You may remember that Arnold Schwarzenegger sued John Chiang in state court to follow his order, and his dream, of cutting all state worker salaries to the minimum wage while we wait for a budget.  The court date was set for September 12, which salvaged the salaries for the month of August.  Chiang’s next move was to partner with some labor allies and move the lawsuit into the federal courts.  This not only would delay the question of whether or not Chiang needs to follow the order, but removes a serious liability problem for the state, because if they slashed salaries per a state court order and then had it overturned by the feds, they would be on the hook for expensive penalties and payments.  

Now, this has become complete, with the state canceling the September 12 court date.

This afternoon, controller spokesman Jacob Roper delivered this bit of news via e-mail to the State Worker:

Since the case has moved to the Federal court, the Sept 12th superior court hearing will not be held. A group of labor organizations has filed a motion to move the case from the Eastern Federal district to the Northern district, and a hearing on that motion is scheduled for October 31.

Roper also restated the controller’s position that cutting salaries to minimum wage would be a massive, time-consuming reprogramming task, “so there is no reason to believe that minimum wage checks would be issued anytime soon.”

While the lingering budget crisis is still incredibly painful for all manner of Californians, with missed payments sure to come if nothing is settled by the end of the month, at least the state workers have John Chiang in their corner, fighting for their interests.  And this is mirrored by the stirring testimony of everyday workers who are losing their benefits and the control of their lives as the Yacht Party turns up its nose and turns its back on the people.  John Chiang is doing his part, and Republican rank and file citizens are putting on the pressure in selected districts; the only way to ultimately win this fight is at the ballot box.

I just chatted a bit with John Chiang about the ongoing budget stalemate.  He was unaware that Gov. Schwarzenegger remarked yesterday to the SacBee that he would be fine with a budget in November or December.  Chiang’s reaction was that it would cost the state hundreds of millions of taxpayer dollars to wait that long.  Basically, there are two types of borrowing systems – one that assumes an imminent budget, with a discount rate, and one that does not, which has the normal rate.  If we keep delaying the budget, we will be funneling hundreds of millions of dollars to the financial services industry, and in the words of Chiang, “put Wall Street above Main Street.”

This is another aspect of the Yacht Party’s holding hostage of the budget process – enriching a key constituency.

On the coming lawsuit over the slashing of state employee pay to the minimum wage, the hearing is scheduled for September 12.  Chiang has asked for the case to be moved to federal court, which would delay it a couple months, but the main reason is because California would have no immunity if the state upholds the wage cut, and the federal courts overturn it.

About speaking at the convention yesterday, Chiang felt pretty good about it, and he offered a little secret that may explain why a lot of people are speaking over their applause lines.  Apparently the speakers get a very strict set of time at the podium.  After they go over, they start beeping and flashing lights at the podium speaker to get them to wrap up.  

One of the few bright spots of this 8-week budget roller coaster has been the leadership of State Controller John Chiang, who stood up and simply said “no” to the shock doctrine tactics of the Governor and his attempts to slash state worker salaries to the minimum wage and eliminate the jobs of thousands of others.  Schwarzenegger’s talk of compromise among the legislature and right-wing Republicans didn’t extend to state workers, and he took Chiang to court to force him to uphold his executive order.  As a result of Chiang at least offering resistance, the workers have a reprieve for August.

State workers targeted by a gubernatorial order to cut their pay to federal minimum wage have dodged that bullet – at least for August.

A Sacramento Superior Court judge Wednesday set a hearing to decide the pay dispute for Sept. 12, too late to affect this month’s state payroll.

Judge Timothy Frawley’s timetable ensures that 145,000 state employees and an additional 30,000 managers and supervisors will receive full pay for August.

This doesn’t happen unless Chiang goes to back for those employees.  And the grassroots in California is grateful.  Frank Russo reports on a meeting in Oakland:

California Controller John Chiang spoke to the Alameda County Democratic Lawyer’s Club yesterday at a small restaurant in Oakland and had a lot to say about the state employee pay order. But he had a lot more to say, about his approach to government, helping average Californians, and his values and philosophy about government while speaking for over a half hour without notes and then taking questions.

