For a few weeks, we’ve been highlighting some of the efforts of various lawmakers to highlight some of the out and out stupid with Arnold’s furloughs. See, the thing is not the actual furlough policy: he’s already pretty much wrapped up mostly winning that fight in the courts. The problem is that Arnold’s blanket furlough process doesn’t take the actual circumstances on the ground. Sen Ducheny pointed out that when you furlough the tax collectors, we take in less money and there is no net cost savings to the furloughs. Asm. Skinner points out that when you furlough workers that are entirely paid by the federal government, you get no cost savings and end up costing the state federal dollars.

And both of these are all kinds of stupid.  Sen. Feinstein, seeing the problem that Asm. Skinner pointed out, passed along a letter from Social Security Commissioner Michael Astrue raising concerns that the furlough policy was delaying payments.

Social Security Commissioner Michael Astrue says disability claims are rapidly increasing and furloughs could postpone another $15 million in federal payments – worsening California’s economic problems. …

The governor will review the concerns in the letter, but furloughs need to be applied universally to generate savings, regardless of departments’ funding sources, {Schwarzenegger spokesman} Cameron said. (AP 8/25/09)

Well, today we get the Governor’s response (PDF) to Sen. Feinstein.  It spouts some data showing that the delays are minimal and that California is right around average processing time.  But what it doesn’t address is how exactly furloughing workers.

I get that the workers can schedule their furloughs, and I suppose that is a step in the right direction, but that doesn’t really address the issue that this a) saves us NO money and b) hurts California.

Arnold’s only real defense for the general policy is that we need some kind of consistency across departments. That somehow if some departments avoid the axe we will be worse off, despite all evidence to the contrary.  In other words, he is spending money to shove the heel of his boot into the face of state workers. There will be discipline, and he will make sure of that.  To prevent an unproven and probably unrealistic problem that one department would revolt if other departments get their furloughs reduced or eliminated.

See, but that is what governing is all about. Making policy decisions.  As an elected official you must make decisions on what areas of government will get priority, and what won’t. His blanket furlough system is just lazy governance. Instead of doing the work that would provide the best possible governance for California during the crisis, Arnold thinks it isn’t really worth his time, so, on to the other issues.

It’s great that Sen. Feinstein has chosen to address this issue, but it would also be great if she would keep up the pressure on stupid as we move forward. And California has a few other figures who could speak a little more loudly on the issue as well.

One of the interesting stories to emerge from the Class of 2008 has been Asm. Nancy Skinner. In fact, a few weeks ago, she was named the “Rookie of the Year”. The reason for this is fairly simple: She does stuff.  She’s held a series of press conferences and other assorted actions to call out some of the Extreme Stupid coming out of the Horseshoe these days.

One target of her ire has been the ridiculous furloughing of workers from the Employment Development Department (EDD) and a few others in the budget dispute. Now the Extreme Stupid comes in with the fact that these agencies have NO impact on the state budget. They are federally funded, and only state administered.  Furloughing these workers not only doesn’t save the state any money, it ends up costing the state in the end. We pull down fewer federal dollars and less money gets to where it should: the pockets of Californians who need it.

So, today she sent a letter to a former California Legislator who might be in a position to help: Secretary of Labor Hilda Solis.

The purported reason for these furloughs-that they are necessary to close California’s budget deficit– is found in the Governor’s Executive Order S-16-08 (December 19, 2008) and Executive Order S-13-09 (July 1, 2009). As CUIAB and EDD personnel are federally funded, I question whether these furloughs save the state money, and whether they are in compliance with federal guidelines.

Skinner is requesting a meeting, but that’s not really the point. The point is to call out a stupid policy that is hurting California.

Full letter over the flip.

Asm. Skinner Letter to Department of Labor –

At some point, you’d figure, Arnold would take out his vengeance against some other group. Like, say oil companies or something.  But no, Arnold is out for state worker blood.

The governor’s latest budget proposal assumes almost 20 percent in employee wage cuts: 15 percent from the three-day furloughs that started this month, plus another 5 percent across-the-board whack.

“Three days (furlough) plus the 5 percent,” said H.D. Palmer, Department of Finance spokesman when asked Wednesday to clarify the governor’s budget proposal.

