agreed to slightly different terms for how long the leave programs are in place and by how much salaries were reduced.
Additionally, unions and the state agreed to temporarily suspend some retirement contributions, which on paper looks like a pay bump for state workers who are not making payments to “other post-employment benefits.” While these tactics helped save the state money in the short term, they are likely to increase California’s future financial liabilities.
On Tuesday, the State Controller’s Office reported that California’s net liability for state retirees’ health and dental benefits is estimated to be $78 billion, which is down $14 billion from last year’s estimate.
While unions secured general salary increases last year to offset the salary reductions associated with the leave program, the agreements did not include similar increases in July 2026.
For example, the correctional officers union agreed to a new deal that awarded roughly 25,000 workers with a 3% general salary increase last year. But corrections staff won’t see another 3% GSI until July 2027 based on that agreement.
The unions representing state engineers and state attorneys both similarly secured 3% general salary increases. But those unions’ workers are not scheduled to receive another pay increase until 2027 when members will receive special salary increases ranging from 2% to 4.5%.
No new raises for SEIU Local 1000 so far
According to the union’s previous contracts, SEIU Local 1000 received a general salary increase between 2% and 3% each July between 2020 and 2025.
But this year, the union, which covers nine bargaining units and represents nearly 100,000 state workers, is not currently scheduled to receive a raise this summer.
The union has been in active negotiations with the state to draft a new contract, but the two parties had not reached a deal as of Tuesday, when the existing agreement is scheduled to expire.
The current contract’s protections remain in effect until a new agreement is signed, but the union’s chief negotiator said that representatives from the California Department of Human Resources rejected SEIU Local 1000’s proposals for raises this year.
The state and the union will continue to negotiate until a new agreement is reached, but it’s not yet clear if that contract will include raises. The union’s chief negotiator urged Newsom and the state’s other leaders to include a raise for SEIU Local 1000 employees in light of the state’s relatively strong budget.
“When they say that, ‘The budget is a moral document,’ and ‘It’s a statement of our priorities,’ it’s clear that workers that power California are not a priority,” Bobby Roy, SEIU Local 1000’s chief negotiator, said in an interview, referring to California’s leaders.
The Governor’s Office did not respond to a request for comment.
