Arnold Schwarzenegger threatened to slash the pay of more than 200,000 state government employees to the federal minimum wage of $6.55 per hour, saving the state an estimated $1.2 billion a month--and putting a huge amount of pressure on recalcitrant lawmakers to finally come to an agreement on the budget.
Schwarzenegger acknowledges that the pay cut is a drastic measure, but he seems to believe push has finally come to shove. The legislature here was required to pass the more than $100 billion state budget by July 1, but legislators have been at loggerheads ever since, with Democrats demanding tax increases to close the shortfall and Republicans insisting on spending cuts. In the last week, negotiations between the two sides have largely broken down.
The state's budget deadline came and went 24 days ago with no sign of progress, and lawmakers have watched their approval ratings sag. According to a poll released this week, 3 in 5 Californians say they disapprove of the job the state legislature is doing. Nearly half disapprove of Schwarzenegger. More than two thirds say the state is now "seriously off track."
With this new move, Schwarzenegger has embraced a policy of mutually assured destruction--and turned the budget battle into a political cage match. While there is some question about whether or not he could actually push through his proposed pay cut--the state controller insists the state has enough cash to make payments through September--there's no doubt that Schwarzenegger is on firm legal ground. In 2003, the California Supreme Court ruled that the state may cut workers' salaries to the federal minimum in the absence of a state budget. Once the budget is passed, workers' salaries would return to their normal levels, and they would receive back pay, as well.
As lawmakers haul themselves back to their budget talks, experts say there is no guarantee they will be able to bridge their differences. This state, after all, has a long history of political gridlock: In 1992, Gov. Pete Wilson paid 93,000 state workers with IOUs during a then-record 64-day budget impasse. Today's state workers, meanwhile, are girding themselves for the worst. As one told the Bee: "I guess people will start working on Monday like they're making $6.55 an hour."
By Justin Ewers Thu Jul 24, 6:40 PM ET
http://news.yahoo.com/s/usnews/20080...ensminimumwage
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