Schwarzenegger Eliminates Jobs, Slashes Pay of State Employees

SAN FRANCISCO—Gov. Arnold Schwarzenegger has taken his scorched-earth tactics in an ongoing battle over California's state budget to the next level. In a press conference today, Schwarzenegger signed an executive order eliminating the jobs of as many as 22,000 state workers and slashing the pay of more than 200,000 state government employees to $6.55 an hour, the federal minimum wage. Schwarzenegger portrayed the move as an emergency measure, saying the state cannot pay its bills without a state budget. Lawmakers were required by law to pass a budget by July 1.

Gov. Arnold Schwarzenegger

"Today, I am exercising my executive authority to avoid a full-blown crisis and keep our state moving forward," Schwarzenegger said. "This is not an action I take lightly, but we do not have a budget, and as governor, I have a responsibility to make sure our state has enough money to pay its bills."

Schwarzenegger first threatened to take this drastic step a week ago—largely, many experts believed, as a hardball tactic designed to bring lawmakers back to the negotiating table. State legislators here have been arguing for months over how to close an estimated $15.2 billion budget shortfall. Several furious days of negotiation followed Schwarzenegger's move, but when it seemed increasingly clear that no compromise was going to be reached—Democrats have continued to insist on a tax increase, while Republicans insisted on spending cuts, instead—the governor raised the stakes. A two-thirds majority is required in California to pass the budget.

Some experts have questioned Schwarzenegger's rationale for holding state workers hostage over a budget impasse. State controller John Chiang, the official responsible for enacting the pay cut, has said the move will only generate about $1 billion a month, not nearly enough to close the state's shortfall. Immediately following Schwarzenegger's announcement today, Chiang sent the governor a letter saying he would not comply with it and would continue to pay state workers their full wages.

Schwarzenegger, though, stood his ground, saying he was willing to take legal action against Chiang, if necessary. "It's my responsibility to make sure the state keeps running and that we pay our bills," he said. "There are different opinions out there and I understand that and I respect those opinions." But when asked if he would take the controller's office to court if it refused to follow his order, Schwarzenegger didn't mince words. "If that's what it takes. I'm here to make sure our state functions. Whatever it takes, I will do."

With more than 200,000 state government employees suddenly facing a huge pay cut, tempers across the state have already begun to flare. Last week, Don Perata, the state's Senate majority leader, called Schwarzenegger's threat "an act of war." While speaking to a group of state workers protesting outside the state capital, Perata said: "You know, he is really trying to incite the wrong people. But if he wants a fight, he's going to have a fight.... This is an act of war. It's a declaration. He is doing war on the people of this state who make California run. So whoever advised him ought to be in an unemployment line right now. If he thought of it himself, shame on him."

Many other lawmakers disagree with Schwarzenegger's decision. "I'm disappointed with the governor's decision," Karen Bass, the speaker of the State Assembly, said in a statement. "It is an unwise and unfortunate move to cause economic strife to public servants and their families who are working hard and playing by the rules. We are not going to let this decision get in the way of our mission, which is to deliver a budget that reflects the values of Californians."

Schwarzenegger, for his part, expressed his sympathy for the workers his order affects—and left the door open to an 11th-hour solution to the crisis. "We feel, of course, bad that they have to go through hardship," he said. "I hope we never have to use this. My intention is to get a budget in the next few days."