State workers' compensation is back on the budget chopping block.
Brown administration officials met with the state employee union leaders last week, according to sources familiar with the meetings, to warn them that the next version of the governor's budget will include an unspecified cut in employee costs up to 10 percent.
The administration in January estimated that California is confronting a $9.2 billion deficit through 2012-13, but a recent state analysis concluded the actual gap is considerably more.
The sources, who declined to talk on the record because the administration asked all involved to keep the discussions secret, said Brown told the unions he was seeking $750 million in state employee cost savings for fiscal 2012-13.
The sources said the Brown administration asked union leaders to come up with ways to make the reduction -- pay cuts or higher benefit contributions, for instance.
Department of Finance spokesman H.D. Palmer said, "The governor has already indicated that more difficult reductions will be required," because the state's budget deficit has grown since Brown issued his first budget proposal in January.
"The details of those reductions will be detailed in the May Revision," Palmer said.
The governor could order wholesale layoffs, but the civil service process usually takes at least six months and the savings often fall short of expectations.
Furloughs are an option only if the Senate and Assembly authorize Brown to execute them, because the courts have ruled the policy falls under the Legislature's authority to set wages and working conditions. That seems unlikely, given the Democratic majority in the statehouse.
Other cost savings such as outright pay cuts, higher employee contributions to pension or health benefits, would need to be bargained.
Last month Brown recently extended the contracts of four unions with deals set to expire in July. Two of the extensions covering about a total 16,000 psychiatric technicians and operating engineers increased the state's health benefits costs 9.5 percent for those workers.
With the four extensions in place, the contracts covering roughly all 180,000 unionized state workers expire in July 2013.
Brown is set to deliver the budget revision on Monday.