June 4: SEIU Budget FAQ

SEIU: Tough Questions on the Budget

1. What’s at stake in this budget?
This budget year is different from any other year. On the table are cuts that will completely reshape the kind of California we live in. Will we be the only state to end welfare, sending a million children spiraling into destitution, hunger, and homelessness? Will we be the only state to end tuition assistance and let college costs stand in the way of a college education for lower-income students? Will we become a state where 1 in 4 residents have no access to healthcare except emergency rooms? Will we do away with home care for nearly 400,000 seniors and people with disabilities? Will we shred county and local services through take-backs of local funds? Will our skilled and efficient state workforce be decimated by further cuts and demoralized by being the perpetual target?

These are some of the questions that will be decided in this budget.

Also at stake are the depth and length of our recession, our ability to recover economically, and the very foundation of our economy. If California makes the cuts the Governor proposes, we will surpass Michigan as the state with the highest unemployment. These are the kind of cuts that turn a recession into a great depression.

2. I keep hearing more and more bad news about how big California’s budget problem is.  How big is the problem really?
It’s huge, and the problem is worse than ever after years of cuts. The numbers can get numbing. To put it into perspective, we are facing a shortfall that is equal to one quarter of entire general fund. The size of California’s deficit for the 2009-2010 budget year is $24 billion and growing.  This comes on top of $31 billion cut in recent years. We are in the worst economic downturn since the Great Depression, which means that the state is taking in far less revenue than it needs to maintain basic, needed services. 

3. What is SEIU’s solution for how to fix the budget?
SEIU has a better plan than a budget balanced on the backs of working people and those who are most at risk in today’s troubled economy. The budget can be balanced using a mixture of majority-vote revenues, such as those passed but vetoed by the Governor last year. These would add $7 billion in revenues to prevent cuts. We believe there is a billion more to be secured by improving tax and fine collections and identifying other efficiencies. We need to maximize our federal revenues like other states do. We also support the kind of new revenues that California’s support by overwhelming margins: taxes on oil pumped in California, on tobacco, and alcohol. We cannot balance the budget through cuts alone.

4. The Governor keeps saying that voters sent a message of no new taxes in the Special Election. Is that true?
If the Governor surveyed voters, we’d love to see the results. SEIU and our allies did exactly that, and found that the voters want the OPPOSITE of what the Governor is doing. By huge margins, voters oppose deep cuts to education, home care, healthcare, and other vital services. And by huge margins, they support targeted taxes such as an oil severance tax, an alcohol tax, etc.

5. What is the “cash crunch”? Is California going to run out of money?
Every year California has to borrow to cover the time lag between our expenditures and our income, since most income comes in March and April. This year, because revenues are down and borrowing will be harder, the problem is particularly severe, and we are projected to run out of money in July. This puts pressure on the legislature to pass a budget right away, so the state can borrow at a better rate.

6. How did we end up in this mess?
For years, politicians have been cutting taxes because it’s politically popular -- and then not dealing with the consequences, because vital public services like schools, home care, healthcare, law enforcement, and fire protection are also popular. The result is a mismatch between the cost of the public services we need and the revenues needed to pay for them. 

On top of that, we are in the worst economic recession in most people’s memory, so there are fewer revenues than ever coming into the state’s coffers to spend on the services Californians need and want.

7. Won’t President Obama’s economic stimulus plan bring funds to California that will fix the problem?
California is receiving billions in federal economic assistance as part of the “stimulus” package, but the state’s cuts are undermining the very purpose of that federal assistance: to maintain services people need and prevent layoffs and permanent damage to the vital public services such as education, healthcare, home care, and colleges that are essential to our quality of life, our economy, and our state’s future. 

8. Why should everyone in the union be involved in the budget campaign, regardless of their political affiliation?
These budget cuts are not partisan: they hit all of us, regardless of our political party. With more than a $24 billion budget deficit, California is facing a huge crisis, and we all need to listen to each other, roll up our sleeves, and work together to fix this mess and protect vital services Californians want and need. Balancing the budget by relying on cuts alone is not realistic.

