BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 790|
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THIRD READING
Bill No: AB 790
Author: Hernandez (D) and Ruskin (D)
Amended: 3/22/10 in Senate
Vote: 27 - Urgency
SENATE PUBLIC EMP. & RET. COMMITTEE : 4-1, 3/8/10
AYES: Correa, Corbett, Ducheny, Liu
NOES: Cox
NO VOTE RECORDED: Ashburn
SENATE APPROPRIATIONS COMMITTEE : 7-3, 3/15/10
AYES: Kehoe, Alquist, Corbett, Leno, Liu, Price, Yee
NOES: Cox, Denham, Wyland
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : Not relevant
SUBJECT : State budget impasse: continuation of services
SOURCE : California Association of Professional
Scientists
Professional Engineers in California Government
DIGEST : This bill (1) provides, in any year in which a
budget is not enacted by July 1, a continuous appropriation
to pay state employee salaries and benefits for the period
of time between July 1 and when the budget is enacted, (2)
specifies that employees shall be paid at rates consistent
with memoranda of understanding or the salaries they were
receiving in the fiscal year immediately preceding the new
CONTINUED
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budget year, and (3) allows the Department of Finance to
reduce the new budget, once it is enacted and without
further legislative action, to reflect the monies already
paid for employee compensation under the continuous
appropriation.
NOTE : This bill was withdrawn from the Senate Rules
Committee and placed on Third Reading. The amendments of
3/22/10 delete the amendments of 3/17/10 which returned the
bill to its original content.
ANALYSIS : Existing law provides that no state officer or
employee will be deemed to have a break in service or to
have terminated his/her employment, for any purpose, or to
have incurred any change in his/her authority, status, or
jurisdiction or in his/her salary or other conditions of
employment, solely because of the failure to enact a budget
act for a fiscal year prior to the beginning of that fiscal
year.
The California Constitution requires the Legislature to
pass a budget bill by June 15 of each year for the fiscal
year commencing on July 1. Under the California
Constitution, money may be drawn from the Treasury only
through an appropriation made by law and upon a
Controller's duly drawn warrant.
This bill:
1. Provides for a continuous appropriation to pay state
employee wages, in any year in which a budget is
delayed, for the period of time beginning July 1 and
ending upon enactment of the new budget.
2. Specifies that wages be paid consistent with memoranda
of understanding, or according to the rate of pay prior
to the end of the previous fiscal year for
non-represented employees.
3. Allows the Department of Finance to deduct from the new
budget, without further legislative action, any monies
paid for compensation under the continuous appropriation
during the time when the new budget was delayed.
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Background
In 2005, the California Supreme Court upheld an appellate
court decision ruling that state workers, paid by the hour
and who do not work overtime in a particular pay period,
are entitled only to the federal minimum wage (currently
$7.25/hour) if the state enters a new fiscal year without a
budget.
In July 2008, Governor Schwarzenegger ordered state
workers' pay to be reduced after the Legislature failed to
pass a budget on time. State Controller John Chiang
refused to cut paychecks that would have paid $6.55 per
hour to 238,000 state workers, which was the federal
minimum wage at that time. The Department of Personnel
Administration took the State Controller to court, arguing
the law compelled him to pay federal minimum wage absent an
on-time budget. In a ruling by the court siding with the
Governor, the court stated, "While state workers have the
ultimate right to their full wages, the law does not
authorize the full pay until the money is appropriated in
the state budget."
Prior Legislation
SB 267 (Maddy), Chapter 213, Statutes of 1998 . Provided
that in the absence of the enactment of the annual Budget
Act by July 1, 1998, $18.959 billion be appropriated form
the General Fund and other funds and sources to be used to
pay the current expenses of the state government, excluding
salaries and per diem of the members of the Legislature,
from July 1, 1998, to August 5, 1998. Passed the Senate
Floor on 7/22/98 with a vote of 33-0.
AB 561 (Scott), Chapter 993, Statutes of 1998 . Authorized
loans of up to $2 billion to continue payments specifically
to Medi-Cal providers, providers of drug-treatment
services, and providers of services to the developmentally
disabled during a budget stalemate. Passed the Senate
Floor on 8/27/98 with a vote of 38-0.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 3/17/10)
California Association of Professional Scientists
(co-source)
Professional Engineers in California Government (co-source)
American Federation of State, County and Municipal
Employees, AFL-CIO
American Federation of State, County and Municipal
Employees, AFL-CIO, Local 2620
California Association of Highway Patrolmen
California Attorneys, Administrative Law Judges and
Hearing Officers in State Employment
California Correctional Peace Officers Association
California Labor Federation
California State Employees Association
California Statewide Law Enforcement Association
CDF Firefighters
Service Employees International Union
State Controller John Chiang
Union of American Physicians and Dentists
OPPOSITION : (Verified 3/17/10)
Department of Finance
ARGUMENTS IN SUPPORT : According to the bill's sponsors,
the California Association of Professional Scientists and
the Professional Engineers in California Government, "AB
790 is a simple bill. It seeks to ensure that state
employees receive their full salary in the event a budget
is not passed in a timely manner. Not doing so will
severely impact the ability of state employees to meet
their financial obligations, care for their families and
participate in California's economic recovery."
ARGUMENTS IN OPPOSITION : The Department of Finance has
indicated that they are opposed to the bill because they
believe the issued should be done through the Memoranda of
Understanding process.
DLW:cm 4/5/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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