Budget deal nears, furlough fight continues

This Friday, about 185,000 state workers took a forced day off without pay, part of Gov. Schwarzenegger’s furlough plan to save the state more than $1.3 billion. And even though an end to the budget stalemate appears to be at hand, the fight over the furloughs continues.

Furloughs for state workers will apparently continue under the tentative agreement reached between the governor and legislative leaders announced Wednesday. And earlier this week, Schwarzenegger filed a lawsuit against Controller John Chiang to expand the reach of the furloughs to cover the 15,000 state employees who work for the state’s constitutional officers and the State Board of Equalization.

At stake is about $93 million that the administration says the state could save by furloughing those 15,000 employees.

The furloughs also apply to the governor’s own staff. Schwarzenegger spokesman Aaron McLear said in a statement Tuesday that “in collaboration with the furlough order, all governor’s office and administration employees are taking a 9.3 percent  reduction in work hours and pay.”

McLear said the governor’s office has made $279 million worth of cutbacks since December. Among them are restrictions on hiring and travel. “The governor’s office budget has dropped from $19.7 to $19.0 over the past year and will drop at least 10 percent more before July 2009,” said McLear.

The governor has also cut 16 employees off his payroll, bringing the total number of gubernatorial employees from 174 down to 158 McClear says another 15 positions will be eliminated by July.

But convincing the state’s other elected officials to go along with the furlough plan has proven difficult. The lieutenant governor, controller attorney general, secretary of state, treasurer, insurance commissioner and superintendent of public instruction have all indicated they will not comply with Schwarzenegger’s furlough order.

Chiang has refused to cut the pay of workers in those offices.

On Tuesday, the governor took another shot at state employees, threatening to lay off 10,000 state workers unless a budget deal was reached. State workers were scheduled to begin receiving pink slips  as early as Friday if a budget deal was not reached.

It was not immediately clear how the tentative agreement reached Wednesday might affect plans to distribute those pink slips.
But laying off state workers is not that simple. Due to deals reached through collective bargaining and other regulations, it can take up to six months for the state to be able to fire a worker.

McLear said the layoffs could save the state as much as $750 million for the 2009-10 budget year. Union negotiators dismissed the move as a scare tactic, aimed at forcing the hand of Democratic negotiators in the budget discussions.

Details of the proposed budget solution were incomplete as of press time. But the general outline of the new revenue package was being widely circulated.

The plan is said to include a temporary, one-cent increase in the state’s sales tax. There would also be a new, 12-cent-per-gallon increase in state gasoline taxes.

Perhaps most ironically, the so-called car tax would also be increased under the proposal. Schwarzenegger campaigned for office in 2003, citing Gov. Gray Davis’s attempt to increase the state vehicle license fee as a key reason why voters should throw Davis out of office.

Under the proposed deal, the VLF would almost double. Currently, drivers pay 0.65 percent of the assessed value of their vehicle in VLF fees. The new plan would increase the fee to 1.15 percent, according to numerous Capitol sources.

There would also be a new quarter-percent surcharge on income tax bills. So, for example, if a taxpayer owed the state $1,000 in taxes, an additional $2.50 would be tagged on to the bill.

The sales taxes are expected to be temporary. They will be in effect for two years, unless voters pass a new cap on state spending. Then, the taxes would be repealed after five years.