Between last May and June, the administration negotiated with the state\u2019s 21 bargaining units to suspend some retirement contributions and personal leave programs, some of those concessions continue into 2027. Those tactics<\/a> helped the government save roughly $800 million in employee compensation costs.<\/p>\n Newsom touted California\u2019s improved financial footing<\/a> on Thursday but when asked if he planned to bring unions back to the bargaining table, the governor said his administration plans to maintain the \u201cstatus quo.\u201d He added that the issue would best be resolved by the next governor.<\/p>\n One union to get a new contract<\/p>\n Some state employees will get a new contract this year. SEIU Local 1000, which represents nearly 100,000 state employees, is actively negotiating with California\u2019s labor representatives. But the other 12 bargaining units, represented by other unions, will not see an immediate benefit from Newsom\u2019s balanced budget until they go back to the bargaining table in 2027.<\/p>\n \u201cToday, the governor talked a lot about how stable California\u2019s finances are,\u201d Anica Walls, SEIU Local 1000\u2019s president, said. \u201cState workers are hearing that and wondering if the state is doing so well, why are workers still being told they can\u2019t get wages that keep up with the cost of living?\u201d<\/p>\n Walls said California\u2019s stable finances are proof that the state can afford more substantial salary increases for workers who deliver essential public services. The governor\u2019s budget proposal includes a $307 million increase to employee compensation costs in the coming fiscal year.<\/p>\n Newsom touted his commitment to paying down the state\u2019s unfunded liabilities, but some of the state\u2019s financial obligations that were exacerbated by last year\u2019s agreements will continue to grow in the coming year due to ballooning costs to pay for healthcare for retirees and growing vacation leave payouts<\/a>.<\/p>\n The leave program unions agreed to last year enable state workers to bank more vacation hours, which they can cash out at the end of their civil service careers, often at a higher salary rate. In 2024, California paid $431 million to those leaving state service.<\/p>\n Newsom pushes back on inefficiency critics<\/p>\n A major theme from Thursday\u2019s budget presentation was Newsom\u2019s pushing back against California\u2019s critics who say that his administration is wasteful and inefficient. He said his critics tell him that state government has too many employees.<\/p>\n He argued California\u2019s public sector workforce isn\u2019t as large, relatively, compared to the rest of the country.<\/p>\n \u201cWe\u2019re 36 in the nation, number of state employees and local employees. Look who\u2019s in the top: 11 of the top 15 are all red states,\u201d he said, singling out Wyoming<\/a> as having the highest number of public sector employees per capita.<\/p>\n Under Newsom, the executive branch\u2019s workforce has grown by over 40,000 positions, according to Finance Department records.<\/p>\n The governor pointed to other efforts to make California\u2019s government more efficient, including state hiring reforms<\/a>, reducing vacant positions and piloting \u201cworker-first AI tools.\u201d Of those artificial intelligence initiatives, the administration has had mixed success: Half of the initial eight proposed are no longer under contract<\/a>.<\/p>\n This story was originally published May 14, 2026 at 3:23 PM.<\/p>\n Related Stories from Sacramento Bee<\/p>\n
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