The Golden State of California (home to the Workforce Management world headquarters) is well-known, for better or for worse, as the place where a lot of innovative trends get started. Some of these are progressive and groundbreaking, but you can also make a great case that many of them, especially the workplace-related trends, are just downright regressive, dumb and kooky.

Here’s a great example of what I’m talking about, courtesy of the San Jose Mercury-News: “One of the accounting tricks used to close [California’s] $26 billion budget deficit is increasing income tax withholding schedules by 10 percent. That is, whatever is withheld for state income tax from your paycheck today will increase by 10 percent come January; you’ll get back any excess payments when you file your tax return in early 2011.”

A spokesman for California’s state Finance Department notes that this “in no way changes any working Californian’s tax liability or taxes owed” and that workers can “increase their allowances to compensate—so long as they do not underpay overall.” But as the newspaper notes, by doing this the state is trying “to shoehorn an extra $1.7 billion of personal income tax receipts into the current 2009-10 fiscal year. Essentially, the state is looking for an interest-free loan from working Californians.”

The move to withhold more from the paychecks of California workers happened in the dead of night as the state Legislature pushed through some 30 bills that, taken together, cobbled together a budget fix for a state that was $26 billion in the hole and issuing IOUs to vendors and taxpayers.

No workers or taxpayers got a chance to question or challenge this action, although as the Los Angeles Times points out, “the 24-hour session leading up to final passage of the budget Friday afternoon turned into a slow-moving train wreck … lobbyists for major interest groups were present throughout the night, seeking to influence the process. With hundreds of pages of legislative language passed with little time available for review, few knew what the fine print might contain.”

That’s how California workers got saddled with 10 percent more tax withholdings come January 1, and it shows just how dysfunctional the legislative process is out here in the Golden State. It also shows how now, days after the latest budget “fix” was approved, the impact of the middle-of-the-night budget-making finally becomes clear.

What can workers do about this? Nothing really, except fiddle their W-4 exemptions and tax withholdings to compensate for the extra 10 percent hit they’ll take next year. Of course, most people don’t do this, and the cynical part of this middle-of-the-night sausage-making is that no matter how riled up workers might get, few will actually follow through and take the time to do anything about it.

And, here’s the scary part of all of this: If the state of California can stick workers with a higher tax withholding in order to float the state a tax-free loan, what’s to stop other budget-challenged states from doing the same?

Nothing, of course, and I would be shocked if other states don’t look at this latest “trend” from out here on the Left Coast and decide, no matter how kooky it seems, that it makes a lot of sense for them to help balance their budgets on the backs of workers too.

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