Analyst Questions Savings From Proposed Compensation Cuts
Gov. Jerry Brown's (D) budget proposal to impose changes to state workers' wages and health benefitsÂ is unlikely to achieve its expected $580 million in spending reductions, according to an analysis by the Legislative Analyst's Office, the Sacramento Bee reports.
The LAO report suggests up to half of Brown's state worker spending reductions likely will not materialize, partly because his budget proposal includes some unrealistic assumptions.
For example, the new governor aims to cut state spending by $72 million by offering a less-expensive option for state worker health insurance benefits. LAO estimates that the plan will not achieve the expected savings because most of California's older state employees are unlikely to switch to a health plan with fewer benefits.
In addition, LAO disagrees with Brown's assumption that state departments that failed to make certain employee compensation cuts this year will make the cuts next year. This year's general fund budget assumes the state will achieve 1.5 billion in spending reductions from cuts to worker compensation, including $450 million that state agencies must cut on their own.
Brown's budget plan for the next fiscal year includes an additional $200 million in unspecified general fund cuts that state departments would be directed to make on their own.
To achieve spending cuts in employee compensation, LAO recommended that state lawmakers consider:
- Reducing state worker wages;
- Pursuing contracts with unions that agree to compensation cuts; and
- Reinstating furloughs (Ortiz, Sacramento Bee, 2/4).