During the pension fights, SEIU members across the political spectrum put our political differences aside and focused on the bottom line. With the essential public services that we provide at stake, we need to do the same thing now.

9. How will California’s economy and local economies be affected by the budget cuts?
California could lose hundreds of thousands of jobs due to the proposed cuts. Each one of these jobs creates ripple effects throughout the state economy and local economies. But the economic effects are even more profound: by closing parks, damaging our schools and colleges, and hurting our quality of life in so many ways, California will become less attractive to the kind of businesses we hope to retain and attract; we’ll have a less educated and productive workforce, and then our chances at economic recovery are in jeopardy.

10. Isn’t California’s problem a spending problem?
Many people are repeating the mantra, “California has a spending problem,” but the facts don’t bear that out.

First, more than 2/3 of the growth in California’s spending is due to population increases and inflation.  Increases in our elderly population, in the population of children with autism, and in the cost of healthcare also contribute to increased demand for home care, developmental disabilities services, and other services.

Second, one of the primary reasons California has found itself in a budget jam is  “spending more” on tax cuts. Tax cuts made since 1993 are now worth $12 billion a year! The state reimburses local governments for the money it gave away in tax cuts – and it costs a lot.

11. Isn’t it true that the main reason we’re spending so much on human services is because of new immigrants?
Immigrants, like everyone else, do use services such as education, but they also pay taxes. When the state of Texas studied the issue, it determined that immigration was a net benefit for the Texas economy and state budget. It’s a complicated issue with no easy answers that ultimately has to be solved at the federal level – and it definitely won’t be solved in the next 30-60 days, when we need to pass a budget.  Immigrants make up the melting pot that our country was founded upon and our diversity makes us stronger.

12. My job won’t be affected, and I don’t use the human services that will be cut. Why should I care about the budget cuts?
Everyone – regardless of their income level, relies on public services, such as good schools, colleges, roads, parks, emergency rooms, burn units, and trauma centers, and these budget cuts threaten all of us. And any one of us could live long enough or develop a disability and need home care.

13. There’s a budget crisis every year, and every year it gets figured out. Why should I worry about it this year?
We’ve already made $31 billion in cuts in recent years; we’re looking at reducing our budget by an astounding 25%. That’s a quarter of the total budget. There’s no way to do that without doing permanent damage to the public services we need for a good quality of life and economic recovery in California.

14. When you say “increase revenues” isn’t that just a code for increasing taxes?
We have to look at all of our options, and we can’t afford to be inflexible and unrealistic. There’s no way we’re going to be able to get out of this mess by cuts alone.

15. Some people say California is a high-tax state. How do California’s taxes compare with other states?
No one likes paying taxes, but the truth is California’s taxes aren’t as high as people say they are. We rank 38th in property taxes, 42nd in tobacco taxes, and 41st in alcohol taxes. CA is the only state in the nation and in the world that does not tax the oil when it’s pumped out of the ground. Corporate income taxes in California have declined for many years. Corporations’ contributions to the state (as a percentage of their net income) have fallen BY HALF since 1981!

The cornerstone of SEIU’s approach to revenue is that we can raise revenue without hurting working families who are struggling in this economy – and who are feeling the brunt of so many of the cuts.

In the most recent budget deal, corporations received over $2.5 billion a year in tax breaks, even while our kids and struggling seniors were cut. That isn’t fair; we all need to share in the responsibility, not just ordinary people, who can’t afford to take legislators to fancy resorts and trips like corporate lobbyists can.

16. What is SEIU’s strategy?
In the short term, we are fighting to secure six Republican votes (4 in the Assembly and two in the Senate) for revenue and to pressure Democrats not to accept an all-cuts or mostly-cuts budget. Our goal is to protect healthcare, education, home care, local government services, state services, and our safety net from cuts so deep they would do permanent damage, understanding that there will definitely be cuts this year. In the longer term, we need to change the 2/3 budget vote requirement, work toward electing more legislators committed to strong public services, and elect a Governor who supports good schools, healthcare, and a strong safety net.

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