The Red Monkey

Gov. Arnold Schwarzenegger plans to save $1.6 billion in state employee costs by maintaining monthly furloughs past next June, instituting layoffs or shifting general fund workers into positions financed by other revenues, according to sources familiar with the governor’s forthcoming budget proposal.

California faces a $20.7 billion general fund budget deficit through June 2011, according to an estimate by the nonpartisan Legislative Analyst’s Office. Schwarzenegger ordered an estimated 200,000 state workers to take two furlough days a month starting last February and then three per month starting in July to save an estimated $1.4 billion in general fund dollars. Under the governor’s new budget proposal, furloughs could continue beyond the scheduled end date of June 2010.

Schwarzenegger communications director Matt David had no comment on the governor’s plan.

Senate President Pro Tem Darrell Steinberg said Tuesday that he hopes to curtail the number of furlough days and shift the burden of cost savings away from state employees after a difficult year. He suggested that the state could find new revenues by requiring independent contractors to withhold taxes, a change presumed to capture more money because the state believes some contractors currently avoid paying their fair share.

Schwarzenegger plans to announce his budget proposal on Jan. 8. He indicated Tuesday in a letter to Congress that he will seek significant help from the federal government to help reduce California’s budget deficit.

The governor’s budget proposal is expected to rely on as much as $8 billion from the federal government. If California does not receive that money, the state would consider eliminating three safety net programs — CalWORKs, Healthy Families and In-Home Supportive Services, according to the source. It also would postpone two tax changes beneficial to businesses that were installed in February.

The governor’s plan would again seek to allow oil drilling off the Santa Barbara coast, a proposal rejected by the state Assembly and the State Lands Commission earlier this year. The proposal estimates that California would receive $200 million annually from oil drilling.

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Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.

I have been saying the furloughs were going to continue. They can’t cut money anywhere else so they punish the employees of the state. Its a proposed savings that has been erased by the ineptitude of the Representatives at the state captiol. If they had passed the budget on time they would have saved more than twice what they are trying to save with the furloughs.