With the state facing a significant budget deficit, California Gov. Gavin Newsom signed a bill into law on May 31 delaying the start date of a law passed last year that sets the minimum wage for some health care workers at $25 per hour.
The governor offered no details after signing the bill, and his office declined to comment.
That delay moves the cost of implementing the new law to the next fiscal year, a strategy that helps balance the state’s current fiscal year’s budget.
When questioned about the motives behind the new law, the bill’s author said the state’s 2024–2025 budget deficit potentially played a role.
“Maybe, it’s hard to say, but I think we wanted to make sure that any kind of impact because of the budget we’re facing, would be taken into consideration,” Ms. Durazo told The Epoch Times. “So, no reason to rush it, and it also lines it up with the budget year, which is another reason it makes sense.”
The state’s upcoming fiscal year begins July 1 and runs through June 30, 2025.
Critics said the wage increase law was a mistake that never should have occurred because it creates financial distress for the state—with costs ultimately borne by taxpayers—and certain health care employers.
As some of the affected health care systems are operated, in part, by local governments, some pay raises affect California’s finances.
“This is horrible policy, as I articulated when the original bill was introduced,” Sen. Roger Niello said on the Senate floor before the bill was approved on May 30.
He suggested the law will prove unfair to experienced workers, as wages of new hires and less skilled employees will rise more quickly than the wages of some employees with years of loyal service.
Additionally, employers will see costs increase significantly because state law requires employees to receive twice the minimum wage if they’re not paid overtime, he said.
With the new wages, exempt employees—including salaried managers and supervisors—would have to earn about $104,000 to not receive overtime pay, he said.
Given the added costs to the state to pay for wage increases, the senator expressed confusion as to why the governor chose to sign the bill while rejecting others with less of an effect on the state’s finances.
“I have to say I was puzzled when the governor signed this [SB 525] in the first place because he had vetoed other bills that had an impact on the state budget—arguably a lower impact than [SB 525] eventually will,” Mr. Niello said. “And then it was shortly after that that I remember he kind of said ‘oops,’ and now we’re working to delay these wage increases.”
He urged a full repeal of the wage increase law to rectify the situation.
“This is just bad policy, and frankly, the only route is to completely repeal [SB 525] altogether,” he said.
Another senator said the wage increases are threatening to upend the health care industry in the state’s 21st Senate District—encompassing areas north of Los Angeles, from Santa Clarita to Victor Valley.
“Out of the seven hospitals in my district, two of them are quite confident, if this is fully implemented, they will be out of business within a year,” Sen. Scott Wilk said on the Senate floor before SB 828 passed.
The Republican leader in the Assembly agreed that the governor erred in signing the bill to raise wages and suggested Mr. Newsom is now using his influence to force the Legislature to address the budget deficit with a strategic accounting trick of pushing the law’s start 30 days, essentially only saving a month’s worth of pay increases.
“The walls are closing in on Gov. Newsom and his Ponzi scheme,” Minority Leader Assemblyman James Gallagher told The Epoch Times. “He made some promises that he can’t keep, and now I think he’s trying to do whatever he can to keep those financial walls from collapsing.”
He said warnings regarding the wage increase should have been heeded.
“Last year, we warned the Legislature and said, ‘Don’t pass this; it’s bad policy for rural hospitals and our health care system, and we’re not going to be able to afford it,’” Mr. Gallagher said. “The underlying problem [of the state’s deficit] has not been solved, and it just underscores the shifting sand that they’re on with this budget.”
Because of an urgency clause, the bill delaying the increase takes effect immediately, and wages will increase for certain health care workers later this summer, beginning July 1.
It remains unclear whether further adjustments to the wage law will be considered by the governor and Legislature, as budget deficits are expected to persist beyond the upcoming fiscal year, according to the nonpartisan Legislative Analyst’s Office.
