Schwarzenegger proposes 5% cut in California employee salaries

By Eric Bailey and Michael Rothfeld
May 29, 2009 Reporting from Sacramento -- Gov. Arnold Schwarzenegger on Thursday readied a proposal to cut state worker salaries by an additional 5% as local government officials lambasted his bid to take $2 billion from cities and counties to help curb the state's growing budget deficit.

The governor's proposed salary reduction would affect 235,000 state workers who already are taking mandatory unpaid furloughs to help the state grapple with a projected budget gap of $24.3 billion.

Combined with the furloughs, ordered by Schwarzenegger earlier this year, the new proposed salary cuts would push many state employees' wages down by about 15%, saving the state $470 million.

"Everyone in the state is cutting back right now -- businesses, families," said Matt David, a spokesman for Schwarzenegger. "The governor feels it's very important that state workers do the same thing."