SBX8 29: Furlough Policy Restructuring Bill

No. of Jobs

4,300

Category

Value working families

Summary

In furloughs implemented by any state agencies, boards, and commissions, this bill will exempt employees in positions funded at least 95% by sources other than the General Fund, employees of the Franchise Tax Board and employees of the State Board of Equalization.

Background

In 2009, Governor Schwarzenegger unilaterally furloughed approximately 100,000 state workers for three days a month as part of his administration’s attempt to close the budget gap. This translated into a pay cut of almost 15 percent.

According to a UC Labor Center study released in October of 2009, the across-the-board furloughs affected departments that do not receive funding from the General Fund. This policy resulted in furloughs of workers in revenue-generating departments like the Franchise Tax Board and the Board of Equalization. These furloughs are projected to result in a loss of $363 million in tax collections in FY 09–10 and $366 million in the subsequent two years.

The Eberhardt School of Business at the University of the Pacific analyzed the economic impact of furloughs. The study shows the loss of an estimated 5,000 private sector jobs in Sacramento County, and it’s “plausible” furloughs cut wage and salary income by around $1 billion (including secondary affects) just in the Sacramento metropolitan area in the last quarter.

The furlough order also disrupted the State’s ability to serve its citizens. For example, the Department of Motor vehicles experienced an increase in wait time for walk-in customers from 27 minutes to 45 minutes. DMV is funded by special fund fee revenues and federal funds. The department’s $900 million budget comes almost entirely from vehicle, driver’s license, and other miscellaneous fees paid by motorists, as well as from the federal government. The furlough policy implemented at the DMV became a classic “lose-lose” proposition.

Read the Bill