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Assembly ratifies MOUs and side letters in AB 138 amid objections over budget accounting
Summary
AB 138, which codifies recent memorandum-of-understanding (MOU) agreements and side letters for collective bargaining contracts, passed the Assembly 53-4 after floor objections about deferring costs.
AB 138, a budget-related measure authorizing and codifying recently negotiated memorandum-of-understanding agreements and reflecting side letters to collective bargaining contracts, passed the California State Assembly on June 4 by a vote of 53-4.
Assemblymember Gabriel presented the bill, which the session description said would ratify four additional MOUs and reflect addenda or side letters to 14 collective bargaining agreements. Gabriel told members the changes "are expected to result in $227,000,000 in general fund savings." He asked for members’ aye votes to concur in the senate amendments.
Assemblymember DeMaio spoke in opposition, warning the chamber that the bill deferred costs for state employee benefits and calling the accounting approach "Enron style accounting." "This bill, like the other MOUs that are being sent by the governor to this chamber, intentionally cooks the books...This is Enron style accounting," DeMaio said, urging colleagues to vote no and to "pay our bills when they are actually due." DeMaio argued the approach pushes liabilities into the future, increases interest costs, and risks creating larger structural deficits.
After closing remarks, the clerk’s roll call was tallied: Ayes 53, Noes 4. The Assembly concurred in the senate amendments and passed AB 138. The bill text discussed on the floor referenced estimated general fund savings of $227 million as a result of the MOUs reflected in the budget package. The Assembly did not specify the precise contractual language or the individual affected bargaining units during the floor presentation.
Because AB 138 ratifies negotiated agreements, final implementation and accounting depend on the state’s fiscal operations and follow-on actions by the Department of Finance and relevant personnel offices.