From the beginning, he was treated as a rock star-introduced by club President Meredith Brown, as “the man who stood up to the man.” He covered a lot of territory-and was paid rapt attention as he challenged this body of lawyers to continue their good work for the betterment of society. He even worked in themes from the Obama campaign, as he prepares to speak at the Democratic National Convention in Denver and appear on the national stage. Josh Richman, a reporter and “blogger” for the Oakland Tribune attended this meeting and you can see his write up for a feel of what transpired as well.

Read the whole thing for Chiang’s comments, which are great.  Hopefully he’ll repeat them at the DNC this week.  Amazing what can happen to Democrats if they stand up for themselves, isn’t it?

UPDATE: The big issue, as Russo details in a separate post, is making sure this case is decided in federal court and not state court.  Otherwise, California could be on the hook for billions in fines.  Read the post at the link.

Just a quick update on the latest on Gov. Schwarzenegger’s slashing of state worker salaries.  After John Chiang refused to carry out the executive order, today Arnold sued him.

Schwarzenegger’s Department of Personnel Administration filed a lawsuit against Chiang late Monday in Sacramento County Superior Court. The suit says the state Constitution and several sections of law prohibit the state from paying full wages without approval of a budget.

“Except where payments are self-executing under the California Constitution, the state has no authority to pay state employees their full salaries where it does not have an appropriation such as in this case, where there is no budget for fiscal year 2008-2009,” the lawsuit says.

Chiang, a Democrat, has balked at making the pay cuts, saying the state has enough money to cover its needs into October.

“The governor has created a solution to a problem that does not exist…,” Chiang said in a statement after the lawsuit was filed.

This has become less about fiscal responsibility during a budget crisis and more about an authoritarian demanding his way.  As for the original intention of the order, to force a compromise on the budget, that’s, er, not happening.

Schwarzenegger met Monday with the Legislature’s Democratic leaders to try to reach a budget compromise.

“We’re still talking. We haven’t thrown anything at each other,” Senate President Pro Tem Don Perata, D-Oakland, said after emerging from the governor’s office.

It’s really the ultimate way for this state employee wage cut to end up – turns out that the payroll generation is so antiquated, they can’t change it to reflect the new salary structure for months.

State Controller John Chiang said Monday an antiquated state computer system makes it impossible to adjust the state payroll quickly to issue minimum-wage checks to state workers. He said it would take at least six months to make the change.

The Democratic controller has vowed to defy Gov. Arnold Schwarzenegger’s executive order directing the state to pay workers the federal minimum wage of $6.55 per hour until a budget agreement is reached. He has previously asserted that the Republican governor’s order is based on an untested 2003 state Supreme Court legal opinion and that he will continue issuing full paychecks to state employees.

But in a meeting with The Bee Capitol Bureau on Monday, Chiang said that even if Schwarzenegger’s legal reasoning were sound, the state could not logistically retool its outdated payroll system in a matter of weeks, as the governor has asked. If the change were eventually made, Chiang also said it would take an additional nine to 10 months to issue checks to employees for their full back pay.

We’ve seen this in LA County with errors in paychecks to teachers, which resulted in major repayments and “treble” damages, which require the government to pay three times as much in damages to those affected.

Of course, the state could always update their payroll systems – which would require more revenue.  Or they could just throw more manpower at the problem – which would require hiring those state workers that Arnold tried to fire (which agencies are promptly not firing).

It’s really a tragicomedy over there in Sacramento.

I was on a conference call earlier with State Controller John Chiang and Rep. Hilda Solis about the Governor’s callous executive order, and both delivered predictably strong comments.  Chiang, who has told the governor he will refuse to comply with the order, blasted Schwarzenegger, saying “state workers shouldn’t be put in the middle of a political battle,” and that this was a nakedly punitive attempt against California’s state employee unions, which the whom the Governor has always held a grudge (they helped deep-six his “reform” agenda in 2005).  Rep. Solis was even more outraged, saying “let’s put him on the federal minimum wage, and get rid of the special interests paying for his hotel room across the street from the Capitol, and see how he likes it.”  She rocks.  

