Bloomberg News

California Public Employees Win Concessions in New Budget

June 18, 2012

The budget California’s Democratic- controlled Legislature sent to Governor Jerry Brown last week granted concessions to public employee unions even as talks continue on cutting programs for the poor.

Democrats removed language that would have authorized the governor to order unpaid days off, known as furloughs, if unions balked at a proposed one-year, 5 percent payroll reduction. The $92 billion spending plan, which counts on higher taxes and cuts in health care and welfare to close a $15.7 billion deficit, also prevents expanded use of private contractors for some government jobs.

Unions contributed $76.7 million to California politicians and ballot measures in 2010, when Brown and lawmakers were running, according to data compiled by the National Institute on Money in State Politics, a nonpartisan group based in Helena, Montana. Labor represented the single largest interest group in terms of contributions that year.

“It’s pretty clear who the winners in this budget plan are,” Senate Republican Caucus Leader Tom Harman of Orange County said during a floor debate June 15. “It’s the public- employee unions and not students, beneficiaries of state services or taxpayers.”

State workers were forced to take unpaid days off three times a month beginning in 2009, in what amounted to a 14 percent pay cut, as California faced annual deficits of as much as $42 billion. The unions agreed to pay more toward pension and retiree health-care costs and gave up some paid holidays. Their leaders have said any new concessions must come through negotiations.

Sign or Veto

Brown, a Democrat, hasn’t said if he’ll sign the budget or veto it over a welfare spending disagreement with legislators.

The budget adopted last week includes a $400 million general-fund savings in state personnel costs. Brown has proposed achieving that by having employees work 9.5 hours on four days instead of 8 hours in five days.

The largest union representing state workers, Service Employees International Union Local 1000, opposes use of furloughs to get that savings. Yvonne Walker, president of the 95,000-member union, wrote May 23 that unpaid time off is “not on the table.”

The SEIU wants any pay reduction to be linked to time off, according to a June 14 update on its website. The union wants to reduce the number of state contracts with private vendors and limit the number of retirees and student assistants the state hires to save money.

Talks Continue

“The negotiations are still ongoing and we know there is more work to do and we wanted to give some time for the governor and the unions to finish their negotiations,” Senate President Darrell Steinberg, a Democrat from Sacramento said when asked why he took the furlough language out of the budget.

Jim Zamora, a spokesman for Local 1000, declined to comment on whether union leaders are satisfied with the budget, noting that labor terms remain under negotiation.

Because some agencies must operate around the clock and can’t shut down for a day, unions for those workers are in talks to find the savings in other ways. Prison guards, forestry firefighters, mental-health hospital staff and the California Highway Patrol have already agreed to have their pay reduced by the equivalent of eight hours a month, the Sacramento Bee reported.

Leaders of the Professional Engineers in California Government, a union of 13,000 workers, said they wouldn’t agree to a 5 percent pay cut unless the state dropped a proposal for a 1-percentage-point increase in the number of private contractors that can be hired by the Transportation Department.

Contractor Costs

While contractors can cost more per hour, they are only paid when needed. State workers continue to draw pay even when not on a project and also collect pensions and benefits.

“One of the things we talked to the administration about initially was that outsourcing our jobs costs twice as much,” Bruce Blanning, the union’s executive director, said in a telephone interview. “We told them that if they would stop wasting money on outsourcing, then we would talk about saving some money through our members as well. Outsourcing costs money and they should get rid of that first.”

Republican lawmakers also said that Democrats included in the budget new language not proposed by Brown that prevents the University of California from contracting out some services.

During budget committee hearings, the Democrats approved Brown’s proposal to extend statewide collective bargaining to county-level in-home service workers, something unions have sought.

Cushion Cuts

Unions were also able to cushion cuts to that program, said Steve Smith, a spokesman for the California Labor Federation, which represents 2.1 million employees, about half of them working in government.

Unions continue to resist cuts to the state welfare-to-work program and to subsidies for child care for the working poor, both issues contained in supporting bills still to be voted on, Smith said by telephone.

“In our view, there aren’t any winners,” he said of the budget. “What small victories working people achieved here were staving off even deeper blows.”

Even as pay reductions are negotiated, many state workers are poised for raises in July 2013. During collective bargaining in 2010, Brown’s predecessor, Republican Governor Arnold Schwarzenegger agreed to raises of 2 percent to 5 percent for workers at the top of their pay scales in return for concessions.

“Unions don’t exist to solve the state’s problems,” said Aaron McLear, Schwarzenegger’s former press secretary. “They exist to get the best deal for their members, and in California, they’re really good at what they do.”

To contact the reporters on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net; James Nash in Los Angeles at jnash24@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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