(Bloomberg Government) — A new minimum wage for California health care workers will be delayed until at least Oct. 15 under an agreement between state lawmakers and Democratic Gov. Gavin Newsom.

The deal announced on Saturday will link the introduction of the minimum wage to public finances. The wage rate was originally due to come into force on July 1.

The passage of the wage bill last year was a major victory for California unions, but Newsom expressed concerns about the cost of the measure to state government as his administration struggles with a budget deficit.

According to the agreement, the minimum wage would come into force on October 15 if government revenues between July and September are at least three percent higher than current forecasts.

The implementation of the minimum wage increases could be postponed until January 1 if government revenues do not rise to this level.

The governor has been pushing for months to create an annual trigger that would make minimum wage increases contingent on the status of the state's general fund, while lawmakers grapple with a projected $27 billion deficit.

However, the proposal initially met with little response, as workers and parliamentarians defended the increase in the minimum wage.

At the end of May, lawmakers voted to postpone the introduction of the minimum wage by just one month, moving its implementation from June 1 to July 1.

This move pushed the law's entry into force into the state government's new fiscal year and gave lawmakers time to negotiate further changes as part of the budget process.

The deal announced Saturday also includes a commitment by the Newsom administration to seek additional federal funding to help hospitals cover costs.

The new minimum wage is expected to cost the state $1.4 billion in the next fiscal year when it takes effect in January, preliminary government figures show. About $600 million of that would have to come from the general state budget.

Dave Regan, president of SEIU-United Healthcare Workers West, said in a statement that his members were disappointed, but “we also recognize and appreciate that legislative leaders and the governor listened to us as we mobilized and raised our voices this year.”

The law applies not only to medical personnel, but also to workers such as janitors, gardeners and cooks who work in health facilities.

The new minimum wage will vary depending on the size, location and type of healthcare facility. In large facilities and dialysis clinics, employees will be paid at least $23 per hour. Twelve healthcare facilities in California fall into this category, including hospitals owned by Tenet Healthcare Corp., University of California Health and Stanford Health Care.

Health systems have adjusted their wages to prepare for the higher wage increase, which the UC Berkeley Labor Center estimates will affect 322,000 direct-employee workers in health care facilities.

Another 76,000 workers would be affected by indirect wage increases due to “spillover effects” that would affect the wages of workers in the same establishments who earn slightly more than the new minimum wage, the center said.

To reach the reporter on this story: Andrew Oxford in Sacramento at [email protected]

To contact the editor responsible for this article: Bill Swindell at [email protected]

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