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May Revision includes proposed employee-compensation savings; LAO and unions urge bargaining and warn of labor-relations damage
Summary
The May Revision assumes $766.7 million in employee-compensation savings (about $283.3 million General Fund) by deferring or suspending scheduled general salary increases and authorizes control-section language to impose reductions if bargaining does not produce agreements. The LAO recommended rejecting open-ended control language and asked for a
The Department of Finance presented the Assembly Subcommittee 5 with a May Revision proposal that would seek $766.7 million in employee-compensation savings, including $283.3 million in General Fund savings, as part of the administration's package to close a projected budget shortfall.
Han Dong Ming of the Department of Finance said the administration will "make every attempt" to reach savings through collective bargaining but also proposed control-section language that would suspend scheduled salary increases for ratified agreements and allow the governor to impose reductions if negotiations do not achieve the targeted savings.
Nick Schroeder of the Legislative Analyst's Office recommended that the legislature reject the proposed control-section language in its current form and, if it were to pursue compensation reductions, specify reduction targets, identify the policy mechanisms to be used (for example, furloughs or other actions) and require legislative review of any implementing policies prior to imposition. Schroeder cautioned that withholding funding for previously negotiated economic terms is within the legislature's authority but warned that doing so could damage labor relations.
Union leaders and a long line of public commenters urged the subcommittee to reject the proposal, saying the May Revision would effectively renege on bargained agreements and would harm recruitment and retention. Commenters from multiple unions running the gamut of state classifications described the practical costs: commuting, parking, childcare and other increased costs they expect if the governor's return-to-office order is implemented while bargaining gains are deferred.
Administration and CalHR officials said their preference is to reach agreement through bargaining but the control language is included to specify the administration's budget plan if agreements are not reached.
Ending: The subcommittee heard sustained public opposition and LAO recommended replacing open-ended control-section language with targeted legislative guidance and review. No action was taken; members asked for additional detail and discussions with bargaining representatives.
