Pay cuts for California state workers could be lifted by July under Newsom proposal

Gov. Gavin Newsom’s administration could restore state workers’ pay, at least partially, as early as July, according to a budget proposal released Friday.

A better-than-expected financial outlook, including a projected $15 billion surplus, means the state can consider modifying the pay cuts that took effect in July of last year for the state’s roughly 230,000 employees, according to the budget proposal.

Most of the pay cut agreements are for two years. They reduced most workers’ pay by 9.23% while giving them two flexible days off per month in return and suspending the payments workers normally make to their retirement health care. Raises that had been scheduled for 2020 and 2021 also were suspended.

Due to the change in the budget picture, the state’s Human Resources Department “anticipates inviting” state unions to renegotiate the pay cut agreements for the fiscal year starting July 1, according to Friday’s budget summary.

“We hope to be able to restore the pay reductions in the budget year, but we need to look at the May revision to see if that is something that can be afforded,” said Finance Director Keely Bosler, referring to the budget tweaks that happen in May.

Last year the budget picture changed significantly from January to May after the coronavirus pandemic arrived.

When Newsom introduced the pay cut, the state faced a projected deficit of $54 billion over two years. The cuts save about $2.4 billion per year.

“We are in a different position,” Newsom said during a news conference Friday.

The days off that state workers receive under the pay cut program add to the state’s liabilities in the long term, the Legislative Analyst’s Office has warned.

The budget still includes a 5% across-the-board reduction to operating expenses. Newsom has ordered department leaders to submit plans detailing how they’ll make the reductions by Feb. 1. He suggested they look for savings that could come from offering telework permanently.

This story was originally published January 8, 2021 at 12:10 PM with the headline "Pay cuts for California state workers could be lifted by July under Newsom proposal."