Partisan Issues Are Holding Up State Budget

SACRAMENTO —  With most spending issues resolved, matters with little direct connection to the overdue state budget -- such as school buses and worker lawsuits -- emerged Wednesday as the newest barriers to a final deal.

Many GOP lawmakers say they won’t support a spending plan unless the Legislature repeals what they call the “sue your boss” law, which this year expanded opportunities for workers to file lawsuits against employers. They also want repealed a law that restricts schools from hiring private companies for transportation and other services.

“These have been topics for Republicans since Day 1,” said Assembly Republican Leader Kevin McCarthy.

Officials with the administration of Gov. Arnold Schwarzenegger confirmed that the issues are central to budget negotiations.

“They are policy issues that are relevant to the budget discussions,” said Finance Department spokesman H.D. Palmer. “These kind of issues are always going to be inextricably linked to budget discussions.”

Democrats are annoyed, contending that the Republicans are holding up the budget for the benefit of business lobbyists and bus companies. The dispute comes as the state ends its second week of the new fiscal year without a budget.

Up until now, the stalemate over the $103-billion budget had been widely blamed on a bitter dispute over how to distribute money to local government.

But Schwarzenegger said Wednesday that “we’re very close” to an agreement on that issue, and Democrats and local leaders agreed.

Senate President Pro Tem John Burton (D-San Francisco) suggested that the only reason the issue hadn’t been settled was to provide a “smokescreen” for “things Republicans want that have nothing to do with the budget. If the Republicans want to hold up the budget for some private bus companies or employers who break the law, I don’t think it will sell well,” he said.

Republicans say they made clear from the beginning of budget negotiations that they expected to see changes in the laws as part of any deal. And GOP legislators pointed to a May hearing at which Democrats suggested that budget talks would be the most appropriate place to bring up such issues.

Republicans say repealing the “sue your boss law” has clear budget implications because it would attract more businesses to California, raising revenue for the state.

Signed by former Gov. Gray Davis five days after Californians voted to recall him, the law allows workers to sue for such labor law offenses as having too few stalls in company restrooms or maintaining payroll records out of state.

One legal entrepreneur even offers a guidebook to 100 possible violations that workers can use to go after their employer. It’s sold online ($49) at sueyourboss.com.

“When you can purchase a book that tells you how to sue your boss, there is a problem,” said McCarthy, adding that the repeal is a top GOP priority.

Democrats say the law was put in place to provide assistance to state regulators who don’t have the resources to stop most labor violations. It empowers workers to file lawsuits over such issues as overtime violations and sexual discrimination -- even if they are not personally harmed.

“You break the law, you get sued,” said Burton. “It’s not a novel concept.”

Democrats say they have already drafted a bill that would respond to most of the GOP complaints. It would make it harder for lawyers to file frivolous lawsuits, they say, while protecting workers from abusive employers. Republicans and business groups are unimpressed and want nothing short of repeal.

“This law has already proven to be a drain on California’s economy,” said a statement from the California Chamber of Commerce. “Its repeal would send the clear message to employers across the country that California is serious about bringing jobs back to our state.”

The school bus issue is another longtime target of Republicans. Current law prohibits school districts from hiring bus drivers, janitors and other workers at less than union scale. Republicans say repealing the law could save school districts more than $1 billion.

Democrats, however, say the law forces school districts to pay their workers a living wage, and suggest that the pressure to repeal it is coming from large bus companies.

As the backroom dealing on those issues intensified, Democrats on a Senate committee tried to move the budget process along by approving their own plan to protect local governments.

The Democratic plan calls for local governments to accept $2.6 billion in cuts in the next two years in exchange for protections against cuts further in the future. But the Legislature, with a two-thirds vote, could borrow from the cities and counties during a fiscal emergency.

Although that plan falls short of the protection the governor and local officials are demanding -- they want a four-fifths vote for any future borrowing -- city and county leaders suggested compromise would be reached by week’s end.

That didn’t keep sparks from flying at the hearing and at a series of news conferences across the state that Schwarzenegger urged local leaders to attend.

Fresno Mayor Alan Autry, sensing that the senators were not taking him seriously as he made his case for local government protections, said, “Let’s stop snickering and scoffing at comments and get to solutions.”

He lectured the lawmakers about poor people in his district who will not get police protection if the state takes more money.

“The cities have had enough,” he said. “This is serious stuff we are talking about.”

Sen. Martha Escutia (D-Whittier) shot back, accusing city leaders of failing to work with lawmakers to help secure more revenue from the federal government and reform the state’s tax formulas.

Later in the day, Schwarzenegger spoke to officers at a Sacramento sheriff’s substation to assure them that he was trying to protect local funding for law enforcement.

“The state of California -- Sacramento -- has consistently for years raided local government, and that means taking money away from law enforcement: from fire, from the nurses, from the garbage collectors,” he said. “Everything. All the important services.... So what I’m doing now is protecting the local services, protecting all of you.”

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Times staff writers Noam Levey and Peter Nicholas contributed to this report.