California budget fight

Paid in Full


Every year Sacramento fails, often spectacularly, to pass a budget on time. Missing the deadline is supposed to trigger a rule that knocks the pay of all government employees down to minimum wage until a new budget is in place. Yet California's employees continue to enjoy full pay rather than the mandated $7.25 an hour.

Seven years ago, the California Supreme Court ruled that the state government was not only allowed but required to reduce the pay of state employees to the federal minimum wage in the absence of a signed budget. (Back pay and regular wages would be restored once a budget is passed.) Subsequent rulings have reiterated this position, and Gov. Arnold Schwarzenegger has fought the battle several times with current Controller John Chiang. Chiang, like his predecessor, claims the state's payroll software has not been updated since 1970 and thus cannot be reprogrammed to handle the reduced payments.

Even sympathetic experts dispute this claim, noting that the system has been easily tweaked to handle nearly 50 separate pay raises as well as multiple automatic deductions for mortgage car payments, union dues, and tax withholding. As of this writing, the state is without a budget and the system still has not been upgraded, meaning state employees are being illegally paid in full.