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<h2>US state governments prepare attacks on jobs, wages, pensions</h2>
<h5>By Patrick Martin <br>
3 January 2011</h5>
<p>January 1 marked the beginning of a three-week period in which
new governors take office in more than half the 50 American
states, including three of the four largest—California, New York
and Florida.</p>
<p>Whether Democratic or Republican, the new state chief executives
are planning major attacks on public employees and public
services, including huge budget cuts and mass layoffs. In the 26
states with new governors, 23 face budget deficits, according to
the Center on Budget and Policy Priorities.</p>
<p>The National Conference of State Legislatures forecast that the
combined state deficits this year will reach $83 billion, somewhat
less than in 2009 and 2010, but requiring even greater cuts than
in those years because the Obama administration’s stimulus bill
provided federal assistance to the states that has now been
exhausted.</p>
<p>Forty-nine of the 50 states (all but Vermont) must by law balance
their budgets each year, and nearly all of the incoming governors
have publicly sworn off any new taxes on the wealthy or big
business, making drastic cuts in public spending or increases in
regressive sales and excise taxes their only policy options.</p>
<p>Since state and local government spending accounts for about
one-eighth of the US gross domestic product, these cutbacks will
have a sizable effect on the US economy and add to the likelihood
of a further downturn, or “double-dip” recession.</p>
<p>Both the Obama administration and Republican congressional
leaders have made it clear that there will be no further federal
assistance to bankrupt state governments. In a clear signal on how
both big business parties plan to treat public employees, Obama
last month ordered a wage freeze for all federal government
workers.</p>
<p>A prominent Republican consultant, former White House aide Ed
Rogers, wrote in the <em>Washington Post</em> Sunday that the
biggest political shock of 2011 was likely to be “public-sector
labor strikes and demonstrations that could stray into civil
disorder as state and local governments cut budgets… The same kind
of protests that have rocked Paris, London and Rome could erupt in
California, New York and Illinois.”</p>
<p>The <em>New York Times</em> chimed in with a lead article Sunday
that declared, “Across the nation, a rising irritation with public
employee unions is palpable,” noting that in many states “even
long-time liberal political leaders have demanded concessions—wage
freezes, benefit cuts and tougher work rules.”</p>
<p>The “irritation” is not something the <em>Times</em> can
actually document, but a political sentiment its editors wish to
whip up, making public employees a scapegoat for a fiscal crisis
caused by the Wall Street crash of 2008 and the ensuing slump, the
deepest recession since the 1930s.</p>
<p>The biggest budget deficit and the largest cuts will come in the
most populous state, California, where Democrat Jerry Brown is to
be inaugurated January 3 as the new governor (he served two terms
previously from 1974 to 1982).</p>
<p>By law, Brown must submit a balanced budget plan to the state
legislature by January 10, under conditions where the outgoing
administration of Republican Arnold Schwarzenegger projected a
deficit of $28.1 billion.</p>
<p>The new governor is expected to propose a special election on the
budget crisis, to be held in May or June, before the beginning of
the fiscal year July 1, for a statewide referendum on a package of
spending cuts and tax increases that would balance the budget.</p>
<p>Brown discussed the plan with state legislators last month and
told them he wanted to “rip the Band-Aid off next year,” adding,
“What we’re looking at today is much worse than it’s ever been
before.” He said the state was facing annual deficits of $20
billion or more for each of the next five years.</p>
<p>Democrat Andrew Cuomo took office January 1 as the governor of
New York state, after declaring that his top priority was to
impose a ceiling on property taxes levied by school districts,
cities or other local government bodies. Tax increases are to be
capped at 2 percent or the rate of inflation, which will force
devastating cuts on local governments and schools outside of New
York City, where the biggest source of revenue is the city income
tax.</p>
<p>Cuomo’s first action was to allow 900 layoffs of state workers,
ordered by his predecessor David Paterson, to take effect. The
