FOTF-‐INTRO 012611-‐EDITION [DAPHNE ON CAM] GOOD AFTERNOON…I’M DAPHNE HUNT…SENIOR RESEARCH ANALYST FOR SEIU LOCAL 1000…TODAY…WE’RE GOING TO GIVE YOU AN IN-‐DEPTH LOOK AT GOVERNOR BROWN’S PROPOSAL TO CLOSE THE STATE’S 26 BILLION DOLLAR BUDGET. IF YOU HAVE ANY QUESTIONS...AT THE END OF OUR BROADCAST…I’LL GIVE YOU TWO PLACES WHERE YOU CAN SEND ME AN E-‐MAIL AS MANY OF YOU KNOW…THE GOVERNOR RELEASED HIS BUDGET PROPOSAL ON JANUARY 10TH. THIS PROPOSAL COVERS THE REMAINDER OF FISCAL YEAR 2010-‐11 AND ALL OF FISCAL YEAR 2011-‐12. THERE ARE STILL A LOT OF UNKNOWNS ABOUT WHEN THE RUBBER HITS THE ROAD…AND HOW SPECIFIC PROPOSALS WILL ACTUALLY PLAY OUT. LOCAL 1000 IS WORKING HARD ON MANY FRONTS TO FIND OUT DETAILS AND TO COMMUNICATE WITH BROWN AND HIS ADMINISTRATION ABOUT THESE PROPOSALS. TODAY WE’LL GO OVER THE BASICS OF THE BUDGET…WHAT THE REVENUE AND SPENDING SITUATION IS AND THE MAJOR COMPONENTS OF BROWNS OF THE BUDGET. TO START…LETS LOOK AT THE ECONOMIC PICTURE IN CALIFORNIA. DURING THE GREAT RECESSION AND ITS AFTERMATH…CALIFORNIA LOST OVER A MILLION JOBS. UNEMPLOYMENT ROSE TO 12-‐POINT-‐SIX PERCENT AND WE KNOW THIS NUMBER IS MUCH HIGHER WHEN WE CONSIDER THE UNDEREMPLOYED…THOSE WHO CAN’T FIND FULL-‐TIME WORK. AND WE KNOW THIS NUMBER IS MUCH HIGHER WHEN YOU CONSIDER THE UNDEREMPLOYED…THOSE WHO CAN’T FIND FULL-‐TIME WORK…AND THOSE WHO’VE BECOME DISENGAGED FROM THE LABOR MARKET. A DECEPTIVELY STERILE TERM THAT ACTUALLY REFERS TO PEOPLE WHO’VE GIVEN UP EVEN LOOKING FOR A JOB. PERSONAL INCOME DROPPED FOR THE FIRST TIME SINCE 1938. MEANWHILE…GENERAL FUND REVENUES DROPPED 24 PERCENT FROM 2007-‐2008 TO 2009-‐2010. AND THE DEPARTMENT OF FINANCE DOESN’T EXPECT GENERAL FUND REVENUES TO RETURN TO THE LEVELS OF 2007-‐2008 UNTIL 2013-‐2014 WHEN WE’LL STILL HAVE BUDGET GAPS THEN BECAUSE EXPENDITURE LEVELS WILL HAVE INCREASED TO MEET THE NEEDS OF A GROWING POPULATION. NO DOUBT CALIFORNIA HAS A STRUCTURAL DEFICIT. YEAR AFTER YEAR THE STATE STRUGGLES TO RAISE ENOUGH REVENUES TO COVER ITS EXPENDITURES. THIS IS NOT DUE TO SPENDING SIMPLY SKYROCKETING OUT OF CONTROL. IT IS DUE MORE TO CHANGES THAT HAVE HAMSTRUNG THE BUDGET AND BUDGET PROCESS. ONE BIG CONTRIBUTOR WAS THE PASSAGE OF PROP 13 AND ITS RESTRICTIONS ON PROPERTY TAX LEVELS AS WELL AS ITS REQUIREMENT THAT RAISING TAXES TAKES A TWO-‐THIRDS
VOTE OF THE LEGISLATURE WHILE CUTTING THEM ONLY REQUIRES A SIMPLE MAJORITY. PROPOSITION 26…PASSED IN NOVEMBER…MADE THE SITUATION EVEN WORSE BY REQUIRING A TWO-‐THIRDS VOTE FOR MANY FEES AS WELL AS TAXES. ANOTHER FACTOR IS THE STATE INITIATIVE PROCESS…WHERE VOTERS CAN PLACES RESTRICTIONS AND REQUIREMENTS ON LARGE PORTIONS OF THE BUDGET…SOMETIMES WITHOUT SEEING THE LONG TERM EFFECTS. IN TOUGH FINANCIAL TIMES…THE STRUCTURAL DEFICIT IS ONLY EXACERBATED. BETWEEN NOW AND THE END OF FISCAL YEAR 2011-‐2012…THE STATE FACES A DEFICIT OF AT LEAST 25-‐POINT-‐FOUR BILLION DOLLARS. THIS NUMBER MAY ACTUALLY BE AS HIGH AS 28 BILLION DOLLARS AND THE LEGISLATIVE ANALYST’S OFFICE PREDICTS CALIFORNIA WILL FACE BUDGET GAPS OF AROUND 20 BILLION DOLLARS EACH YEAR FOR THE FOLLOWING FOUR YEARS. THE NEXT SLIDE SHOWS THE REVENUE PICTURE FOR 2011-‐2012. ABSENT ANY BUDGET OR POLICY CHANGES…PROJECTED REVENUES ARE 83.5 BILLION DOLLARS FOR THE NEXT FISCAL YEAR WHILE PROJECTED SPENDING IS EXPECTED TO TOTAL OVER 100 BILLION DOLLARS. THIS IS 17-‐POINT-‐2 BILLION DOLLARS SHORT. ADDING IN THE CARRY-‐OVER DEFICIT OF 8-‐POINT-‐2 BILLION DOLLARS FROM THIS CURRENT FISCAL YEAR…WE GET TO PROJECTED 25 –POINT-‐FOUR BILLION DOLLAR HOLE IN THE GENERAL FUND. FOR A LITTLE CONTEXT…COMPARE THIS WHOLE TO THE ENTIRE CIVIL SERVICE PAYROLL FOR THE STATE. ITS 14-‐POINT-‐8 BILLION DOLLARS WITH A LITTLE OVER HALF OF THAT COMING FROM THE GENERAL FUND. LOCAL 1000’S PAYROLL IS FOUR-‐POINT-‐SEVEN BILLION DOLLARS…AGAIN…WITH A LITTLE OVER HALF OF THAT COMING FROM THE GENERAL FUND. AND THE STATE’S CONTRIBUTIONS FROM THE GENERAL FUND TO CALPERS IS TWO-‐POINT-‐FOUR BILLION DOLLARS. YOU COULD LAY OFF EVERY CIVIL SERVANT…THOSE POSITIONS SUPPORTED BY THE GENERAL FUND AS WELL AS THOSE SUPPORTED BY SPECIAL AND FEDERAL FUNDS AND HALT GENERAL FUND CONTRIBUTIONS TO THE PENSION SYSTEM AND STILL NOT FILL THE BUDGET HOLE. WHAT’S MORE…WE KNOW THAT STATE WORKERS NOT ONLY PROVIDE VITAL PUBLIC SERVICES…BUT MANY STATE EMPLOYEES DO WORK THAT BRINGS IN MONEY TO THE STATE. SO HOW DOES BROWN PROPOSE WE CLOSE THE BUDGET GAP? BROWN PROPOSES WHAT HE CALLS A TOUGH BUDGET FOR TOUGH TIMES THAT IS BOTH BALANCED AND SUSTAINABLE. THAT IS…UNLIKE IS PREDECESSOR…HE COUNTS ON BOTH CUTS AND REVENUES TO BALANCE THE BUDGET. ALSO…HIS PROPOSALS AVOID MANY OF THE GIMMICKS AND ONE-‐TIME FIXES THAT SCHWARZENEGGER’S RELIED ON TO BALANCE HIS BUDGETS. BROWN’S BUDGET INCLUDES 12-‐POINT-‐ FIVE BILLION DOLLARS IN CUTS AND 12 BILLION DOLLARS IN REVENUE MEASURES. THE BULK OF THE CUTS WILL TAKE PLACE IN 2011-‐2012…WE’LL DISCUSS THESE SHORTLY. IT ALSO INVOLVES BORROWING A LITTLE UNDER TWO BILLION DOLLARS FROM SPECIAL FUNDS…SHIFTING A LITTLE UNDER TWO BILLION DOLLARS FROM PROPERTY TAX…AND BORROWING
ABOUT A BILLION DOLLARS EACH FROM PROP 10 AND PROP 63…WHICH ARE CHILDREN’S PROGRAMS AND MENTAL HEALTH SERVICES, RESPECTIVELY. BROWNS BUDGET ASSUMES THAT THE LEGISLATURE WILL ADOPT AND THE GOVERNOR WILL SIGN ALL NECESSARY MEASURES BUT NOT THE BUDGET BY MARCH. THIS IS SO A REVENUE PACKAGE CAN GO BEFORE THE VOTERS IN THE JUNE SPECIAL ELECTION AND THE BUDGET BE ADOPTED RIGHT AFTERWARDS. WE WILL DISCUSS THIS IN GREATER DETAIL SHORTLY. READYING THE BUDGET IN MARCH WILL ALSO ALLOW FOR EARLIER IMPLEMENTATION OF BUDGET MEASURES AND GREATER SAVINGS TO BE ACHIEVED BY THE END OF 2011-‐2012. BROWN’S BUDGET PROPOSES TO CUT ABOUT ONE-‐POINT-‐SEVEN BILLION DOLLARS FROM MEDICAL IN 2011-‐2012. THESE CUTS INCLUDE LIMITED DOCTORS VISITS AND PRESCRIPTIONS AND IMPOSING CO-‐ PAYMENT ON DOCTORS VISITS…EMERGENCY ROOM VISITS AND HOSPITAL STAYS. THE GOVERNOR ALSO PROPOSES TO CUT CALWORKS BY ALMOST ONE-‐POINT-‐FIVE BILLION DOLLARS IN 2011-‐2012. THESE PROPOSALS WOULD LIMIT FAMILIES TO FOUR YEARS OF CASH ASSISTANCE…DOWN FROM THE CURRENT FIVE YEARS…AND WOULD CUT GRANTS BY 13 PERCENT AND CONTINUE TO REDUCE FUNDING FOR CHILD CARE AND EMPLOYMENT ASSISTANCE. IT IS ESTIMATED THAT THESE CUTS WOULD REDUCE THE NUMBER OF FAMILIES USING CALWORKS BY 21 PERCENT. ONE BILLION DOLLARS IS PROPOSED TO BE CUTS FROM THE CSU AND UC SYSTEMS. $500 MILLION EACH IN2011-‐2012. $750 MILLION IS PROPOSED TO BE CUT FROM THE DEPARTMENT OF DEVELOPMENTAL SERVICES IN 2011-‐2012. BROWN’S BUDGET MAINTAINS PROP 98 EDUCATION FUNDING AT THE SAME LEVEL IN 2011-‐2012 THAT IT CURRENTLY IS IN 2010-‐2011. HOWEVER, IF THE TAX MEASURES PUT ON THE JUNE BALLOT DON’T PASS…WE CAN EXPECT DEEP CUTS TO K-‐12 EDUCATION. THE GOVERNOR ALSO PROPOSES $380 MILLION IN GENERAL FUND SAVINGS FROM EMPLOYEE COMPENSATION. THIS INCLUDES $72 MILLION FOR THE CARRYOVER OF THE PERSONAL LEAVE PROGRAM FOR FOUR MONTHS FOR 2011-‐2012. THESE ARE NOT NEW CUTS TO LOCAL 1000 EMPLOYEES…THE GOVERNOR IS SIMPLY SCORING SAVINGS IN THE NEXT FISCAL YEAR FOR WHAT WE AGREED TO IN OUR CONTRACT BECAUSE THE 12 DAYS OF PLP CAN BE EXTENDED INTO 2011-‐2012. BROWN SCORES AN ADDITIONAL $308 MILLION FOR THE SIX BARGAINING UNITS THAT ARE STILL WITHOUT CONTRACTS. THE SAVINGS ESTIMATE ASSUMES A TEN PERCENT CUT TO THE PAY OF THESE WORKERS. BROWN ALSO PROPOSES A CORE HEALTHCARE PLAN TO PROVIDE LOWER-‐LEVEL COVERAGE AT A LOWER COST. LOCAL 1000 IS INVESTIGATING THIS PROPOSAL. WE ARE ALSO CLOSELY FOLLOWING THE BUILDING SALES. ADDITIONALLY…THE UNION IS WORKING DILIGENTLY TO FIND OUT DETAILS OF CUTS TO ANY SPECIFIC DEPARTMENTS AND UNION LEADERSHIP IS IN COMMUNICATION WITH BROWN AND HIS ADMINISTRATION. WE WILL CONTINUE TO UPDATE YOU AS WE LEARN MORE.
ONE AREA LOCAL 1000 IS LOOKING SERIOUSLY INTO IS BROWNS PROPOSAL FOR REALIGNMENT. ULTIMATELY THIS WILL RESTRUCTURE WHERE MORE THAN $10 BILLION IN A NUMBER OF SERVICES WILL BE DELIVERED. THIS WILL BE PHASED IN A NUMBER OF YEARS BUT WILL START IMMEDIATELY. THE FIRST PHASE INVOLVES TRANSFERRING ALMOST SIX BILLION DOLLARS OF PROGRAMS FROM THE STATE TO THE LOCAL LEVEL IN 2011-‐2012 AND DEALS MAINLY WITH PUBLIC SAFETY. IT IS PROPOSED THAT THIS BE FUNDED THROUGH EXTENDING THE ONE PERCENT SALES TAX INCREASE AND HALF PERCENT VEHICLE LICENSE FEE INCREASE THAT ARE CURRENTLY DUE TO EXPIRE IN 2011. SO THIS IS PART OF THE PROPOSED JUNE 2011 SPECIAL ELECTION TAX PACKAGE TO BE PUT BEFORE VOTERS. WE’LL DISCUSS THIS MOMENTARILY. PHASE ONE INVOLVES TRANSFERRING RESPONSIBILITIES AND SERVICES FOR LOW-‐LEVEL OFFENDERS AND PAROLEES TO THE LOCAL LEVEL. IT ALSO INVOLVES ENDING THE STATE’S ROLE IN HOUSING AND TREATING YOUTHFUL OFFENDERS BY TRANSFERRING REMAINING JUVENILE JUSTICE PROGRAMS TO THE COUNTY LEVEL AND ELIMINATING THE DEPARTMENT OF JUVENILE JUSTICE. THERE ARE OTHER AREAS INVOLVED AND WE’RE STILL LOOKING INTO A LOT OF THIS. LOCAL 1000 WILL OF COURSE FIGHT TO MITIGATE ANY LAYOFFS OF LOCAL 1000 EMPLOYEES THAT MAY RESULT AS A CONSEQUENCE OF ANY OF THESE PROPOSALS. BROWN’S BUDGET INCLUDES OTHER PROPOSALS FOR REDUCING SPENDING AND PROMOTING EFFICIENCY. THESE INCLUDE REORGANIZATION…WHICH WE ARE ALSO CLOSELY FOLLOWING. THE GOVERNOR IS ALREADY ELIMINATING CERTAIN AREAS LIKE THE OFFICE OF THE SECRETARY OF EDUCATION AND CUTTING THE GOVERNOR’S OFFICE BUDGET BY 25 PERCENT. WHAT’S MORE THE BUDGET ALSO INCLUDED…DUE TO THE HARD WORK OF LOCAL 1000 LEGISLATIVE DEPARTMENT…A MENTION THAT REDUCING CONTRACTING OUT IS ANOTHER WAY TO SEEK EFFICIENCIES IN STATE GOVERNMENT AND SAVE MONEY. PAGE 175 OF THE GOVERNOR’S BUDGET SUMMARY STATE’S THAT “THE GOVERNOR’S BUDGET INCLUDES $200 IN SAVINGS ASSOCIATED WITH IDENTIFICATION OF EFFICIENCIES IN STATE OPERATIONS. FOR EXAMPLE…AND ONE OF THE OPTIONS NOW LISTED IN THE BUDGET IS…REDUCTIONS IN OTHER AREAS LIKE CONTRACTING.” WE’RE WORKING WITH THE LEGISLATURE TO IDENTIFY CONTRACTS THAT THEY COULD START WITH IN ORDER TO CUT HUNDREDS OF MILLIONS OF DOLLARS IN PRIVATE VENDOR CONTRACTS FROM THE BUDGET. IN ORDER FOR BROWN’S BALANCED BUDGET APPROACH TO WORK…ITS REALLY BANKING ON THE PASSAGE OF CONTINUED TAX INCREASES FOR THE NEXT FIVE YEARS. THIS PROPOSAL WOULD BE TAKEN BEFORE VOTERS IN JUNE AND INCLUDES CONTINUING THE TEMPORARY TAX INCREASES ADOPTED IN 2009. THAT IS TO SAY…YOUR CURRENT TAX RATES WOULD NOT GO UP. INSTEAD…THEY WOULD STAY THE SAME FOR THE NEXT FIVE FISCAL YEARS AND THEN DECREASE. THEY INCLUDE THE ALREADY IN PLACE QUARTER PERCENT INCREASE ON ALL PERSONAL INCOME TAX BRACKETS. THAT’S ONE-‐QUARTER OF
ONE PERCENT. KEEPING THE DEPENDENT EXEMPTION CREDIT THE SAME AS THE PERSONAL EXEMPTION CREDIT…KEEPING THE VEHICLE LICENSE FEE ONE-‐HALF OF ONE PERCENT HIGHER…SO AT ONE-‐POINT-‐ ONE FIVE PERCENT TOTAL…AND KEEPING THE STATE’S SALES AND USE TAX ONE PERCENT HIGHER AT SIX PERCENT. AS STATED EARLIER…THE LAST TWO CONTINUED TAX INCREASES…THE VLF AND SALES TAX…WOULDN’T GO DIRECTLY TO THE GENERAL FUND. THEY WOULD SUPPORT REALIGNMENT AND THUS RELIEVING THE GENERAL FUND. ONE CANNOT STATE STRONGLY ENOUGH HOW CRUCIAL THE PASSAGE OF THIS TAX PACKAGE IS. SHOULD IT NOT PASS…THE GOVERNOR AND LEGISLATURE WILL BE LOOKING TO CUT ANOTHER TEN BILLION DOLLARS OR MORE FROM ALREADY STRAINED AREAS OF STATE GOVERNMENT. AS GOVERNOR BROWN STATED WHEN HE RELEASED HIS BUDGET PROPOSAL…SHOULD THE TAX EXTENSIONS NOT PASS…WE CAN EXPECT DOUBLE THE CUTS CURRENTLY PROPOSED. BROWN’S BUDGET ALSO INCLUDES SOME OTHER POSITIVE REVENUE MEASURES SUCH AS THE ELIMINATION OF ENTERPRISE ZONES AND REDEVELOPMENT FUNDS. THESE ARE GREAT STEPS IN THE RIGHT DIRECTION, WHICH DISALLOW ONGOING TAX BENEFITS TO CORPORATIONS AND BUSINESSES THAT HAVEN’T PROVEN TO REAP THE PUBLIC BENEFITS THEY WERE SUPPOSED TO. THE GOVERNOR’S BUDGET PROPOSAL ALSO INCLUDES THE INSTITUTION OF THE TAX SHELTER AMNESTY FOR CERTAIN PERSONAL INCOME AND CORPORATE INCOME TAXPAYERS. TAX AMNESTIES HAVE PROVEN TO HELP CLOSE THE STATE’S TAX GAP PREVIOUSLY AND THIS PROGRAM WILL PROBABLY DO LIKEWISE. SO THAT’S THE BASICS OF THE GOVERNOR’S BUDGET PROPOSAL AND AS I’VE STATED…LOCAL 1000 IS WORKING HARD TO FIND OUT A NUMBER OF THE DETAILS. IF YOU HAVE ANY QUESTIONS…FEEL FREE TO REACH ME AT E-‐MAIL AT D-‐HUNT-‐AT-‐SEIU-‐1000-‐DOT-‐ ORG…OR YOU CAN SEND YOUR QUESTIONS TO CHANNEL-‐1000-‐AT-‐SEIU-‐1000-‐DOT ORG. THANKS FOR WATCHING CHANNEL 1000’S FOCUS ON THE FACTS