S.C. to Decide if State May Pay Workers During Budget Impasse

Thursday, August 15, 2002

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S.C. to Decide if State May Pay Workers During Budget Impasse

By KENNETH OFGANG, Staff Writer/Appellate Courts

As California strolled through its 45th day without a budget yesterday, the state Supreme Court agreed to decide whether state employees may continue to collect their pay during the impasse.

In an order signed by all seven justices, the court granted review of the ruling by this district’s Court of Appeal in White v. Davis, 98 Cal.App.4th 969, a case dating back to the 1998-99 impasse. The justices continued the stay previously granted by the Court of Appeal, which means that about 250,000 employees affected by the ruling will continue to get their paychecks, a lawyer for the state controller told the MetNews.

Rick Chivaro, chief counsel to Controller Kathleen Connell, said the state would continue to pay rank-and-file workers “until and unless the Supreme Court decides otherwise.” But the stay will be of no benefit to vendors, Chivaro said, because they “have absolutely no legal basis to be paid in the absence of a budget.”

Elected and appointed officials and some employees exempt from civil service won’t be paid either, Chivaro said. Judges and retirees are not affected.

The 1998 impasse marked the 11th time in 12 years the state had missed the nominal June 15 deadline for passing the budget act. The 1999 and 2000 acts were passed on time, but last year’s was not.

Minimum Wage

This district’s Div. Four ruled in May that the controller can pay state employees minimum wage, but no more than that, during a budget impasse, absent a continuing or emergency appropriations act.

The panel also ruled that only a limited portion of the funding for public schools under Proposition 98 may be disbursed in the absence of a budget or emergency legislation.

The Court of Appeal modified a 1998 injunction by Los Angeles Superior Court Judge Robert H. O’Brien. The judge, who has since retired, ordered Connell to stop paying most bills, including employee salaries, three weeks into the 1998-99 fiscal year.

Appropriations Bill

The day after the ruling, the Legislature unanimously passed an emergency appropriations bill, thus keeping employees on the job. Had the bill not passed, any employees who showed up for work would have been entitled to federal minimum wage for days worked from July 1 to the date of his ruling and would thereafter have been “volunteers,” with no right to payment then or in the future, O’Brien ruled.

The state lacks a 2002-03 fiscal year budget because lawmakers have been unable to muster the two-thirds majority in both houses required to pass one.

A budget backed by Gov. Gray Davis and the Democratic leadership, including tax and fee increases they say are needed to close a huge gap between revenues and expenses, passed the Senate with a single Republican vote in June.

But the bill could not attract any of the four GOP votes needed to pass it through the Assembly, where Republicans insist they will not support revenue increases.

The Court of Appeal agreed with Connell that the state Constitution allows the Legislature to enact continuing appropriations, and that such payments—including judicial salaries and debt service payments—must continue to be made during a budget impasse.

But the court rejected the controller’s arguments that the state Constitution and federal law permit her to pay all employee compensation and to pay the full share of state funding that must go to public schools under the 1988 initiative requiring the state to devote a specified percentage of its budget to that purpose.

Curry said the state can only make the following payments during a budget impasse, absent an emergency appropriations bill passed by the required two-thirds majority:

•Continuing appropriations mandated by the Constitution or by statute;

•Surplus funds earmarked for schools because the state otherwise could not spend the money under the “Gann limitation” of Proposition 4, which limits total spending. Prior to the passage of Proposition 98, all of the surplus funds had to be returned to the taxpayers in the form of reduced taxes or fees, but now 50 percent of the money goes to schools;

•Minimum wages mandated by the Fair Labor Standards Act; and

•Federally mandated spending under the Food Stamp program, Foster Care and Adoption programs; Child Support program, and Child Welfare Services program.

In another action taken at yesterday’s weekly conference, the justices declined to review a ruling by this district’s Court of Appeal strictly applying a one-year statute of limitations to claims of toxics exposure in the workplace.

No justice voted to grant review in Rivas v. Safety-Kleen, 98 Cal.App.4th 218.

Div. Four held May 7 that a worker who knows he or she was exposed to toxic chemicals in the workplace must sue within one year of being told by a doctor of the nature of the illness, even if the specific cause has not been established.

The panel affirmed a pair of summary judgments in favor of Safety-Kleen Corporation, which makes and supplies machines and solvents used in the automotive industry.

Los Angeles Superior Court Judge Charles Lee ruled that both claims were barred by the one-year statute of limitations because each plaintiff filed suit “more than one year after his first actual or constructive suspicion that the solvents he used at work had caused the injuries claimed . . . and that such injuries were the result of someone’s wrongdoing.”

The Court of Appeal agreed. There is no rule that tolls the statute of limitations prior to the time the injured party is explicitly told “that a certain substance or product caused the medical disorder,” Justice Daniel Curry wrote.

The panel also rejected a contention that a longer federal statute of limitations applies under federal environmental laws, which Curry said do not apply to suits of this type.

In other conference actions, the justices:

•Let stand a ruling by this district’s Div. Six that the Santa Monica Mountains Conservancy must comply with local land use laws. By denying review, with Justice Joyce L. Kennard the lone dissenter, the high court handed a victory to the City of Malibu in its years-long battle with the conservancy over the use of the 22-acre gift that the conservancy received from Barbra Streisand in 1993. The case is City of Malibu v. Santa Monica Mountains Conservancy, 98 Cal.App.4th 1379.

•Agreed to decide whether state occupational safety regulations apply to homeowners who hire workers to trim trees. Div. Seven of this district’s Court of Appeal said they did, in Fernandez v. Lawson, 98 Cal.App.4th 388. All seven justices voted for review.

•Voted unanimously to review Div. Seven’s ruling in In re Jesusa V., 97 Cal.App.4th 878, dealing with a number of issues related to the right of an incarcerated “presumed father” to participate in a dependency proceeding.

•Agreed to decide whether an insured may sue an insurer in tort for bad faith in seeking an increase in premiums following an audit. The Fifth District Court of Appeal said it could not, in Jonathan Neil & Associates, Inc. v. Jones, 98 Cal.App.4th 434.

•Agreed to decide whether a trial court may reconsider its order granting a new trial in a criminal case after an appellate court has depublished the case authority on which the order was based. The First District’s Div. Four said the court had that discretion.

•Voted to decide whether an inmate who saved a prison guard from choking to death may be granted a sentence reduction in addition to the maximum credit available under the three-strikes law. A divided panel in this district’s Div. Six said he could not, in In re Young, 98 Cal.App.4th 166.