Thursday, May 27, 2010

A Smarter Budget, Especially on Jobs

Our enduring recession demands that California’s leaders offer new and innovative ideas to close our budget gap. And, priority number one is to reduce our 12.6% unemployment rate.

This is precisely why the Assembly Democrats’ budget proposal succeeds where the governor’s fails. The governor’s May Revise is a job killer. It will undermine California’s economic recovery with cuts that sacrifice 430,000 jobs in the private sector, local government, and local schools, increasing California’s unemployment rate to 15%.

The Assembly Democrats propose a $10.1 billion Jobs and Economic Stability Fund. We pay for the fund by borrowing from the state’s recycling program and paying it back through a new oil severance fee. In addition we would borrow $500 million from the Disability Insurance Fund. Our plan invests in education and job creation, and protects the safety net for families struggling in the grip of this recession. Our plan either saves or creates 465,000 jobs. Highlights of our proposal include:
Local Schools - $3.8 billion repayment of funds borrowed in prior budget years. This will protect tens of thousands of jobs for teachers, aides, and counselors by fully funding Proposition 98 and eliminating portions of the “Education Credit Card.” That’s $750 more per student than the governor’s proposal.
UC/CSU - $1 billion to restore recent education cuts and fully fund the UC and CSU. We would reduce the Governor’s student fee hike by 50 %, saving UC students $628 and CSU students $202.
Targeted Jobs Investment - $1.1 billion to strengthen California industries, including green and clean tech industries.
Community Colleges - $1.4 billion in critical employment services to move people from welfare to work and to retrain workers at Community Colleges.
Child Care - $1.9 billion to maintain childcare programs funded through CalWORKS and Proposition 98 in order to ensure that working parents can stay employed, over 50,000 small business childcare providers can stay in business, and businesses will not lose employees for lack of child care.
Local Government - $900 million repayment in funds owed to local governments for past mandates, which will protect thousands of local police, fire and other jobs.
Revenues – No one in California will pay more in taxes except oil companies. The personal income tax and sales tax increases that were adopted in February of 2009 will expire. The Vehicle License Fee would remain at 1.15%. The corporate tax cuts adopted last year would be delayed for 3 years in order to save over $2 billion to help offset cuts to programs benefiting working families and businesses.

As has been reported on this blog, the governor’s proposed evisceration of the safety net will have a body count. A recent report from the U.C. Center for Labor Research and Education shows how his cuts to the safety net will also kill California’s prospects for economic growth. For example, $1 billion in cuts to the in-home supportive services program costs 215,000 full-time jobs. It also costs us nearly $2.5 billion in matching federal funds and $5.16 billion worth of economic activity. $1 billion in cuts to Medi-Cal costs 35,900 jobs. It also costs us $1.6 billion in federal funds and $5.59billion worth of economic activity

In contrast, establishing an oil severance tax worth $1 billion per year in revenue will not lose federal funds and will have $1.7 billion in economic impacts. While the new oil severance tax may cost potentially 300 local jobs, this loss will be more than offset by the 465,000 jobs that our proposal protects and creates overall. That is a ratio of 1,500 jobs saved or created for 1 job lost.

Californians are crying out for help. This proposal is an innovative approach that will keep Californians working and provide long-term economic relief. We can do this without increasing the tax burden on anyone except oil companies. The question is: will the Governor and our Republican colleagues protect oil companies like Chevon, Exxon, and BP at the expense of California’s seniors, disabled, children, and jobless?