layoffs were ordered as punishment for public employee unions
refusing to offer sufficient concessions. The state faces a
deficit of as much as $10 billion for the coming fiscal year, and
Cuomo must present a budget eliminating at least that much
spending by April 1.</p>
<p>The New York Democrat has rejected pleas to extend the so-called
“millionaire’s tax,” enacted as a temporary measure in 2009,
saying that an extension would violate his campaign pledge of “no
new taxes, period.” The result is that the Wall Street financial
parasites will get a state tax cut this year on top of the
windfall on their federal taxes from the extension of the Bush-era
tax cuts.</p>
<p>In Michigan, the state hardest hit by the industrial slump,
Republican Rick Snyder took office January 1 with a
Republican-controlled state legislature and Republicans holding
all statewide offices. To emphasize his desire to obtain
Democratic Party support for his right-wing policies, Snyder
invited Detroit Mayor David Bing to preside over the inauguration
ceremony, after appointing a prominent Democrat, former state
House Majority Leader Andrew Dillon, as his treasurer, the
principal budget-cutting post.</p>
<p>The new year began with reports that Michigan, once one of the
highest-income states because of a high-paying auto industry, had
fallen to the bottom third of US states in per capita income. The
state has fallen from 24th among the 50 states in 2005 to 34th
last year, a collapse that is unprecedented.</p>
<p>Although the state faces a general fund deficit estimated at
$1.85 billion, Snyder, former chief operating officer of computer
manufacturer Gateway, has proposed to eliminate the Michigan
Business Tax, one of the major sources of revenue for the state
government. This will increase the deficit by as much as $2.2
billion and provide a justification for even deeper cuts in social
spending.</p>
<p>Snyder took office as the state government received a request by
city officials in Hamtramck, an industrial enclave inside of
Detroit, to be permitted to file for municipal bankruptcy so they
can tear up union contracts and impose cuts in wages and pension
benefits. There were reports that another 30 towns and cities will
follow suit if Hamtramck is allowed to default, although forced
amalgamation with Detroit was also considered an option.</p>
<p>In Wisconsin, the new Republican governor, Scott Walker, takes
office January 3, having declared that state workers’ wages and
benefits must be brought “into line” with those of private sector
workers. Particular targets are health and pension benefits.</p>
<p>An effort by the public employee unions to push through a new
concession-ridden contract before Walker took office, ostensibly
to preempt even greater concessions, failed when the Democratic
leader of the state Senate cast a vote against the plan. In a
demonstration of his intentions, Walker announced a 5 percent cut
in his own state pension upon taking office.</p>
<p>Walker is proposing a sweeping right-wing program including
enactment of a “right-to-work” law banning the union shop, the
elimination of a proposed high-speed rail plan to link Chicago,
Milwaukee and Madison—and with it, an estimated 13,000
construction jobs—the lowering of taxes on businesses, and the
imposition of limitations on liability lawsuits against
corporations over defective products.</p>
<p>Other state governors plan similar measures. In New Mexico,
Republican Susana Martinez has frozen all pending state
regulations while they are reviewed for their potential impact on
business. In Georgia, Republican Nathan Deal called for downsizing
the state workforce. In South Carolina, Republican Nikki Haley
inherits a deficit approaching $1 billion and state legislators
have proposed cutting the school year by 10 days to save money.</p>
<p>Perhaps the most remarkable proposal comes from the newly elected
governor of Oregon, Democrat John Kitzhaber, who returns to office
after serving two terms from 1994 to 2002. At a summit meeting
with business leaders in Portland, Kitzhaber called for a complete
revamping of the state’s budget process.</p>
<p>“We must adopt a 10-year budget that is permanent and cannot be
changed in the future,” he said. Such a measure would be
tantamount to abolishing democracy, since voters would not be able
to change the policy in subsequent elections.<br>
</p>
<p><a class="moz-txt-link-freetext" href="http://wsws.org/articles/2011/jan2011/stat-j03.shtml">http://wsws.org/articles/2011/jan2011/stat-j03.shtml</a><br>
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