Chiang has made his decision, and now only litigation can force him to carry out the Governor’s order (and Chiang discouraged litigation as a “waste of time.”)  But we expect these kind of statements from Democrats.  Take a look at this one from Republican Greg Aghazarian:

“While I appreciate the Governor’s leadership on this budget crisis, I cannot support reducing the salaries of our state employees to minimum wage.

If our state workers had the power to pass a budget, then it might be appropriate to hold them accountable, but that’s not where the responsibility lies according to our State Constitution. I cannot predict when a budget will be passed, but I do know this, when it does happen it will be because we worked to achieve bipartisan solutions.

I understand what the Governor is trying to accomplish with this action, but I must respectfully disagree and urge the Governor to reconsider his executive order.”

Now, Aghazarian is talking out of both sides of his mouth.  He’s trying to win a Senate election against Lois Wolk in SD-05, and he wants to be seen as some kind of moderate when his record suggests the opposite.  But the fact that he’s gone off the reservation means that there’s a lot of pressure to come out against the Governor on this one, putting him alone on an island of his own making.  It’s important to keep pounding away and make him completely unpopular and unable to help his party in the fall as a result of this stupid, heartless action.

The Governor has set up a Web site to answer employee questions about the wage cut.  Predictably, it has no interactive function.  If he allowed comments on it the server would be down.

The CDP sent out a message from Controller John Chiang about the proposed wage cut to state workers:

When I received word that Gov. Schwarzenegger was proposing to use California’s state workers as pawns in the budget battle by cutting their pay to the federal minimum wage of $6.55, I said civil servants should not bear the brunt of the budget stalemate.

Since then, thousands of Californians have joined with me to protest the Governor’s proposed — and needless — order to slash the pay of California’s public servants. I want you to know I will stand strong against the Governor’s threats.

Show Gov. Schwarzenegger that you stand with me by signing the California Democratic Party’s petition at www.cadem.org/supportcaliforniaworkers.

Forcing public servants to involuntarily loan the State cash by foregoing their hard-earned paychecks puts an untenable burden on our teachers, health care workers and those who provide critical public services.  That is just wrong.

Excellent.  Chiang is really coming out like a hero in this.

Taking another tack, Lt. Governor John Garamendi sent a letter to the Governor (via the SacBee’s new state worker blog:

Dear Governor Schwarzenegger:

I write to you today regarding the proposed executive order to reduce the minimum wage of 200,000 of California’s state workers to the federal minimum wage of $6.55 an hour.

As you contemplate signing this executive order, please ask yourself – how would you feed and care for your family on $262 per week ($1,048 per month)?  How would your hardworking staff fare on these minimal earnings?  Could you and your family do it for one week?

It is our duty, as elected officials of this great State, to find solutions to the many challenging problems that face California, such as the state budget.  Those solutions should always look to improve the quality of life for all Californians, not impede it.

Please walk a week in a state worker’s shoes before you sign this executive order and imagine yourself and your family surviving on $262 per week.

This is reminiscent of the SEIU’s “Walk A Day in My Shoes” program, as well as the challenge taken by members of Congress earlier this year to live on a food stamp budget for a week.  It gets replicated because it works.  Garamendi is taking the right approach to humanize the budget crisis.

It does appear that our state Controller has basically said “No Dice” to the governor’s plan to punish state workers for his own leadership failures.

While the governor is poised to order the cuts on Monday, state Controller John Chiang, who is responsible for disbursing state workers’ paychecks, said Thursday that he will refuse to go along with the governor, setting up a political standoff and a possible legal fight.

“The authority to issue people’s paychecks is mine. I have both constitutional and statutory authority,” said Chiang, a Democrat. “Frankly, (the governor) is just trying to make me do something that’s improper and illegal.”

