California Gov. Schwarzenegger Vetoes Anti-Furlough Legislation

California Governor Arnold Schwarzenegger has vetoed Senate Bill X8 29, a legislation that would have exempted from furloughs 80,000 workers in offices and agencies, specifically those employees of the Franchise Tax Board (“FTB”) and Board of Equalization (“BOE”) that get most of their money from sources other than the state general fund.

In his veto message, Gov. Schwarzenegger said, “It is necessary to apply furloughs across the board, with limited exemptions as needed to protect public health and safety, to effectively manage the workforce, and to avoid inequities and morale problems for state employees.”

According to the Governor, the bill as written would be difficult, if not impossible to implement.  “Many positions are funded through multiple funding sources and as such it is not always possible to determine if they are funded at least 95 percent by sources other than the General Fund.”

The bill exempts state civil service employees from being furloughed if employed in positions funded at least 95% by sources other than the General Fund (GF), prohibits state agencies, boards, and commissions from implementing, or assisting with implementation of, furloughs for such employees, and specifically exempts all employees of the FTB and BOE from being furloughed.

The bill adds Section 19582.3 to exempt from furloughs employees in positions funded at least 95% by sources other than the General Fund. As special session legislation, the bill would become operative on the 91st day after adjournment of the session.

In explaining his veto, the Governor added that the “bill would limit the ability of future Governors to implement furloughs during a fiscal emergency.  It is imperative that Governors have maximum flexibility to address such emergencies.  As this is a matter presently before the courts, attempts to legislatively limit Governors’ furlough authority are premature until a final judgment has been made.”

By way of background, on December 19, 2008, Governor Schwarzenegger issued Executive Order S-16-08 to implement a furlough or represented state employees and supervisors for two day per month, regardless of funding source, for the period February 1, 2009 through June 30, 2010.

The order was issued based on “an emergency pursuant to Government Code section 3516.5…” The BOE members, however, declined to participate, arguing that as constitutional officers, they were not required to follow the direct edicts of the Governor and would instead make other budget cuts to do their part to deal with the fiscal emergency.

On July 1, 2009, since the state’s revenues continued to fall below expectations, a third furlough day was ordered by the Governor through Executive Order S-13-09. Again, the BOE declined to participate. Since the BOE, along with other independently elected constitutional officers, declined to participate in the furloughs, the Governor sued to force the Controller to withhold 14% of the pay of constitutional office employees.

This bill was sponsored by the Senate President pro Tem to stem General Fund revenue losses by those agencies that generate revenues.

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