By John Howard and Anthony York | 01/07/10 12:00 AM PST

As Gov. Arnold Schwarzenegger prepares his 2010-11 state budget, one group that is likely to continue to feel the squeeze is the state workforce.

Details of the governor’s proposed spending plan will be unveiled Friday, but Capitol sources said this week state workers were likely to continue to take part of the budget blow. They said the current system of forced furloughs, in which state employees are required to take three Fridays off per month without pay, reportedly would be abandoned, but it was unclear what would be in their place. Layoffs and a 5 percent pay cut had both been mentioned as an alternative to furloughs.

Pay cuts would also affect contributions to workers’ retirement plans.

The furloughs, the equivalent of a 14 percent pay cut, have drawn a series of lawsuits fought out in courts across Northern California. Some two dozen suits have been filed since 2008. Some have been resolved and some have been combined. Losing sides have filed appeals that currently are working through the courts.

The governor’s proposed 5 percent may be in lieu of the furloughs, but he also may propose changes that would result in reductions in pensions.

“If he does a pay cut, it’s a perfect topic for the bargaining table, which is where it belongs,” said Bruce Blanning of the 13,000-member Professional Engineers in California Government. “Under current law, there would have to be bargaining on a pay-cut proposal. He could not do it unilaterally.”

Dave Low of the California State Employees Association agreed.

“I would imagine that pay cuts would fall very similarly in the category that furloughs do – you gotta go baragain them. You can’t unilaterally implement a layoff. I would presume that the state employee organizations are going to be asking to go to the table to talk about the whole panoply of options,” he said.

“It’s one thing to get furloughs imposed on you with no opportunities for a quid pro quo or mitigation or anything. It’s another thing to go to the table and decide whether the best course of action may be furloughs or layoffs or something else. But that opportunity never presented itself,” he added.

Currently, about 201,000 state workers are furloughed on three Fridays per month, the equivalent of a 14 percent pay cut. The furloughs originally were scheduled to expire by mid-year. The bulk of the lawsuits filed thus far target the legality of the furloughs, and only indirectly focus on the budget cuts themselves.

The state budget shortage is estimated by the legislative analyst at $20.7 billion, which includes about $6.3 billion from the current year and another $14.4 billion through the following year.

The shortage includes $6.3 billion in the current fiscal year, which ends June 30, and $14.4 billion for the next fiscal year which begins July 1.

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