The Legislature won’t go for the pay cut, but the governor can then add a furlough day for reasons we’ll explain. (SacBee State Worker 7/9/09)

This will be a 20% pay cut. And let’s be clear, while many of these employees make a decent living, it’s not like any of these people were making CEO type salaries. These are people who put in their time, and do extremely hard work for the people of the state every day.

Slashing their salaries doesn’t create any massive cost savings, it is essentially a tool that Arnold can use for negotiations. It’s cynical and short sighted.  If Arnold does get his way, services will be slashed down to the bone. It’s impractical and doesn’t actually solve any real problems. More of the same shock doctrine attitudes and goals from the Governor.

UPDATE by Julia let me also note that these state workers have already seen their workloads dramatically increase.  Between all of the cut backs and unfilled positions, plus simply having 3 less days to do the same work these workers are overburdened and now facing huge cuts in their pay.

According to Mike Genest, the Governor’s Director of Finance, the $24.3 billion dollar problem expanded by $2 billion dollars last night.  He’s not taking into account the interest on IOUs, of course, or the expanded borrowing costs.  But he’s factoring in the education spending that now cannot be cut below a certain level because of “maintenance of effort laws.”  Genest said that higher education has agreed to keep their books open an extra month, until July 31, meaning that the $1 billion in higher education cuts to the 2008-09 budget year could still be enacted.  This is basically fuzzy math, since the additional expenditures due to the Governor’s stubbornness do not get addressed.  

What the Governor wants to do now, to recoup those cuts under Prop. 98, is to suspend the law.  Once again, the reckless lawlessness of the Governor and his allies, out of an unwillingness to deal with budget reality, exposes itself.  In addition, the Governor has backed off on the outsized budget reserve as well as eliminating vital programs like welfare, state park closures, children’s health care and student grants.  Of course, this has been replaced by unrelated items like cutting public employee pensions and social services fraud inspections, both of which would do nothing to the deficit in the near term.

The Governor has declared a state of emergency, under Prop. 58 rules.  This means that the legislature has 45 days to come up with a solution on the budget, and if they fail to do so, they cannot adjourn or act on other bills.  This is a moot point, since the Governor has vowed already to veto any non budget-related bill until a solution is reached.  This just brings the legislature into special session (the fourth since December, I believe).

In addition, the Governor announced three furlough days a month for state employees to save cash, which amounts to a 15% pay cut.  And IOUs will get issued tomorrow.  They will have an interest rate for the banks which accept them of between 2-5%.

Here was my favorite part of his press conference:

Guv gets booed by some who watch him leave press conf and walk back to his office.

By the way, there’s a new hashtag to find all budget news on Twitter: #cabudget.

UPDATE: John Myers has a story up about this, and he includes the Governor’s latest revise, the centerpiece of which is the suspension of Prop. 98.

Late last week I received a statement from an anonymous state employee working at the Employment Development Department, which included some pretty stunning allegations about how Arnold Schwarzenegger and the Legislature are dealing with state workers.  For example, the Governor would reduce all state employee salaries by 5%, including ones not paid out of the General Fund but through other dedicated resources, including federal dollars.  Our budget deficit is a General Fund crisis, not a crisis of those other resources, and so there is absolutely no necessity to reduce those salaries.  In addition, the Governor has proposed furloughing such workers, an illegal action since state law excludes Special Fund workers from these types of job reductions.  The State Compensation Insurance Fund just successfully sued the Governor over this matter.

Perhaps worst of all, the Governor and the Legislature have in recent years used special fund money to balance the budget.  This is EXACTLY what Props. 1D and 1E would have done, moving dedicated funds into the General Fund.  And yet the Governor and a compliant legislature goes ahead and does it anyway when the funds at risk are more murky and have lower-profile champions.  This parallels the Governor, despite failing with Prop. 1A, budgeting a $4.5 billion dollar reserve for the upcoming fiscal year, despite the “rainy day” we’re currently facing, essentially moving forward in violation of the will of the voters with a spending cap.  

