The governor’s wild ploy

It’s an indication of just how insane the battle over the state budget has become that Gov. Arnold Schwarzenegger has ordered that the pay of all state employees—with a few exceptions—be dialed back to minimum wage, $7.75 per hour. If it’s carried out, the order will affect more than 200,000 innocent people, putting in jeopardy their mortgages, car payments, kids’ college tuition, even their ability to put food on the table.

The governor’s move is a ploy, of course. He’s using blunt force to coerce state employees’ unions into agreeing to concessions at the bargaining table. He’s already convinced six unions to agree to such concessions, and this is how he’s going after the others. It’s a heck of a way to run a state.

That’s not to say the concessions he’s seeking aren’t reasonable. They won’t have much short-term effect, but in the long run a readjustment of pension benefits is necessary. California has been too generous with its defined-benefit pension plans, far outstripping the private sector, where most people are reliant on largely self-financed 401(k) plans.

The six unions that have negotiated new contracts have agreed to extend the retirement age for new hires from 55 to 60 (from 50 to 55 for the Highway Patrol) and pay 10 percent instead of 5 percent toward their pensions. They will still enjoy some of the best benefits available today.

State Controller John Chiang is refusing to implement the governor’s order, saying it’s against federal law and, besides, his office’s computer system can’t handle it. He’s appealing the court decision. But union leaders would be wise not to rely on Chiang. Recalcitrance on their part could boomerang, especially if Meg Whitman—who says she intends to cut 40,000 workers from the state payroll—becomes governor.