Wednesday, July 30, 2008

How NOT to cut costs

For those who may have missed this story, California has been hit by a stunning combination of forest fires and the failing housing market. In response, Governor Schwarzenegger signed an executive order to slashing the pay for more than 200,000 state employees to the federal minimum wage of $6.55. The order is said to be needed because of the state's $15.2 billion budget deficit for the fiscal year that started July 1st. California minimum wage is $8.00, $1.45 higher than the federal minimum wage. How this measure is going to help the situation in California remains unclear. The forest fires and housing market have combined to cause thousands of Californians to lose their homes. By reducing the salaries of some 200,000 state employees to $6.55 an hour, it can only add already dire housing situation in California. The mental stress and anguish of this move causes me to wonder how the safety and well-being of the state of California may now be compromised. Slashing salaries may look interesting on paper but in reality thousands of people have come to rely on a regular paycheck to support their families. Jeopardizing those employees’ livelihoods at such a critical time simply goes beyond any rational explanation. These employees include those responsible for maintaining the infrastructure of California including police officer, public works officials, and transportation specialists. I know California does things differently but even by their standards, if enacted this decision is extremely troubling.

Unfortunately bad decisions tend to multiply and spread. Revenues from the federal gas tax are down since fewer people are driving this summer. Funds to support repairs to roads and highways are lower than expected. In Ohio, the problem is compounded by diminishing state tax revenues as more employers leave increasing the jobless rate. Fewer employed Buckeyes means fewer tax revenues for the state of Ohio. In Cincinnati, city and county officials just levied a 6 percent cut to the budget. The local sheriff created a stir when he removed deputies from running metal detectors in the courthouse. Other agencies responded by providing the funds to continue operations of the metal detectors in the courthouse. With reduced federal funds, demands for state and local dollars will only increase. More services will be reduced or even eliminated but as measures are taken to stretch austere budgets need to be balanced by the need to maintain safety and security of our communities


richmck said...

Why not start on cutting the deficit by cutting waste first?

Correcting the broken parole revocation process would save about $.5 to $.6 billion annually. Our very high rates are the direct result of the county jail bed shortage. Previously, technical parole violators were held in jail while the parole agent developed a local program, such as placement in drug treatment and changes in parole conditions. The jail bed shortage required immediate transfer of technical parole violators from jail to prison. Once in prison, there is almost no chance a technical violator will be released without serving a revocation term.

The State could simply release Requests for Proposals for correctional beds to hold technical parole violators. Only about 4% of the California prison population is held in contract facilities compared to 9% in Texas. In addition to saving a lot of money, the state could avoid spending any of the $6.5 billion in AB 900 funds for construction of more prison beds.

Of course, in order to realize such saving, both the Governor and the Legislature would have to be willing to displease the correctional employee unions, some thing they are very reluctant to do!

Bob Baylor said...

Good point! The logic behind the governor's plan still escapes on another level. If he plans on digging out of the deficit by slashing salaries, it will only prolong the inevitable. I believe I read that employees will receive back-pay once the deficit is solved. If correct, then they will have only slid the problem to the right for a few months. Compound that huge back-pay bill with other demands for those dollars (such as infrastructure repairs) and the economic picture for California becomes very bleak.

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