State budget cuts? It’s time for real alternatives

The financial crisis is an opportunity to rethink the way we fund education and other public services.

By Joshua Pechthalt
UTLA-AFT Vice President
AFT Local 1021 President

As we enter 2008, the national economy is heading for a major contraction with serious implications for all Americans, especially those dependent on public sector spending. How bad will it be? In a recent L.A. Times opinion piece, business writer Steven Fraser described the looming crisis as a “depression—or a slump so deep it’s not worth quibbling about the difference.”

Who will be asked to bear the brunt of this slump? In California, Governor Schwarzenegger announced shortly before the winter holiday that the state faces a $14 billion deficit and has called for an emergency session of the legislature to look at spending cuts. On January 10, Schwarzenegger issued a statement calling for deep across-the board cuts to public education, including suspension of Proposition 98.

So Schwarzenegger wants students, teachers, schools, and the community to feel the pain. No doubt, LAUSD administration will “reluctantly agree.” They have already been dragging their heels at the bargaining table and are even more unwilling to move off of their 0 percent offer to teachers. All of this— the cutbacks to teachers, classrooms, schools, programs—is both unacceptable and unnecessary.

During his State of the State speech, the governor rejected any tax increase to deal with the budget crisis. He wouldn’t even consider restoring the vehicle license fee the legislature abolished in 2003. Rather, the governor wants to revive a spending cap amendment that would give him the authority to make budget cuts without going to the state legislature. His proposal is similar to Proposition 76, which Schwarzenegger supported in the November 2005 special election and which California voters overwhelmingly rejected.

In the coming months, we are going to hear many politicians, economists, and so-called experts tell us that we have no other choice but to accept belt tightening. They have laid the basis for this for the last three decades by chipping away at social programs, denigrating the government as a force for creating a more equitable society, and battering unions and the community into assuming that we are powerless to intervene in the economy.

When times are good maybe we get a few extra crumbs; when times are tough we are told to quietly suck it up. This time we cannot sit quietly by and be victims of a crisis that is not of our making.

An economic recession, even a severe one, need not mean we are doomed to endure spending cuts. It’s time to recall that it was in the middle of the worst of economic times—the Great Depression of the 1930s—that Americans were able to win the most expansive increase in social programs by going into the streets to demand a reordering of social priorities.

If social programs could be established and funded in the Great Depression, they certainly can be now. California, like the nation as a whole, has enormous wealth. Unfortunately over the course of the last 30 years much of that wealth has been flowing upwards from working and middle class families to the corporations and the wealthiest 10 percent of the population. Recent Congressional Budget Office reports indicate that in 2005 the income of the wealthiest 3 million Americans was approximately equal to that of the bottom 166 million.

On a national level we have to demand an end to the war in Iraq and any other possible military adventure. Beyond the human suffering and unbearable loss of life, the Iraq war alone is predicted to suck between $1 trillion and $2 trillion from American taxpayers that could go to education, health care, and rebuilding the nation’s infrastructure. Particularly in this election year, we have to demand a return to tax policies and social spending that benefit working and middle class families while moving toward greater economic equality.

What’s the alternative?
For the past two decades the California Tax Reform Association (CTRA), a nonprofit public interest group in Sacramento headed by Lenny Goldberg (no relation to UTLA Treasurer David Goldberg), has lobbied for progressive tax reform with proposals for putting the state on more secure financial footing while promoting economic justice. According to CTRA, California could generate an additional $17 billion in tax revenues by cutting tax loopholes and implementing more equitable tax policies, such as:

• Restoring the vehicle license fee alone would generate up to $6 billion, cutting the deficit by more than one third.

• Restoring an 11 percent tax rate on income over $500,000 (policy during the Republican administrations of Governors Reagan and Wilson) would generate another $3 billion.

• Reversing the ill effects of Proposition 13 by implementing a split roll tax measure (that leaves residential property alone while reassessing commercial property) would generate $4 billion.

CTRA has identified many more tax loopholes that should be closed, as well as other longer-term tax reforms that if adopted would both make our state’s tax structure more equitable while providing the money needed to preserve and expand the vital public programs now being threatened by Schwarzenegger’s reckless budget-slashing proposals.

Corporate California and anti-tax advocates have frightened us into believing that anything approaching a more equitable tax structure is unfair and would drive businesses out of the state. Their campaign has been so successful that California, the fifth-largest economy in the world, ranks in the bottom half of the 50 U.S. states in rates of taxation. A study by the Council on State Taxation done for the U.S. Chamber of Commerce showed that California business tax rates rank:

• 39th in business taxes as a percent of private sector economic activity;

• 42nd as a percentage of capital income; and

• 32nd in business taxes as a percentage of all state taxes.

How do we move forward?
Pursuing the legislative route has some real obstacles thanks in part to Proposition 13, which mandates that any measure to raise taxes must have a two-thirds vote of approval. Further, while Democrats control both houses in the state legislature, they do not have enough votes to override the governor’s veto. Any measure to institute progressive tax reform would require some Republican support, and the majority of Republican legislators are politically more conservative than the governor.

The bottom line is that we have to build a broad-based labor-community alliance that has the political strength to force the legislature to cut tax loopholes and institute progressive tax reform. While teacher unions must play a key role in such an alliance, we cannot do it alone. We will only have the strength to win if we join with other unions representing public sector workers and community groups, who are also threatened by the proposed cuts. So this cannot be just about public education. This is a fight to save all of our vital public programs, and it is in our common interests to build this alliance together.

UTLA has already begun to bring together such an alliance by reaching out to the L.A. County Federation of Labor and Lenny Goldberg to work with us in developing a strategy to challenge budget cuts. This looks to be a long hard battle and we are likely to be in for a very bumpy ride.

But these moments of crisis also provide us the opportunity to challenge assumptions and look at the world in a new way. In 1989 we experienced such a moment when we went out on strike for nine days. During those days I saw a fire of hope lit among the teachers at my home school, Manual Arts High, as they defied the District and demanded respect on the picket line. By the end of that strike we all felt we could change the world, and for a brief time we did. It’s time we rekindled that flame. Jack Gerson assisted with this article.

Published in United Teacher Volume XXXVIII, Number 5, January 18, 2008