The same exact thing happened in 2003, with Steve Westly refusing to cut salaries as then-Gov. Gray Davis requested.  And Westly got his way until the budget was eventually signed on August 2.  This basically throws the whole issue into the courts and delays the implementation of any salary cut.  And that’s a legal fight I relish having.  For too long the chief executive of the state – and in some cases, the legislature – has absolutely overstepped their authority with regard to fiscal matters.  The most egregious example is their raiding municipal government and transit funds to fill in the cracks of the budget deficit, which leads to ridiculous outcomes like cutting bus service at a time when mass transit should be expanding.

But Chiang standing with workers and holding on to his authority as a statewide elected official is just as important.  We elect a governor, not a king, and this encroachment on the jurisdiction of other constitutional officers is illegal and increasingly dangerous.  State workers who are rallying against the proposed cuts should understand that they have a champion in John Chiang, and that his decision deserves their support.  The California Democratic Party has a petition you can sign to stand with the Controller in this effort.

UPDATE: As informed by the CDP, State Sen. Dean Florez asked the Legislative Counsel for an opinion on Schwarzenegger’s authority to slash wages, and the Counsel agreed that he didn’t have it:

SACRAMENTO – Senator Dean Florez, D-Shafter, sought to alleviate the fears of state workers contemplating how to pay their bills on the federal minimum wage, while heading off a potential lawsuit between the Governor and Controller at a time the state can least afford it, by releasing a Legislative Counsel opinion stating that the Governor does not have the power to order such a cut to workers’ salaries.

“If the Governor really intended this as more than a ‘motivational’ gimmick, he clearly did not do his homework,” said Florez.  “He is making reckless and false threats against the people who keep our state running, causing undue grief to innocent people — many of whom are already struggling to get by – and I really believe he owes them an apology.”

Just received this press release from the Greg Pettis for Assembly campaign.  Pettis is Mayor Pro-Tem of Cathedral City and is running for the CA 80th Assembly District.  He announced endorsements from California’s top elected financial leaders this week, including Former State Controller Steve Westly, State Controller John Chiang, Board of Equalization member Judy Chu, and Chair of the Assembly Appropriations Committee Mark Leno.

Re full disclosure, BlueBeaumontBoyz is a financial supporter to the Greg Pettis for Assembly campaign.

More below the flip…

The text of the press release is as follows:

“Democratic candidate for Assembly Greg Pettis announced the endorsements from California’s top elected financial leaders this week.

“Among Pettis’ newest endorsements include Former State Controller Steve Westly, current State Controller John Chiang, Board of Equalization member, Judy Chu, and Chair of the Assembly Appropriations Committee, Mark Leno. 

“”Greg has a track record of making the tough choices to balance Cathedral City’s budget as well as creating thousands of new jobs to increase city revenues to pay for public services,” said Chiang.

“”With health care looming as such a big issue, Greg’s financial acumen will help our State Assembly put together a common sense plan for all Californians,” said Westly.

“”I am pleased to have this endorsement from theses well known financial leaders,” Pettis said. “They know my qualifications, and know I will hit the ground running in bringing the people of the 80th Assembly District progress on issues like affordable health care, good paying jobs and protecting our environment.”

Pettis has served on the City Council of Cathedral City for the last 13 years. During that time, Pettis has helped change the city into destination where 50,000 people work, shop and live their dreams.

In addition to Pettis’ duties on City Council, he has worked on a wide range of committees designed to improve the lives of Californians.

Pettis has dealt successfully with environmental issues from Salton Sea restoration to serving on the Coachella Valley Mountains Conservancy Board to helping to negotiate the Multi Species Habitat Act which will guide future growth in the Coachella Valley in a more sustainable way.

Pettis has been working on transportation issues through the Riverside County Transportation Commission and the National League of Cities Transportation Policy Committee, working to come up with mass transit solutions that will help combat climate change.

Pettis was the first openly gay elected official in Riverside County, and he has worked to bridge the gap between communities and to provide leadership to other gay candidates who had the desire to serve in public office but needed encouragement and mentorship.

