State workers don't have to worry that their paychecks for June will be reduced to federal minimum wage, a Department of Finance spokesman said this week, ending speculation that an arcane state budget fix last year gave Gov. Arnold Schwarzenegger the authority to order wages withheld for this month.
July payroll, however, could be reduced if budget talks drag on much past the June 30 end of the fiscal year, said Finance spokesman H.D. Palmer.
State workers have been wondering if their June pay would be withheld to the least allowed by federal law, $7.25 per hour for most employees. Legislation passed last year to plug a $20 billion hole in the 2009-10 general fund budget included pushing this month's payroll expenses to the July 1 start of the 2010-11 fiscal year.
That meant, technically, that the state has no funding set aside for June payroll, which is paid July 1. And legislative consultants concluded that could have opened the door for Schwarzenegger to invoke a 2003 California Supreme Court decision that the state can't pay employees' beyond the legal minimum when there's no budgeted money for wages.
The governor invoked that court ruling when budget talks deadlocked in 2008. He ordered pay withheld with the balance returned to employees when lawmakers appropriated the money in a new budget. Controller John Chiang refused on legal and logistical grounds. Schwarzenegger sued and won a lawsuit to force Chiang to comply. Chiang filed an appeal.
Although there's no money budgeted for June payroll yet, the administration concluded that "individual departments still have appropriating authority through June 30," Palmer said. "June payroll will not be affected" by what is strictly an accounting device.
But July pay could be reduced he warned, he warned, if a budget impasse drags on into the new fiscal year.
State employee unions have tried to change the law so that state workers are paid when budget talks stall. Their latest attempt Assembly Bill 1699 cleared the lower chamber on Thursday with 54 votes and now goes to the Senate.
Meanwhile, the legal tussle between Schwarzenegger and Chiang is about to resume. Chiang's appeal goes to oral argument before the 3rd District Court of Appeal in Sacramento on June 21.