Metropolitan News-Enterprise


Thursday, May 30, 2002


Page 1


State Employees Not Entitled to Salaries During Budget Impasse—C.A.


By KENNETH OFGANG, Staff Writer/Appellate Courts


The state controller can pay state employees minimum wage, but no more than that, during a budget impasse, absent a continuing or emergency appropriations act, the Court of Appeal for this district ruled yesterday.

Div. Four also ruled that only a limited portion of the funding for public schools under Proposition 98 may be disbursed in the absence of a budget or emergency legislation.

Overall, the panel delivered a mixed ruling on issues raised in an appeal of a 1998 injunction by Los Angeles Superior Court Judge Robert H. O’Brien. The judge, who has since retired, ordered Controller Kathleen Connell to stop paying most bills, including employee salaries, three weeks into the 1998-99 fiscal year.

The day after the ruling, the Legislature unanimously passed an emergency appropriations bill, thus keeping employees on the job. Had the bill not passed, any employees who showed up for work would have been entitled to federal minimum wage for days worked from July 1 to the date of his ruling and would thereafter have been “volunteers,” with no right to payment then or in the future, O’Brien ruled.

Issue Moot

Connell appealed the day after the ruling. The passage of the emergency bill, and subsequently of the budget act for that year, rendered the issue technically moot, Justice Daniel Curry said yesterday, but the court chose to rule in order to address issues that may recur.

The justice did not mention it, but that recurrence may be imminent. Lawmakers have yet to pass a budget for the 2002-03 fiscal year and Republicans say they will not join the Democratic majority in passing tax or fee increases. Gov. Gray Davis and the Democratic leadership say some increases are needed to close a huge gap between revenues and expenses.

At least one GOP senator and at least four Assembly Republicans must vote for the budget in order for it to pass. The Legislature has, in most recent years, failed to obtain the two-thirds vote necessary to pass a budget by the start of the fiscal year, July 1.

The Court of Appeal yesterday agreed with Connell that the state Constitution allows the Legislature to enact continuing appropriations, and that such payments—including judicial salaries and debt service payments—must continue to be made during a budget impasse.

But the court rejected the controller’s arguments that the state Constitution and supreme federal law permit her to pay all employee compensation and to pay the full share of state funding that must go to public schools under the 1988 initiative requiring the state to devote a specified percentage of its budget to that purpose.

Connell said in a statement that she was “dismayed” by those portions of the ruling and would seek further review of the decision, which she said would affect 250,000 state workers. 

Political Pawns

“It appears that under the Court’s ruling, school children, State employees and vendors will be held hostage or be used as political pawns in a protracted budget negotiation,” the controller wrote.

Perry Kenny, president of the California State Employees Association, said his union would join Connell in seeking to overturn part of the decision.

“Our members work hard to keep the State of California running,” he said in a release. “CSEA will work with the Controller to prevent our members from having their wages held hostage by yearly budget debates.”

Beverly Hills attorney Richard I. Fine, who brought the lawsuit on behalf of the Howard Jarvis Taxpayers Association and an individual taxpayer, called the decision a “complete victory.”

Fine said it was unfair for the government to “pay itself” while small vendors suffer “tremendous hardship” because they cannot get paid during budget impasses. He noted that at the time he brought the suit, the state had missed the nominal June 15 deadline for passing the budget act 11 times in 12 years.

The 1999 and 2000 acts were passed on time, but last year’s was not.

Fine said the appellate ruling was “good for the people of California” because it would require cooperation between the Legislature and the governor. “The taxpayers have been vindicated and the politicians are being told that they too must obey the Constitution.”

Curry said the state can only make the following payments during a budget impasse, absent an emergency appropriations bill passed by the required two-thirds majority:

Continuing appropriations mandated by the Constitution or by statute;

Surplus funds earmarked for schools because the state otherwise could not spend the money under the “Gann limitation” of Proposition 4, which limits total spending. Prior to the passage of Proposition 98, all of the surplus funds had to be returned to the taxpayers in the form of reduced taxes or fees, but now 50 percent of the money goes to schools;

Minimum wages mandated by the Fair Labor Standards Act; and

Federally mandated spending under the Food Stamp program, Foster Care and Adoption programs; Child Support program, and Child Welfare Services program.

The case is White v. Davis, B122178.


Copyright 2002, Metropolitan News Company