Pettis has a Bachelor’s of Arts degree from Azusa Pacific University and recently completed the Senior Executive Program in State and Municipal Government from the John F. Kennedy School of Government at Harvard.

Pettis’ goals for a healthy California include:

(1) Creating a truly universal health care system in California that can be the model for the rest of the nation that has been mired in this debate for too long.

(2) Public eduction–For our state to continue to be one of the largest economic engines in the world, we need to educate kids who are ready to compete in the global economy. While California has made great strides in funding public education (mainly by popular ballot measures) we need to eliminate the achievement gap that is plaguing so many communities, especially in my district.

(3) Environmental protection–Simply put, the rest of the nation looks to California for leadership on this issue. I have the background working on land use, building codes and air and water quality issues to make it happen. It is my goal to have California meet the Kyoto standard of reducing carbon emissions to 1990 levels by 2020.”

Pettis sees the primary issues as being universal health care, quality public education across the state, and reducing our carbon footprint.

“I have a long progressive record in office that is also been fiscally responsible,” said Pettis.

I was unexpectedly yet unavoidably unable to attend any of today’s public hearing in Oxnard for the proposed BHP Billiton LNG Terminal, but enough people showed up to make a difference.

The State Lands Commission decided late Monday not to award a lease essential to a proposed liquefied natural gas terminal off the Southern California coast, citing environmental concerns.

In the 2-1 vote, commissioners complicated efforts by Australia’s BHP Billiton LNG International Inc. to build an $800 million terminal in the ocean northwest of Los Angeles, about 14 miles off Malibu and about 20 miles off Oxnard. BHP officials have said the facility would provide a reliable source of low-polluting energy.

The decision was met with loud cheers by the estimated 900 people who packed the auditorium for Monday’s commission hearing. Many were opponents who wore blue shirts emblazoned with the words “Terminate the Terminal.”

900 people, WOW.  That’s some real grassroots action.  I’m guessing that Garamendi and Chiang did the right thing here (although a 2-1 vote the other way elected not to certify the environmental impact report, which keeps the door open for future predations, I fear).

LNG is a lower-polluting energy, but this terminal was unecessary, would have increased foreign consumption of oil, and would have lessened air quality.  It’s good to see it go down (for now).

UPDATE: I want to share with you Marcy Winograd’s firsthand account on the flip:

Though newspaper accounts mention a crowd of hundreds, the head count was more like 2,000 at the Oxnard Performing Arts Center, where Assemblywoman Julia Brownley (go 41st AD! -ed.) urged the commission not to approve a project fraught with risk.  Amidst a sea of blue Sierra Club “Terminate the Terminal” (a little Schwarzenegger dig there) t-shirts, scientists, former Assemblywoman Fran Pavley, Chumash healers, Malibu’s Pierce & Keeley Brosnan, the incredible former PUC commissioner Loretta Lynch, Mayor Maricela Morales of Pt. Hueneme, Santa Barbara’s Bob Handy, a rabbi, actors and activists spoke of asthma, smog, greenhouse gasses, and environmental racism (the pipes would run through Oxnard, a city over 70% Latino).

Maureen Cruise, Michael Jay, Mary Pallant, and I waited hours to testify on behalf of the executive boards of  Progressive Democrats of Los Angeles, Progressive Democrats of the Santa Monica Mountains, and the Palisades Democratic Club, but ultimately we ceded our time in respect to a Sierra Club organizer who asked that we let the commission vote on the issue, rather than postpone because of hearings that would stretch past midnight.

“All those opposed to the project please stand up,” said the Sierra Club organizer.  Hundreds, maybe a thousand, shot to their feet.  “I cede my time,” he said.  Before the next name was called, Garamendi added, “Wait a minute.  All those in favor of the project please stand.”  Only five suits, (Were they Billiton reps or Oxnard Chamber of Commerce men?) slowly rose from their chairs. 

Yes, it’s lonely at the top of an LNG terminal.

On behalf of the Executive Board of Progressive Democrats of Los Angeles, I want to thank all of you who wrote letters and campaigned to protect our coast. 

Marcy Winograd

Gotta love it.