Assembly Democrats Put Up a Budget Worth Fighting For

Posted on 27 May 2010

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By Angie Wei
California Labor Federation

Finally, there’s a budget proposal worth fighting for, and it couldn’t have come at a more critical time.

On Tuesday, Assembly Democrats, led by new Speaker of the Assembly John Pérez, proposed an innovative budget plan that closes the nearly $18 billion budget gap while focusing on jobs, as an alternative to Gov. Schwarzenegger’s job killing, all-cuts budget.

This proposal takes the economic high road by saving hundreds of thousands of jobs for teachers, police, firefighters and other workers, and creating jobs in the private sector that will spur economic growth and new revenues for the state without raising taxes on working families.

Speaker Pérez:

California has to produce a budget that promotes job creation and makes economic sense. We shouldn’t make budget decisions that cut jobs and short-change our overall recovery and long-term growth. The California Jobs Budget will protect and create 465,000 jobs in the private sector and local communities, while also protecting funding for schools, public safety, and a basic safety net.

The proposal would ease California through the worst budget deficit of a generation. It protects working families from devastating cuts in service like home care and child care, and saves jobs for teachers, police, firefighters and others who provide vital services at the state and local levels. It proposes only half of the Governor’s fee increase for UC and CSU students, and rejects his proposed $4.3 billion cut in education.  

This package would mitigate deep budget cuts by choosing working families over Big Oil and large multinational corporations. A new oil severance fee will help fund a private sector job creation program. And delaying unnecessary corporate tax breaks will save $2 billion that can be invested in job creation, child care, health care, and job services for the working poor.

The Speaker’s office detailed the proposal in a release yesterday:

The California Jobs Budget closes the state’s $17.9 billion General Fund shortfall and ends the year with a $1 billion final reserve. The centerpiece of the California Jobs Budget is a $10.1 billion Jobs and Economic Stability Fund that will protect against the loss of 430,000 private sector, local community and school jobs in the Governor’s May Budget Revision, and which will also generate tens of thousands of new jobs.  The California Jobs Budget provides $1.5 billion for targeted Jobs Initiatives, repays debts to local governments and schools to avoid massive local government layoffs, and maintains critical employment services and training programs that get people back to work and keep them on payrolls and off government aid.

Predictably, Republicans and the Governor are already attacking the proposal in an effort to try to score some cheap political points as they enter negotiations.

Assembly Budget Chair Bob Blumenfield (D- San Fernando Valley) responded to those attacks yesterday:

The California Jobs Budget protects the private sector job growth we’ve begun to see and it prevents massive layoffs of teachers and cops.  Assembly Republican Leader Martin Garrick is saying he’d rather kill 430,000 jobs in a time of record unemployment than have California join other states in charging oil companies a fee for the oil they take, a fee that experts agree won’t impact consumers.  The irresponsible rejection of jobs and federal funds Mr. Garrick’s position represents is not what Californians want – and it’s not what California’s economic recovery needs.

By unleashing their attack machine without even considering the merits of this proposal and its potential benefits to our economy and middle class, Republicans have once again shown they aren’t interested in meaningful solutions to the budget crisis that will actually get our economy back on track. Instead, the Governor and his Republican allies continue their scorched earth campaign that would eviscerate the state as we know it. We simply can’t let them win. Not this time.

As progressives and advocates for working families, this is the proposal we’ve been waiting for. And this is precisely the kind of proposal the people of California want. Recent polls show that Californians are seeking a fair budget solution that won’t destroy what we value most: education, public safety, our safety net and other important programs. The Assembly Democrats have stepped up to offer a budget that delivers.

This proposal is a bold and creative step forward that, frankly, we haven’t seen in prior budget fights. But it can’t pass on its own. We need to fight for it. It’s time for everyone who cares about our state’s future to rally around this proposal so that we can achieve where the Governor has repeatedly failed: delivering a budget that protects jobs, education the safety net and finally puts California on the road to economic recovery.

Angie Wei is the Legislative Director of the California Labor Federation, AFL-CIO, which represents 2.1 million members of 1,200 manufacturing, service, construction, and public sector unions.

since they merely delete the comments rather than answering them

Borrowing ANOTHER 9 Billion dollars through general obligation bonds will NOT get us out of this mess, it'll only make it worse.

We are currently paying 6% of our entire budget for debt service, and it's the fastest growing part of our budget, and no matter what we do it's going to continue to increase. The reasons for that are several.

Despite the state constitution prohibitions against running a deficit, we avoided budget shortfalls in many previous years by selling general obligation bonds for no specific project other than filling budget shortfalls. Back then we could sell G.O. bonds at a tax free 3% and promise to pay them off out of future tax revenues and people would buy them. We have many billions of dollars of these bonds that will come due over the next decade and we do not have the revenue to pay them off. We will need to sell NEW bonds to pay off the principal of the old bonds.

The problem is that we now have the lowest credit rating of any state, so we can't sell bonds at the old rate to pay off the old bonds as they mature, we have to sell bonds at a discount that results in the buyer getting tax-free income of 7% on their purchase.


The $9 billion in proposed new 20 year General Obligation Bond sales that is proposed will cost us $675 million a year for the next 20 years and then we'll have to pay off the whole $9 billion at that time. Over the life of this proposal it will cost us $22.5 billion to pay off that $9 billion loan - $14.5 billion in tax-free interest along the way and - in the end - a lump sum $9 billion. We don't have that money now and we are unlikely to have it then after spending two decades paying our taxes out to the money lenders in tax-free interest.

One thing we should certainly NOT do is add to that indebtedness.