From the LATimes:
Reporting from Sacramento -- The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.
Schwarzenegger's office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.
The news comes as state lawmakers are already facing a severe cash crisis, with the state at risk of running out of money in July.
The wages at issue involve workers who care for some 440,000 low-income disabled and elderly Californians. The workers, who collectively contribute millions of dollars in dues each month to the influential Service Employees International Union and the United Domestic Workers, will see the state's contribution to their wages cut from a maximum of $12.10 per hour to a maximum of $10.10.
The SEIU said in a statement that it had asked the Obama administration for the ruling.
Of course, that was May 8, before the Obama administration backed down:
On Wednesday, the Obama administration said that California's decision to cut the state's contribution to home health care workers' wages will not affect the state's eligibility for $8 billion for Medi-Cal provided through the federal economic stimulus package, the Sacramento Bee reports.
Medi-Cal is California's Medicaid program.
The wage cuts affect workers participating in the In-Home Supportive Services program. A provision of the state budget approved in February reduced the state's contribution to the workers' wages from a maximum of $12.10 to $10.10 an hour (Hotakainen, Sacramento Bee, 5/20).
Unions representing the workers complained to the Obama administration, arguing that the cut violated a provision of the stimulus package that bars states from shifting costs to counties.
However, in a letter to Gov. Arnold Schwarzenegger (R), federal officials wrote that the reduced state contribution to the wages does not violate the stimulus law because it does not require counties to increase their contribution to IHSS workers' wages (Freking, AP/San Francisco Chronicle, 5/20).
You'd have to wonder why.
Of course it couldn't have anything to do with lucrative $15,200/plate Beverly Hills fundraisers.
But more importantly, you'd have to wonder how the possibility that the Feds might raise the same sort of issue in Delaware might play in the face of unified opposition from virtually all state employee labor unions.