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California Cuts State Salaries 10 Percent to Offset COVID-19

Gov. Newsom’s proposed budget would save the state $2.8 billion in the next fiscal year but it would mean that all state workers, including the governor and his staff, would receive a 10 percent pay cut.

(TNS) — Gov. Gavin Newsom proposed cutting state worker pay by 10 percent Thursday, dramatically changing the economic outlook for a workforce that just a few months ago was looking forward to raises from a humming economy.

The pay cuts, scheduled to begin with the July pay period, would save $2.8 billion in the coming fiscal year, according to Newsom’s $203 billion budget proposal. His administration estimates the state faces a deficit of $54 billion over two fiscal years due to economic impacts of the coronavirus.

“None of us in state government will be immune from tightening our belts and helping to support the cause and helping those most in need,” Newsom said.

He said the pay reduction applies to him and his staff. The cut applies to all state workers, including those in health care and public safety, Finance Director Keely Bosler said.

Pay raises many state workers were scheduled to receive in July also seem to be off the table, since the proposal calls for reducing pay by 10 percent as of June.

The pay cut comes as the state’s unemployment rate continues to notch upward. At least 4.6 million people in California have filed unemployment claims since March 12, Newsom said. His administration estimates the unemployment rate could reach 24 percent or higher.

The administration will bargain with all of the state’s unions over the pay cuts, but if agreements can’t be reached, the administration will pursue the reductions through the budget process, according to a budget proposal.

That likely would mean furloughs. A 10 percent pay cut translates roughly to two furlough days per month. The Legislature ultimately has authority over state workers’ pay.

Assembly Speaker Anthony Rendon, D-Lakewood, said that while “everything needs to be on the table,” he’s concerned a 10 percent hit to state workers’ pay will exacerbate the suffering already caused by COVID-19.

“I want to make sure that we are not only respecting state workers, but collective bargaining,” Rendon said. “I am concerned about the 10 percent cut. You are looking at workers who are already suffering, so I am going to make sure we go through those details.”

‘A Lot of Sacrifices’

Yvonne Walker, the president of SEIU Local 1000, the state’s largest union, said in a Wednesday night video that she would work to avoid furloughs.

“We can figure out the equivalent of what that 10 percent represents and try to negotiate something that, yeah there might be a little pain involved, but it won’t be those two furlough days and how we think about it,” Walker said in the video.

Walker declined to elaborate Thursday, saying she didn’t want to divulge the union’s bargaining strategy.

Abraham Pinedo, 40, a materials and store supervisor at Deuel Vocational Institution in Tracy, said the pay cut could affect his 10th-grade daughter’s college plans and the family’s plan to buy a home in Lodi.

“There’s going to be a lot of sacrifices financially to deal with this,” Pinedo said.

He said the pay cuts follow a difficult time in which many state workers have been showing up for risky jobs. He said his wife, also a state worker, has a health care job at the prison.

“After being praised for being critical workers, for being essential workers, now we can’t even get a full paycheck,” he said.

Newsom’s proposal draws on the state’s rainy day fund and a collection of special reserves, along with cuts, to address the $54 billion deficit. He said 26 percent of the state’s solution comes from cuts, including the pay reduction.

If the federal government sends states more aid, the reductions would be less, Newsom said. State workers’ pay is one of the items that would be restored with federal funding, according to the budget proposal.

He said state departments have been instructed to reduce their operating budgets by 5 percent.

“We can do without as many cars, without as many cell phones, without as much in our travel budgets, (and without) conventions,” he said.

Protections for Lowest-Paid

The budget proposal says workers who make less than $15 per hour will still get a planned raise to bring their pay to that amount.

The proposal also says the state will pay the $260-per-month health insurance stipends included in contracts with SEIU Local 1000 and with the state attorney’s union.

Those commitments will cost the state $604 million per year, according to the budget proposal.

The proposal to reduce pay marks a dramatic shift from just a few months ago, when more than 108,000 state workers were looking forward to raises this summer and other unions were starting to negotiate for new raises against the backdrop of a budget surplus.

Union leaders said Newsom’s approach is preferable to that taken by former Republican Gov. Arnold Schwarzenegger, who insisted on furloughs and showed little interest in negotiations.

“It’s not the imposition of the furlough days but a conversation,” said Bianca Petzold, president of the California Association of Professional Scientists.

Nonetheless, Petzold said, “This is definitely something that’s going to hurt. It’s not something that’s taken lightly.”

Kari Everett, 57, an information technology specialist at CalPERS, worked through the furloughs of the Great Recession. She had to take three unpaid days off per month at the height of the cost-cutting.

“It was hard,” Everett said. “I didn’t have to get a second job. I just had to cut my expenses and watch everything.”

She said she and her husband, who is also a state worker, had to stop eating out, going to movies and traveling. She said she knew other state workers who had to start going to food banks.

“I am thankful I have a job, and thankful I do get retirement,” she said.

©2020 The Sacramento Bee (Sacramento, Calif.) Distributed by Tribune Content Agency, LLC.

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