Looking at the California economy, the politics and the numbers, two observations surface for the thousands of unionized state workers with contracts expiring in the next few weeks: The next deal will include a modest raise. It’s probably the last one for a while.
Gov. Jerry Brown is in talks with 17 bargaining units that represent everyone from custodians and office clerks to hydroelectric plant operators and doctors. In 2015, the state paid about $14.6 billion to the 200,000 or so employees in those units.
The governor’s May budget proposal sets aside $500 million next year for higher salaries and increased benefits yet to be set through collective bargaining. If all the money went to pay raises – and it won’t because some of it will cover pensions and retiree medical contributions – that would translate into a 3.4 percent total payroll increase from last year.
It’s unlikely that the unions can arm-twist more from Brown. When he presented his revised budget plan earlier this month, the governor cautioned that California’s economy may be slipping. State tax receipts are down. The economy has been trending up longer than is usual, he noted, and California is overdue for a recession.
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As things go through the Legislature, there may be more and more pressure on the governor to spend on other things.
Ron Yank, former labor negotiator and director of the California Human Resources Department
For those reasons, Brown’s revised $169.3 billion budget is almost $2 billion lower than his first draft. Privately, union leaders say they expect other interests will crank on lawmakers for some of those pay-raise dollars. Ron Yank, a former labor negotiator and state human resources director, agreed.
“As things go through the Legislature,” Yank said, “there may be more and more pressure on the governor to spend on other things.”
Brown also is mindful that California’s new minimum wage law, which incrementally increases bottom-rung pay to $15 by January 2022, includes state government employees and its outside contractors. The Legislative Analyst’s Office said recently that, fully phased in, the cost of the increase to the state “could be in the billions of dollars each year.”
All this is happening against the backdrop of a November ballot measure that asks Californians whether to continue the higher state tax rates they approved for school funding four years ago. The Department of Finance figures the taxes will pull in an extra $8 billion this year alone. If they go away, education will siphon funds from other areas of the state budget.
Assuming that Brown, who leaves office at the end of 2018, does three-year deals with the remaining bargaining units, this is the last time the unions will sit at the table with his administration. Although Brown’s reputation among labor groups is that he’s tight with a buck, the Democratic governor is a known quantity.
What if, due to either personal politics or a recession, the next governor wants to claw back money, hike what employees pay for benefits, or some combination of the two?
So now, before their fortunes reverse, the unions must press for all they can get. Next time around, negotiations might be more about holding on to what they have – and less about making gains.