BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1699|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1699
Author: Hernandez (D)
Amended: 8/31/10
Vote: 27 - Urgency
SENATE PUBLIC EMP. & RET. COMMITTEE : 4-1, 6/23/10
AYES: Correa, Corbett, Ducheny, Liu
NOES: Hollingsworth
NO VOTE RECORDED: Ashburn
SENATE APPROPRIATIONS COMMITTEE : 6-1, 7/15/10
AYES: Kehoe, Corbett, Leno, Price, Wolk, Yee
NOES: Walters
NO VOTE RECORDED: Alquist, Emmerson, Wyland, Vacancy
ASSEMBLY FLOOR : 54-19, 6/3/10 - See last page for vote
SUBJECT : Interim appropriations
SOURCE : Professional Engineers in California Government
California Association of Professional
Scientists
Service Employees International, Local 1000
DIGEST : This bill continuously appropriates sufficient
amounts from the General Fund and various other funds to
the State Controller for the payment of compensation and
employee benefits to state employees during a fiscal year
where the state budget is not enacted by July 1.
CONTINUED
AB 1699
Page
2
Senate Floor Amendments of 8/31/10 remove "judicial branch
employees" from the definition of "state employee" and add
"employee of the Administrative Office of the Courts."
Senate Floor Amendments of 8/17/10 add judicial branch
employees to the definition of "state employee" and require
that, absent an on-time budget, monies would be
continuously appropriated to maintain funding for the
payment of contract obligations to state contractors and
the administration of area agency programs on aging.
ANALYSIS :
Existing law provides that no state officer or employee
will be deemed to have a break in service or to have
terminated his or her employment, for any purpose, or to
have incurred any change in his or her authority, status,
or jurisdiction or in his or 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 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 at the rate approved by the Department
of Personnel Administration prior to the commencement of
the fiscal year for which a Budget Act has not been
enacted for non-represented employees.
3.Specifies that if no memoranda of understanding is in
effect and DPA has not approved a compensation package
CONTINUED
AB 1699
Page
3
for non-represented employees, compensation will be at
the rate in effect at the expiration of the last fiscal
year for which a budget was enacted.
4.Requires continuous appropriation of amounts necessary
for payment of contract obligations to contractor that
provide goods and services to the state. Specifies that
these payments are to be continuously appropriated from
funds that the contracts were paid from in the prior
fiscal year. These payments are to be made on July 15th
and thereafter on July 15th of each month until the
budget is passed.
5.Requires continuous appropriations to pay area agencies
on aging the sums necessary for administration of
programs under their jurisdiction. Specifies that these
payments are to be appropriated from the General Fund,
unallocated special funds, federal funds, and any other
funds from which area agencies on aging are compensated.
These payments are to be made on July 15th and thereafter
on the 15th of each month until a budget is enacted.
6.Includes employees of the Administrative Office of the
Courts in the definition of "state 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.
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 238,000 state
workers $6.55 per hour, which was the federal minimum wage
CONTINUED
AB 1699
Page
4
at the time. The Department of Personnel Administration
took the 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."
Similar Legislation
This bill is similar to AB 1523 (Soto), 2007-08 Session,
which was held in the Assembly Appropriations Committee; AB
1125 (Hernandez), 2009-10 Session, which was held in the
Assembly Appropriations Committee; and AB 790 (Hernandez
and Ruskin), 2009-10 Session, which is on the Senate
Inactive File.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Foregone interest -- unknown
-- General
Admin savings -- potentially tens of thousands in
savings -- General
(SCO)
SUPPORT : (Verified 8/31/10)
Professional Engineers in California Government (co-source)
California Association of Professional Scientists
(co-source)
Service Employees International Union, Local 1000
(co-source)
American Federation of State, County and Municipal
Employees, AFL-CIO
American Federation of State, County and Municipal
CONTINUED
AB 1699
Page
5
Employees Local 2620, AFL-CIO
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
OPPOSITION : (Verified 8/31/10)
Department of Finance
ARGUMENTS IN SUPPORT : According to the sponsors, this
bill "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 is
opposed to this bill for the following reasons:
1. It will significantly impact the state's cash flow
flexibility during fiscal crisis and could impact the
state's ability to make other priority payments by
requiring expenditure of funds despite the lack of a
Budget.
2. It provides a continuous appropriation from the General
Fund and other specified funds that reduce oversight by
the Legislature and the Administration.
3. Runs contrary to the policy trend over the past decade
to reduce continuous appropriations and to bring more
fiscal decisions within the budgetary process.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Blakeslee,
Block, Blumenfield, Bradford, Brownley, Buchanan,
CONTINUED
AB 1699
Page
6
Caballero, Charles Calderon, Carter, Chesbro, Cook, Coto,
Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong,
Fuentes, Furutani, Galgiani, Gilmore, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Skinner, Solorio,
Swanson, Torlakson, Torres, Torrico, Yamada, John A.
Perez
NOES: Anderson, Bill Berryhill, Conway, DeVore, Fletcher,
Fuller, Gaines, Garrick, Hagman, Harkey, Knight, Logue,
Miller, Nestande, Norby, Silva, Smyth, Tran, Villines
NO VOTE RECORDED: Tom Berryhill, Emmerson, Jeffries,
Niello, Nielsen, Audra Strickland, Vacancy
CPM:cm 8/31/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED