An 'Enormous Crisis'
That's what state and local budget cuts are creating for public employees across the country. In concert with a four-point strategy, AFSCME councils and locals have swung into action — holding rallies, protesting to public officials, building coalitions to meet the problem head on.
By the Public Employee Staff
We have rallied at the statehouse in Olympia, Wash., picketed outside prisons in Illinois, sent postcard messages to lawmakers in Wisconsin and made ourselves heard in Congress. All across the country, AFSCME members are spreading a vital message: Don't balance budgets on the backs of the dedicated employees who carry out its essential functions.
But instead of just crying, "Don't!," AFSCME has developed reasonable and workable alternatives to the slash-and-burn policies advanced by some government officials — our employers. In February, more than 100 AFSCME leaders came to Washington, D.C., for a budget crisis strategies conference. Their goal: to strategize winning solutions to the budget problems of the states and cities; and learn the details of our plan and how to implement it back home.
Pres. Gerald W. McEntee told the leaders that it's up to AFSCME members — together with other unions and coalitions with our supporters — "to show these officials that there are smarter and fairer ways to close budget gaps." He then outlined AFSCME's four-step plan for federal, state and local governments: suspend tax cuts; tap state and local budget reserves — "rainy day" funds; reduce health care costs, a major portion of state budgets; provide more federal aid to states.
Wrong choices
Unfortunately, the president noted, some lawmakers have taken steps that will make matters worse. For instance, the so-called stimulus plan, passed by the U.S. House of Representatives last year, "makes the wrong choices" because it "includes permanent repeal of the corporate minimum tax, costing average taxpayers more than $25 billion." The Senate did not act on that plan, and Congress has yet to pass a stimulus bill that will help those who need it most: America's working families. Homeland security, he added, is about more than making the nation terrorist-proof. It's also "about Americans having jobs, money for food and shelter, funds for medication and retirement savings. It's about protecting workers from layoffs, unemployment, wage freezes, furloughs and higher health costs."
Sec.-Treas. William Lucy told the audience: "It took Congress about 10 days to bail out the airlines after Sept. 11 — $15 billion in loans and loan guarantees but not a single dime for workers," he said. "Not one job has been saved. Not one job has been created as a result of this bailout" — although the U.S. economy lost 2 million jobs between January 2001 and January 2002.
New York State Comptroller H. Carl McCall described the consequences of severe budget cuts in clear, everyday terms: Such cuts "increase the level of decay and dissatisfaction in our communities, and that leads to flight from those areas and a downward economic and social spiral. Every nurse who's laid off means diminished care for patients. Every corrections officer who's fired means one less opportunity for a person in need." McCall called on the federal government to provide a one-time, $100 billion grant to help state and local governments balance their budgets.
Investing in growth
Another speaker, investment banker Felix Rohatyn, who designed the New York City bailout in the late 1970s, called for a "coalition of cities and states to develop an infrastructure investment and a revenue-sharing initiative." He said that pouring $250 billion over five years into roads, schools and other projects "would improve confidence, improve education and national productivity, and create 7-8 million new jobs."
AFSCME's leaders and activists convened a series of policy workshops: bargaining in times of adversity, facility closures, fiscal strategies and health care costs. Then, armed with fresh ideas and a powerful conviction, they headed for House of Representatives offices to deliver their message.
Details of the four-point strategy:
1. Provide additional federal support
In a national crisis, our elected national leaders simply must respond with action. In this case, that means giving deserved financial support to state and local governments whose budgets have been battered by reduced revenues. At this writing, the states alone face a cumulative $50-billion deficit. It also means providing support to workers and their families who may be affected — or already are — by the resulting budget cuts.
AFSCME has been leading the fight for increased federal aid to states and localities. Other thoughtful ideas that have been advanced — for example, federal guarantees for state and local debt — also deserve the union's support. The bill that shows greatest promise at present: H.R. 3414, which increases by $10 billion the Medicaid matching funds that Washington sends to the states.
We and our allies made sure that the best of the economic-stimulus bills, the one sponsored by Senators Tom Daschle (D-S.D.) and Max Baucus (R-Mont.), includes a major increase in Medicaid funds. The bill received 56 votes. That fell four short of the 60 required to end a right-wing filibuster, but we are continuing to press for an increase in Medicaid funding.
In addition, AFSCME has spoken out strongly for increased federal aid to bolster homeland security. Without federal support, states incurring massive new security obligations will be forced to cut other programs to pay for them. And whenever that happens, public employees' jobs are threatened.
Beyond those concerns, we are giving Congress and the administration a loud, clear message about the 2003 federal budget: Don't make things worse by cutting, even eliminating, key programs for working families.
2. Suspend tax cuts
The "boom" years of the late 1990s allowed states to reduce taxes, increase per-capita spending by 25 percent and save money for a "rainy day." According to the National Governors Association, however, state budget deficits of $50 billion and climbing now exceed the state tax cuts of the last seven years. State governments around the country are now revisiting earlier cuts to plug budget holes.
In Maryland, for instance, Gov. Parris Glendening has proposed postponing the final 2 percent phase-in of an already-enacted 10 percent cut in personal income taxes over five years. Florida and Connecticut are reconsidering their planned tax cuts.
And at the federal level, President Bush's 10-year federal tax-cut package is so massive that it precludes job security at the state and local levels. Although public-sector workers may not like to admit it, tax revenues fund their salaries and benefits, not to mention the services and programs the taxes underwrite.
Local government workers are also dependent on these same resources. So, realistically, in an economy beset by budget crises, public employees can't expect to have their tax cuts, keep their jobs and take their job security for granted.
Less gain, more pain
Further, last year's federal cuts did relatively little for working people. Some individual taxpayers received one-time rebates of several hundred dollars; the wealthiest 1 percent and corporations got by far the biggest breaks, with others still to come. That leaves only the wealthiest Americans with a significant stake in the continued phase-in of the tax cuts in succeeding years. Working families face less gain but lots of pain from 2001 onward.
The massive federal tax cut will put additional pressure on state budgets that are already being squeezed. It is highly doubtful, therefore, that excessive tax cuts and secure public-sector jobs can co-exist, and proposals to stop — or at least postpone — further cuts have to be put on the table.
According to the Economic Policy Institute, suspending the Bush tax cut and postponing other tax measures designed to benefit the wealthy would save $350 billion. In addition, EPI says, new federal cuts for businesses and the wealthy should not be enacted now. Instead, states should separate their own income and inheritance taxes from federal taxes.
3. Reduce health care costs
Many states are forced to absorb massive increases in health care expenses because of the rising costs of prescription drugs for employee group insurance, Medicaid and other programs. To limit the increases, some states are pooling their clout by negotiating together for lower prices from the drug manufacturers. In others, legislation is pending to force large pharmaceutical companies to lower their prices.
States trying to balance their budgets could face severe consequences if Congress enacts the Bush administration's budget plan for fiscal 2003. Under the proposal, state governments would themselves have to cope with extra losses in revenues caused by additional business tax cuts and a $9 billion decrease in Medicaid reimbursements from the federal government.
4. Tap state and local budget reserves
Instead of withdrawing public services, AFSCME recommends that states tap into rainy day funds — money socked away by states and sometimes municipalities during robust economic times, for use when revenues shrink.
The Center on Budget and Policy Priorities notes that many states set aside funds during the economic expansion of the 1990s. This money was "to be the first line of defense against the pressures that declining revenues and rising need for public services in a recession might place on state budgets."
Such states as California, New York, Massachusetts, Ohio, Washington, Minnesota and Kentucky have proposed using — or are already using — the reserve funds. Gov. Bob Taft of Ohio put together budget cuts, new revenues and transfers from the state's rainy day and tobacco-settlement funds to help shrink the $1.5 billion hole in his state's two-year budget.
Other states hopefully will take similar steps. But some seem reluctant to spend the money. In Florida, the center says, policy makers convened a special session last December to balance the budget. They enacted $1 billion in budget cuts without "drawing down" any of the state's $941 million rainy-day fund.
Actions under way in four major AFSCME states:
Washington
The skies are dark over Washington's state capital. The home of the high tech industry is suffering financially as dot.com stocks fall and the companies themselves struggle to remain afloat. Washington's largest private-sector employer, Boeing, is laying off workers left and right. Mix in the drop in tourism and increased responsibilities to provide security and fight bioterrorism, and you have a state that's facing a budget shortfall of up to $1.6 billion.
Officials looking for quick fixes turned first to funding for state workers and programs that support Washington's most vulnerable citizens. Gov. Gary Locke (D) proposed cutting hundreds of state jobs, slashing dozens of programs and aid to local governments. He also recommended increasing health insurance costs and delaying or eliminating cost-of-living increases.
"They're doing cutbacks like nothing I've ever seen in 35 years," says Local 843 (Council 28) member Mark Weinstein. "But there are all those corporate tax breaks. It's scapegoating. It's cowardly. Wave the flag and pull the trigger."
Last year's struggle for fair wages and to secure health insurance benefits produced a victorious statewide strike. It also created an activist infrastructure, and the council decided to use it.
Save our state
Early this year, rank-and-file district coordinators from across the state met to plan their multi-faceted strategy. The council commissioned a study outlining options the state could use to lower spending and increase income, and coordinators now organized activities around its findings. Worksite leaders were recruited to plan local actions. Coalitions formed for the 2001 battle were reinvigorated.
Meanwhile, Council 28's weekly TV show, aired on public access stations, focused on issues affecting state workers. The council also bought radio time on 23 stations to play spots advocating for sensible solutions to the budget crunch.
But the union's most useful communications system is its Hotline, which uses computer e-mail and the telephone to get current information to members. During 2002's short legislative session, new messages went out frequently to encourage action: calls to legislators, attending Town Hall meetings, e-mails and letters to the governor, and participation in the S.O.S. (Save Our State) rally/lobby day.
District coordinators met regularly with jobsite leaders to discuss issues, answer questions and encourage actions. In some cases, the union furnished cell phones so members could call their senators and representatives.
State workers in Washington cannot negotiate for wages and benefits, and they must win most other improvements through collective lobbying efforts — one bill at a time.
As Council 28 members were mobilizing to protect their livelihood, history was made when the statehouse passed a collective bargaining bill. Governor Locke had pledged his support, and at press time, state workers were awaiting senate action.
Illinois
A battle royal is being waged here. Gov. George Ryan (R) is swinging a budget ax: on Feb. 20, he announced a $52.8-billion budget plan that eliminated the jobs of 3,800 state employees. Some 45,000 state workers represented by Council 31 are resisting.
"Our members are ready to stand up and fight," Henry Bayer, executive director of the council and an International vice president, declared at our budget conference. And responding to Ryan's plan to privatize prison commissary and dietary services — part of a slate of budget cuts announced last November — more than 200 corrections employees picketed a public meeting of contractors who hoped to provide those services.
The picketers, chanting "Vendors, go home!," were denied entry to the meeting, but worked their way in. Two weeks later, more than 1,000 corrections employees and other AFSCME activists converged on the state capital. That same afternoon, the House of Representatives unanimously adopted a resolution opposing the privatization plan. Says Bayer, "I don't think that resolution would have passed 113-0 if we didn't have 1,000 people out there that day demonstrating against it."
Into court
Council 31 has taken its fight into the legal arena. On Feb. 13, acting on a council lawsuit, a circuit court judge issued an order temporarily blocking Ryan's privatization plan. Earlier, when Ryan ordered the closure of the Chicago-based Illinois Center for Rehabilitation and Education, which employs nearly 70 people represented by Council 31, the union sued; it also helped build a broad-based coalition opposing the move, and on Jan. 28, Ryan reversed his decision.
Now the governor is pushing the council to reopen its contract and accept a temporary wage freeze — while proposing a budget that includes an unacceptable 3.8 percent cost-of-living boost for himself, his cabinet and state legislators.
Better ideas
Not content with picket signs and lawsuits, Council 31 has developed a list of alternatives to his severe budget cuts. The suggestions mirror AFSCME's strategy for easing the state budget crises in general, with at least one distinct feature: increase taxes on riverboat casino profits.
"If we wait for politicians to come forward with an alternative to cuts, we'll be waiting and waiting," says Bayer. "We have to have our own program, and there are plenty of politically palatable ways out there to raise revenue."
New York
Gov. George Pataki has proposed a budget that relies heavily on cutbacks instead of additional revenues. He has also rejected the idea of delaying tax cuts — a number of which are scheduled to take effect this year.
In addition, the governor's budget would withhold state aid that normally goes to municipalities and localities. "That could cause a ripple effect on the local level where the majority of our members actually work," says International Vice Pres. Danny Donohue, who is president of the Civil Service Employees Association (CSEA)/AFSCME Local 1000. "We'll probably be fighting a thousand different budget fights as a result of state funding formulas."
In New York City, Mayor Michael Bloomberg's preliminary budget for FY 2003 projects a deficit of $4.7 billion. In response, he has proposed cuts up to 26 percent in almost all city agencies. DC 37 Exec. Director Lillian Roberts counters that the size and scope of the reductions are "too large for the citizens of the City of New York to absorb." Yes, she says, the city's budget must be balanced — "but in ways that do not jeopardize the delivery of essential city services or the jobs and livelihoods of the workers."
Josephine LeBeau, Council 1707's executive director and an International vice president, worries that the budget crunch will bring layoffs and program closures in social services, including foster care. "Our members work in a private, non-profit sector that relies on city and state grants," she notes. "One of our programs, an alcohol treatment facility in Albany, has not received funding."
Balancing Buffalo?
Buffalo has relied on state aid to balance its budget and counted on getting 10 percent of the total from that source. The result is a huge hole — a $7 million gap this year and a shortfall three times that large next year.
Mayor Anthony M. Masiello has talked openly about contracting out the city's recycling, sanitation and snow-removal programs — targeting many AFSCME members. A mayoral task force has further proposed no wage increases, delayed payrolls, furlough days, changes in health care benefits and consolidation of services.
"The mayor could unilaterally make all those changes," says Mike Huffert, president of Local 650 (Council 35). "In that case, we'll fight him in the courts."
Cooperative moves
CSEA and AFSCME locals from Councils 66 and 35 are now engaged in a cooperative effort to try to develop alternatives to city-county consolidation. And in Nassau County, CSEA is working with several community groups in a grass-roots campaign. Their goal: levy a local tax on high incomes to solve the county's fiscal crisis. At a recent rally in Garden City, members of the Campaign for a Fair Tax Plan said that enough money would be raised to close the county's $428 million deficit without drastic layoffs and service cuts.
Ohio
Union activists are challenging state and city officials to find alternatives to job losses. When Columbus Mayor Michael Coleman threatened to lay off 200 employees after Sept. 11, Council 8 members mobilized and forced his administration to reconsider.
The result: city "bean counters" squeezed out nearly $6 million more than anticipated for the 2002 budget, and losses were avoided. "We put a real face on the layoff by filling the [city] council chambers with our members and their families," says Cynthia Johnson, Local 1632 (Council 8). "And this was not a one-time thing. Our members packed every budget hearing. We wanted them to see the people they were going to put out of work."
State officials are attempting to use privatization to replace union workers, but members from the Ohio Civil Service Employees Association (OCSEA)/ AFSCME Local 11, aren't knuckling under. On Feb. 20, hundreds of them — joined by members of other Buckeye State unions — rallied at the state house to protest budget cuts proposed by the Taft administrators.
Union activists object particularly to plans to shut down Orient Correctional Institute. The move could cost 450 employees their jobs. OCSEA instead wants Reginald Wilkinson, director of the Ohio Department of Rehabilitation and Correction, to close two private prisons that have been plagued by cost overruns and high staff turnover.
OCSEA members have rung up a money-saving victory against privatization at the Ohio Department of Job and Family Services. In February, agency heads announced plans to replace private contractors with state employees, which should save $39 million over two years.
The department operates computer systems for Medicaid, child support, unemployment and welfare compensation. State workers earn an average of $42 an hour, including benefits. Contractors have been billing the state at an average cost of $105 per hour. Department Director Tom Hayes told the Associated Press: "It just seemed to me that there were too many people and that we were spiraling our way down a dark hole. We were getting more and more dependent on contractors."