Democratic lawmakers are floating a plan to use that projected reserve, but resist augmenting that with new revenues, leading to $19 billion in additional cuts and borrowing from local governments, really a terrible plan considering the alternative options on fees.  The unions are getting impatient with the lack of leadership, and advocacy groups seem more interested not in working with them but just going the heck around them.  This note at the bottom of the LAT piece from Lenny Goldberg is the buried lede:

The next step for unions could be going directly to voters. One labor-backed group, the California Tax Reform Assn., has prepared a possible ballot measure to repeal the three corporate tax cuts Democrats agreed to in the last year to get GOP support for the budget.

“It’s ready to go,” said Lenny Goldberg, the group’s executive director.

Reading the statement from the state employee, which I’ve posted on the flip, gives you some of the reasons why workers feel they have no allies in Sacramento anymore.

I’m a California State Employee and I’m currently working approved overtime in the middle of a state financial crisis.  I work for the Employment Development Department (EDD).   EDD is conducting massive hiring.  In the two months alone, my office alone has hired 30 trainees and is continuing to hire.   This action is allowable because approximately 90% of EDD’s budget is paid directly with federal dollars.   The majority of the remaining balance is paid by seven other special funds.  Only one quarter of a percent derives from the General Fund.

Gov. Schwarzenegger would have Californians believe that all state employees are lumped into one sole classification. In reality, state employees work for departments that fall into one of two categories:   General Fund or Special Funds.

Special Funds Departments budgets are allocated by either self sustaining revenue funded entirely on fees or premiums and/or have been designated for a sole purpose by California Voters or funds from the federal government.  There are 51 state departments whose budgets are derived from the Special Fund.   The current State financial crisis is a General Fund crisis, NOT a Special Fund crisis.    Politicians and the media fail to emphasize the distinction.  They would have you believe that there is one state indistinguishable budget.

For example, The Department of Alcoholic Beverage Control, The Department of Community Services and Development, and The State Council on Development Disabilities and are funded entirely out of federal dollars and receive no General Fund dollars. The Department of Motor Vehicles and California Highway Patrol are funded entirely out of special funds.

I and my co-workers are at a loss to understand why the governor is proposing to reduce all state employee salaries by 5%.   His action is illogical.  Special Fund employee salaries are not paid out of the General Fund. This is wasteful management of resources and of personnel.   There is no justification for this action.  Why reduce an employee’s salary when there is no necessity to?   Why continue to hire if the state is in cash flow crisis?  Anyone can review the State Personnel Board’s web site (http://jobs.spb.ca.gov/wvpos/search_p.cfm?showAll ), and can see for themselves that the State is still hiring.  There are currently over 2000 job vacancies with the State of California.

On top of the proposed 5%, the governor implemented a two day furlough for all state employees.  The reality is that I am mandated to report to work on my furlough days to meet public need and not get paid for it. The official policy is that the furlough days are accrued and can be taken at a later date.  However, due to the high work load, requests for time off in exchange for furlough days are denied.   There is a deadline for which all furlough dates must be taken: June 2010.   Use it or lose it.   The California Attorneys, Administrative Law Judges and Hearing Officers in State Employment have filed a lawsuit on behalf of its Special Fund Employees as being unlawful.  Interested parties can read the brief at    http://www.sacbee.com/static/w…

The lawsuit cites how each department is funded and its impact on the General Fund.

My co-workers and I work overtime to recoup lost hours just to pay for my necessities of life, such as my food and my mortgage. Contrary to popular opinion, the average employee does not make six figures.  In issuing furloughs and the proposed 5% cut, the state increases its budget deficit in that it loses income tax revenue from state workers.

In recent years, the governor and the legislative branch have dipped into the Special Funds Budget to cover the General Fund deficit.  Gov. Schwarzenegger balanced last year’s budget by borrowing $574 million from various special funds.  Where does this money go? How is it repaid? No one truly knows.   Californians rejected his budget measures in the May 19 special election to shift money from special funds for mental health services and early childhood care and education.  Why is this practice still being continued?

