Gov. Gavin Newsom will propose a 10% pay cut for state workers on Thursday, according to two labor union leaders, part of his plan to fill a projected $54.3 billion budget deficit caused by the coronavirus-induced economic downturn.
SEIU Local 1000 President Yvonne Walker said in a Facebook video that Newsom's office informed her of the proposed cut on Wednesday. Tim Edwards, president of the union representing state firefighters, said the proposal would not spare them even as the state enters wildfire season.
A state official with knowledge of the budget confirmed the proposal, adding it will be part of the collective bargaining process. The official spoke on condition of anonymity because they were not authorized to release the information ahead of Newsom's formal announcement expected later Thursday.
If the Newsom administration fails to achieve the necessary savings through negotiation, the governor could order furloughs instead. The pay cuts could be revisited should the federal government approve another aid package for state and local governments. Newsom and the leaders of four other western states have asked Congress for an additional $1 trillion.
Walker said the union will try to negotiate an alternative plan. Newsom's office did not immediately respond to a request for comment.
"We can call the bargaining team together and we can figure out the equivalent of what that 10% represents and try to negotiate something," Walker said. "Yeah, there might be a little pain involved but it won't be the same as two furlough days."
On Wednesday, Newsom said his revised budget will include more than $200 million to increase the state's preparations for looming wildfires and other disasters. That includes hiring an additional 500 firefighters and 100 support personnel to help make up for the loss of dozens of inmate firefighters who were paroled to ease the risk of coronavirus outbreaks.
State officials have furloughed state workers during previous budget deficits. But Edwards said furloughs could cost the state more money because the idled firefighters would have to be backed up with a replacement earning overtime.
"Being one of the lowest-paid fire departments already in California (compared to metro fire departments), pay cuts would not go well for us," said Edwards, who is president of CalFire Local 2881. "We're waiting to see what the governor and CalHR have to say, and we'll work through it."
Newsom had proposed a $222.2 billion spending plan in January that included a nearly $6 billion surplus. But that changed in March, when Newsom issued a mandatory, statewide stay-at-home order to slow the spread of the coronavirus.
The order closed schools and most businesses, prompting more than 4.5 million people to file for unemployment benefits. With so many people out of work, state tax revenues have plummeted.
The deficit is a first for Newsom, who had a historic $21 billion surplus when he took office in 2019. He won praise from key constituencies for paying off the state's lingering recession-era debts and handing out first-in-the nation subsidies to help middle-income earners pay their monthly health insurance premiums.
Now, Newsom has to decide what to cut.
"My history with government is it does a really good job of expanding and it does an awful job of contracting," said Republican state Sen. John Moorlach, who was the Orange County treasurer-tax collector in the aftermath of the county's bankruptcy in the mid-1990s.
Wednesday, Newsom indicated his new budget proposal won't be solely focused on cutting spending. It includes money for the state's Public Utilities Commission to hire more than 100 people for a new wildfire safety division to oversee Pacific Gas and Electric and other power companies that often turn off people's power to prevent its equipment from starting wildfires during dry windstorms.
Newsom also wants to spend $50 million in grants to local governments to help prepare for those power shutoffs.
Lawmakers must pass an operating budget by June 15. If they don't, they forfeit their pay. State Senate President Pro Tempore Toni Atkins vowed earlier this week to avoid "major ongoing program cuts or broad middle class tax increases," saying they may help in the short term but "cause more economic damage and prolong our budget struggles."
"Our budget approach seeks to avoid becoming part of the economic problem," she said.
The state Assembly's leaders have made no such promises. Assembly Budget Committee Chair Phil Ting has said the chamber is considering all options, including tax increases. A memo from the Assembly Budget Committee this week said they expect "to make difficult decisions to ensure California's budget is balanced."