Supreme Court Upholds Governor’s Furlough Order, Spending Vetoes
From Staff and Wire Service Reports
The California Supreme Court yesterday unanimously upheld the legitimacy of the governor’s 2009 two-day-a-month furlough program for more than 200,000 state employees and Schwarzenegger’s vetoes on spending for various social service programs in two related decisions.
Chief Justice Ronald M. George explained in his decision for the high court in Professional Engineers in California Government v. Schwarzenegger, 10 S.O.S. 5694, that the governor could not unilaterally institute a mandatory furlough of represented state employees unless he was specifically granted such authority in the memorandum of understanding between the state and the employee organization for the affected employees.
While George expressed “considerable doubt” that Schwarzenegger had the power to institute the furlough program at the time he authorized its implementation in December 2008, the chief justice concluded that the Legislature ratified the governor’s program as a permissible means of achieving the reduction of state employee compensation when it approved the 2009 budget bill the following February.
In November 2008, Schwarzenegger published a letter addressed to all state employees, announcing that in order to cope with the state’s worsening fiscal situation he was proposing a one-day-a-month furlough that would result “in a pay cut of about 5 percent.”
By December, citing the worsening economy and the possibility that the state would soon lack sufficient cash to meet its payroll and other obligations, Schwarzenegger issued an executive order calling for the furlough of over 200,000 state workers on a twice a month basis, beginning Feb. 1, 2009.
He later expanded his order to three days a month, and more than two dozen lawsuits were filed by employee organizations in response to Schwarzenegger’s directive.
Three unions—the Professional Engineers in California Government; California Association of Professional Scientists, the California Attorneys, Administrative Law Judges and Hearing Officers in State Employment, better known as CASE; and Service Employees International Union Local 1000—filed petitions in the Sacramento Superior Court to restrain implementation of the executive order.
All of the petitions were heard by Judge Patrick Marlette, who issued a single ruling on Jan. 30, 2009 denying each on the merits, primarily based on his interpretation of Government Code Secs. 19851(a). The state’s highest court later transferred the appeal to itself and heard oral argument Sept. 8, 2010 in San Francisco.
Schwarzenegger’s attorney, David Tyra, insisted that the governor acted within his implied and inherent powers as the state’s chief executive, while attorneys for the state’s employees—Patrick J. Whelan, Anne Maria Giese, Gerald Andrew James and Robin B. Johansen—contended that Schwarzenegger’s executive order could be undertaken only by, or with the concurrence of, the Legislature.
George noted that the terms and conditions of employment for the state employees represented by each of the plaintiff employee organizations were governed by an applicable MOU at the time Schwarzenegger issued his order and that under the Dills Act, the terms and conditions embodied in an MOU supersede most of the general statutory provisions that govern the terms and conditions of state employment.
“There can be little question that the issue whether an employee’s wages may be reduced by the implementation of a mandatory furlough (and, if so, by what amount and with what input from the recognized employee organization) lies at the heart of the matter of ‘wages, hours, and other terms and conditions of employment’ that are the subject of an MOU,” George said. “Accordingly, unless the MOU’s specifically authorized the mandatory unpaid furlough imposed by the executive order, it would appear that at that time the executive order was not valid.”
George, however, emphasized that “the validity of the mandatory furlough program fundamentally changed” once the revisions 2008 Budget Act—which explicitly reduced the 2008-2009 fiscal year appropriation for state employee compensation to a level reflecting the reduced compensation to be paid to employees under the governor’s furlough plan—were signed into law.
As the new legislation provided that the reduction in the appropriations for employee compensation could be achieved either through the collective bargaining process or through “existing administration authority,” George posited that phrase “reasonably included the furlough program that was then in existence and that had been authorized by the current gubernatorial administration.”
Justice Carol A.Corrigan wrote separately, proposing that Government Code Sec. 19826(b) would not bar the governor from unilaterally implementing furloughs since the Department of Personnel Administration has statutory jurisdiction over the salaries and hours of state employees.
Bruce Blanning, executive director of Professional Engineers in California Government, said his group “had hoped for a better outcome,” but “that’s the way the court ruled, and we take it and move on.”
Yesterday’s ruling puts more pressure on public employee unions to negotiate benefit rollbacks with the administration. Legislative leaders are now pushing the unions to accept concessions on pension and other benefits as part of a 2010 budget agreement scheduled for a vote by lawmakers as soon as Thursday.
Schwarzenegger has demanded the concessions as a condition of signing the budget aimed at closing a $19 billion deficit.
Schwarzenegger and the Democratic and Republican leaders of the Assembly and Senate said last week they had reached a tentative agreement to address California’s budget deficit. The spending plan is more than three months late.
A spokesperson for the governor’s Department of Finance said that furloughs saved the state’s general fund $1.5 billion during the previous two fiscal years and an additional $80 million a month in the fiscal year that began July 1, but both nominees to succeed Schwarzenegger—Republican Meg Whitman and Democrat Jerry Brown—have said they would avoid furloughs if elected.
George also wrote for the court in St. John’s Well Child and Family Center v. Schwarzenegger, 10 S.O.S. 5717, which held that the governor acted within his constitutional authority by using his line-item veto power to cut $489 million from last year’s state budget, reducing funding for programs that had already had their budgets slashed by the Legislature in its midyear adjustments to the Budget Act.
Democratic legislators had challenged the $448 million in cuts from health, battered-women and other programs, made by the governor to 27 line items within AB 4X 1 last year.
In March, the First District Court of Appeal ruled that Schwarzenegger acted within his constitutional authority in making additional spending cuts after the Legislature made midyear reductions to appropriations that originally appeared in the 2009 Budget Act, and George yesterday agreed.
The chief justice rejected the argument that only an increase in spending authority can constitute an appropriation.
“Whether spending authority is increased or decreased, it still fundamentally remains spending authority,” George concluded.
Schwarzenegger said yesterday in a statement that he has “had to make very difficult decisions in response to the world-wide economic collapse, including furloughs for state workers and line-item vetoes to balance our budget,” insisting that these decisions “were absolutely necessary to keep our state functioning.”
He remarked that yesterday’s court decisions “uphold the state’s actions to protect taxpayers and ensure we live within our means, just like every California family and business must do.”
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