On February 5, 2009, The Los Angeles Times reported that the U.S. Labor Department objected to EDD employees being furloughed since the salaries were primary paid with Federal dollars.   (http://articles.latimes.com/2009/feb/05/business/fi-unemploy5)  The Labor Department notified the governor that the furloughs could impact EDD’s performance in meeting criteria for the timely handling of unemployment claims and appeals.   The Labor Department notified the EDD that failing to comply could violate Social Security laws.   The governor was unmoved.

Similar to 911, this is a game of power and politics.    It is a tactic to instill fear in the general public to justify actions that would not normally be endorsed or approved.   The governor should follow the President Obama’s lead and use a scalpel rather than an ax to make precise cuts.  The governor can not have budget reform without the trust of the people and without providing the state with crucial and vital details of the nature of the budget.

Signed

Employee Proudly Serving the State of California

Even if you were to posit that furloughs were beneficial for the budget and preferable than the threatened layoffs, some make absolutely no sense. Julia described the situation of a state agency that reviews federal disability claims and is completely paid for by the federal government. Yet despite the fact that not only did we not save money from the furloughs, but actually lost federal dollars, Arnold stuck with his edict.

The Feds are now calling this for what it is: stupid.

The official, Michael J. Astrue, the commissioner of Social Security, said Sunday that “governors are hurting their own states, their own citizens, and increasing the backlog of claims” by furloughing workers who make disability decisions.

“The states’ response is completely illogical,” Mr. Astrue said. (New York Times 4/13/09)

The article specifically names Schwarzenegger, and Govs. Corzine (D-NJ) and Patterson (D-NY). So Arnold gets to have his word in the article, but, being as objective as I can, really makes no sense.

Aaron B. McLear, a spokesman for Mr. Schwarzenegger, said: “The governor has not made exemptions to the furlough order because he believes that the state government needs to cut back, just as every California family and business is doing. We hope the furloughs have a minimal effect on state services, but understand that services very well may suffer.”

The problem with this: it does not cut back.  To run with McLear’s analogy furloughing these workers would be the equivalent of a California family rejecting one of those government coupons to get a new digital TV converter. The little boxes cost around $40, and the feds give you a coupon for $40.  Should I say no to the coupon, because I shouldn’t get anything new during the recession? Or should I just take the coupon and go get the converter so I can watch TV?

The answer seems clear to me, you’d take the damn free converter box.  Yet, the Governor is saying no to getting services for the state that are totally and completely paid for by the federal government. Not only does furloughing take those services away from the state and not save money, but it actually costs the state.

This is just Arnold making the state pay so that he can really make his point. It is bad for the state, the state budget, and for Californians who need those services. Sometimes it is ok to admit a mistake and fix it, rather than squandering our resources to make a point.  Point taken, now let’s get to making this state work, please?

Incredibly, forcing people to take off two days a month against their will not only lowered morale and increased inefficiency at state agencies, it didn’t put much of a dent in the budget crisis.  Revenues are still coming in short and will for the forseeable future.  So the Governor put the hammer down.

Gov. Arnold Schwarzenegger will move to lay off as many as 10,000 state workers if lawmakers fail to pass a plan to close California’s nearly $42-billion deficit by the end of the week, an administration spokesman said this morning.

Schwarzenegger’s press secretary, Aaron McLear, said at a media briefing that the administration would send out pink slips Friday, absent a budget deal. The layoff process generally takes about six months for state employees due to union rules and other legal considerations, and bureaucratic procedures the state must follow. The move would save the state $150 million annually if the jobs are eliminated by July 1, according to McLear.

This would have been a good thing for the Governor to be working on, I don’t know, yesterday, instead of jetting to Idaho.  It turns out that Arnold was making a scheduled appearance at the Special Olympics – but he cancelled a similarly scheduled appearance at the Republican National Convention when budget talks were ongoing last year, and if anything the crisis is worse now.  This is another case of Arnold making stern pronouncements in the media instead of doing his job.  He is a failed governor and frankly the press are the only people who will listen to him.

…I should mention that George Skelton came out yesterday for lowering the 2/3 requirements for budgets AND taxes, albeit on the latter he added a caveat that tax increases can’t be used to grow government above the rates of inflation and population growth.  I’m not much for the caveat, but Skelton is a bellweather for the media elite in California, so this is important.