SAN FRANCISCO (Reuters) - California Governor Jerry Brown ordered a hiring freeze on Tuesday across the state’s government to help cut costs in the face of a budget gap of at least $25 billion.
The budget deficit of the nation’s most populous state is closely tracked in financial markets. California is the biggest issuer of U.S. municipal debt, and is of concern in Washington as some in Congress have discussed crafting legislation to allow states to declare bankruptcy to ease their fiscal woes.
The U.S. economy may be recovering but state and local governments still face weak revenue due to the recession, housing and financial market slumps, hesitant consumer spending and high unemployment.
Brown’s order applies to vacant, seasonal, full-time and part-time positions and will save $363 million in operational costs in the next fiscal year beginning in July, Brown’s office said.
“The hiring freeze will be in effect until agencies and departments prove that they can achieve these savings,” Brown, sworn in last month, said in the statement.
It was the latest move by the 72-year-old Democrat to trim state spending on his own as he seeks approval from lawmakers for his budget plan.
It includes proposals for $12.5 billion in spending cuts and calls on the legislature to put a ballot measure to voters in June to extend tax increases scheduled to expire this year.
Democrats, who control the legislature, are expected to support Brown’s cuts to help win Republican votes needed to advance a measure to the ballot.
The tax extensions, spending cuts and other moves would close a budget gap Brown estimated last month in his budget plan at $25.4 billion through mid-2012.
That deficit may swell to more than $27 billion after Brown canceled a plan to sell state buildings and if his proposal for creating a nearly $1 billion reserve survives budget talks with lawmakers.
In addition to the hiring freeze, Brown has ordered sharp reductions in mobile phones for state employees and in the state’s vehicle fleet.
To further underscore frugality, Brown recently took a commercial passenger flight -- coach and without entourage -- to Southern California to urge business groups to support a referendum on tax extensions.
Reporting by Jim Christie; Editing by Xavier Briand