BILL ANALYSIS
AB 1523
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Date of Hearing: May 2, 2007
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 1523 (Soto) - As Introduced: February 23, 2007
Policy Committee: P.E.R. &
S.S.Vote: 5-1
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides that state employees will continue to be paid
even if a budget is not enacted by the beginning of the new
fiscal year. Specifically, the bill specifies that:
1)In any fiscal year in which the budget is not enacted by July
1, an amount will be continuously appropriated from the
General Fund and special funds to pay state employee salaries
and benefits.
2)If there is a memorandum of understanding (MOU) in effect, pay
and benefits will be consistent with the MOU's provisions.
3)For managers and other excluded state employees, compensation
and contributions will be at the rate approved by the
Department of Personnel Administration in the prior fiscal
year.
4)If no MOU is in effect and if DPA has not approved a
compensation package for excluded employees, the compensation
payments will be at the rate in effect the prior year.
FISCAL EFFECT
Potential reduction in interest earnings of up to $2 million per
month in years in which the budget is not enacted by July 1.
The actual amount would depend on decisions made by current and
future state controllers regarding employee payments in
late-budget situation under current law. For example, if the
Controller continued to pay most employees, the net impact of
AB 1523
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this bill would be minor.
COMMENTS
1)Background . The California Constitution requires the
Legislature to pass a budget bill by June 15 for the fiscal
year commencing the following July 1. The state Constitution
also specifies that money can be drawn from the Treasury only
through an appropriation made by law and upon a Controller's
duly drawn warrant. In recent years, most state workers have
been paid during late-budget periods due to various court
rulings and interpretations of law by various state
controllers.
I n 2005, the California Supreme Court upheld an appellate
court decision that ruled state workers who are paid by the
hour and don't work overtime in a particular pay period, are
entitled only to the federal minimum wage if the state enters
a new fiscal year without a budget. Under state law, employees
are paid in full retroactively once a budget is signed.
State Controller Westly opined at the time that the Supreme
Court decision left him with the authority to decide how much
to pay state employees. He argued that, because decisions on
overtime cannot be made in advance, he would have to pay all
workers in full or risk violating the law.
2)Rationale. The bill seeks to ensure that state employees
receive their full salary in the event a budget is not passed
in a timely manner. Proponents argue that, notwithstanding the
previous Controller's opinion, the recent Supreme Court
decision leaves state workers vulnerable to sharply reduced
pay during late budget periods.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081