Will Schwarzenegger's high-stakes gamble on furloughs work?

Aug 1, 2010 — The Sacramento Bee

Jon Ortiz

Aug. 1, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- His order to resume furloughs next month essentially doubled-down Gov. Arnold Schwarzenegger's bet that he has the authority to impose unpaid days off on state workers.

It's also a high-stakes gamble that the policy will wring concessions from state labor unions and squeeze the Legislature, now seven weeks late on passing a budget, to craft a deal that includes significant reductions to employee pensions.

Will it work?

So far it hasn't appeared to alter the posture of Democrats, including Assembly Speaker John A. Perez.

"It's shocking that every single one of the governor's budget moves deliberately hurts people," said Perez's deputy chief of staff Shannon Murphy, recounting Schwarzenegger's proposed budget cuts and his stalled minimum-wage order. "It would be a refreshing change if for once he could make a decision that helps the economy rather than hurts it."

Schwarzenegger's side says his moves have been a matter of math, law or prompted by legislative inaction.

The state is drowning in red ink, the administration has said, and voters rejected higher taxes at the ballot box, making cuts necessary -- including cuts to employee compensation.

"Furloughs are the last thing we can do by ourselves to save money," said Schwarzenegger spokesman Aaron McLear. "Speaker Perez has failed to even engage with the other leaders in trying to solve our deficit. The state is facing IOUs this month. Until the Legislature gets back from vacation and produces a budget, we have a responsibility to avert the looming cash crisis."

But clearly Schwarzenegger's team has calculated the political impact of furloughs, said Jaime Regalado, executive director of the Pat Brown Institute of Public Affairs at California State University, Los Angeles.

The governor knows that the unions and Democrats who control the Legislature are political allies. Squeezing concessions at the bargaining table makes it much easier for lawmakers to approve the savings from those givebacks in the next budget.

"Furloughs add to the pressure union leaders feel to protect their members," Regalado said. "It increases the pressure on the Legislature, just as the governor intended."

Schwarzenegger is also searching for a legacy, Regalado said. The governor's signature carbon emissions bill, AB 32, could be suspended by a voter initiative this fall. A statewide vote for bonds to upgrade California's water infrastructure, another key issue for the governor, may be pushed to 2012 because it's not polling well.

Labor relations, particularly rolling back pensions, is "his last chance to drive up legacy points," Regalado said. "And he's trying to elevate his hand, no question, as he continues talks with the unions."

So far half of the 12 unions that represent state workers tentatively have agreed to contracts that include lower retirement packages for new hires and that shift more pension costs to employees. Some include 12 floating unpaid days off though June 30, 2011.

In exchange, the deals include promises that the 73,000 or so employees covered by the agreements won't be put on minimum wage during a budget impasse or furloughed.

Nathan Barankin, spokesman for Darrell Steinberg, D-Sacramento, said the Senate president pro tem supports bargained agreements.

"I can tell you that historically we honor agreements reached by the governor and unions," Barankin said. He noted that last year Republicans shot down SEIU Local 1000's contract, which contained several concessions, including unpaid days off. "Democrats typically support agreements reached in collective bargaining."

Assembly Republican leader Martin Garrick said recently he hadn't yet reviewed the agreements' details, but added, "I think they're headed in the right direction."

Still, some of the biggest unions, including the 95,000-member SEIU Local 1000, have yet to reach deals. The California Correctional Peace Officers' Association said this week that off-the-record talks covering its 33,000 members broke down.

Other unions representing state engineers and state scientists have rejected Schwarzenegger's demands for concessions. The state attorneys union has filed a formal complaint against Schwarzenegger for unfair bargaining.

In total, 156,000 employees are represented by unions that haven't yet reached agreements. If Schwarzenegger needs them to come to concessionary terms before Democrats will support a budget bill that contains savings from employee cost cuts, budget talks may go on for much, much longer.

How many would need to reach concessionary agreements for Democrats to sign off on commensurate budget cuts? "Certainly (the governor) needs the big gorilla," Regalado said, referring to SEIU.

Bruce Blanning, executive director of Professional Engineers in California Government, said the renewed furlough order isn't putting more pressure on his members to agree to concessions. He also noted the governor's furlough authority is still being tested in the courts. Ultimately the policy could be considered illegal, as PECG and other unions contend. "He's doubled down his bet" with the Wednesday's furlough mandate, Blanning said.

Meanwhile, look for the unions to continue backing Perez knowing there'll be a settlement sometime, Regalado said: "This is all part of the dance of negotiating."

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Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043. Bee Political Editor Amy Chance contributed to this report.

Newstex ID: KRTB-0178-47502384