In 46 states, anybody with a tax-funded job has seen the hand-writing on the wall. While her own job may not be at risk, she likely knows colleagues who have suffered a pay cut because of furlough days, have been "downsized" or is worried that they soon will be. The situation is about to get worse. On Friday, we learned from the seasonally adjusted jobs report of the Bureau of Labor Statistics that 11,000 government workers lost their jobs last month. Since August 2008, 407,000 state and local government workers have lost their jobs, according to the BLS.
My wife, who supervises the 160,000 adult-student division of the Los Angeles Unified School District, laid off 13 of her 17-member senior staff in early 2010. Several hundred adult-school teachers also lost their jobs. Last month, as part of a cut in 1000 classified staff (clerks, secretaries, janitors, maintenance and operations crews), she had to lay off five more employees. It's rumored that more cuts may occur in June.
But government workers aren't the only people who suffer from the job cuts. State programs of many sorts, but especially those helping lower-income Americans, are getting the budgetary cudgel.
Michael Cooper and Mary Williams Walsh at The New York Times write Mounting State Debts Stoke Fears of a Looming Crisis:
Some of the same people who warned of the looming subprime crisis two years ago are ringing alarm bells again. Their message: Not just small towns or dying Rust Belt cities, but also large states like Illinois and California are increasingly at risk.
Municipal bankruptcies or defaults have been extremely rare — no state has defaulted since the Great Depression, and only a handful of cities have declared bankruptcy or are considering doing so.
But the finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations in Europe.
Analysts fear that at some point — no one knows when — investors could balk at lending to the weakest states, setting off a crisis that could spread to the stronger ones, much as the turmoil in Europe has spread from country to country. ...
Now, just as the downturn has driven up demand for state assistance, many states are cutting back.
The demand for food stamps has been rising significantly in Idaho, but tight budgets led the state to close nearly a third of the field offices of the state’s Department of Health and Welfare, which take applications for them. As states have cut aid to cities, many have resorted to previously unthinkable cuts, laying off police officers and closing firehouses.
Next summer, federal money that provided a third of state budgets in the current fiscal year will run out, according to this report from the National Governors Association:
By the end of fiscal 2011, states estimate that they will have spent nearly $240 billion in Recovery Act funds. Within this temporary aid to states, $151 billion has been flexible funds (Medicaid and State Fiscal Stabilization Funds) that has helped states avoid draconian cuts. However, the wind down of these flexible funds in fiscal 2012 will result in a cliff of more than $65 billion.
Finally, one of the clearest signs of state fiscal stress are mid-year budget cuts as they highlight the difference between budgeted levels of spending and forecasted revenue collections. For fiscal 2010, thirty-nine states made $18.3 billion in mid-year budget cuts. Thus far for fiscal 2011, 14 states have made $4 billion in cuts. In 2009, 43 states cut $31.3 billion and in 2008, 13 states made $3.6 billion in mid-year cuts.
Just how bad the situation will get is anybody's guess. It depends on what happens to the economy. Predictions of slow growth have not put a happy face on the situation unless you're of the Grover Norquist school who relishes in the possibility that government budget cuts forced by the recession will become permanent.
Nicholas Johnson, Phil Oliff and Erica Williams at the Center on Budget and Policy Priorities write:
These budget pressures have not abated. Because unemployment rates remain high — and are projected to stay high well into next year — revenues are likely to remain at or near their current depressed levels. This has caused a new round of cuts. Based on gloomy revenue projections, legislatures and governors have enacted budgets for the 2011 fiscal year (which began on July 1, 2010 in most states). In many states these budgets contain cuts that go even further than those enacted over the past two fiscal years.
Cuts to state services not only harm vulnerable residents but also worsen the recession — and dampen the recovery — by reducing overall economic activity. When states cut spending, they lay off employees, cancel contracts with vendors, reduce payments to businesses and nonprofits that provide services, and cut benefit payments to individuals. All of these steps remove demand from the economy. For instance, at least 44 states and the District of Columbia have reduced overall wages paid to state workers by laying off workers, requiring them to take unpaid leave (furloughs), freezing new hires, or similar actions. State and local governments have eliminated 407,000 jobs since August 2008, federal data show. Such measures are reducing not only the level and quality of services available to state residents but also the purchasing power of workers’ families, which in turn affects local businesses and slows recovery.
They point out that we can specifically identify, in many cases, how federal money helped ameliorate the situation. For instance, child care in Alabama and Arizona, public safety in Washington, prescription drugs for seniors in New York, and education funding in several states. The State Fiscal Stabilization Fund in the American Recovery and Reinvestment Act provided money for 266,000 education jobs and 49,000 jobs in other areas, a total of 315,000 jobs.
At least 30 states have raised taxes, sometimes sharply. But that hasn't meant no cuts. This has affected education, assistance to the elderly and disabled, programs for the homeless and for children, as well as spending at colleges and universities. Here's a look at just a few of the cuts in one area - public health programs:
• More than 1 million low-income Arizona residents have lost access to Medicaid services.
• In California, the nearly 1 million children in the CHIP program now must pay more for visits to health care providers, and pay higher premiums. Some families can't afford this and have dropped out of the program. California also cut nearly all funding for services supporting HIV/AIDS patients. It also eliminated funding for the state’s domestic violence shelter program and maternal, child, and adolescent health programs.
• In Connecticut, more than 220,000 pregnant women, parents, caretaker relatives and disabled and elderly adults lost coverage for over-the-counter medications and nutritional supplements.
• Massachusetts cut benefits to HIV/AIDS prevention programs, dental benefits for some 700,000 low-income residents. It eliminated a health insurance program for low-income legal immigrants.
• New Hampshire reduced the state hospital’s beds by 15, meaning 500 fewer patients will be treated each year.
• In New Jersey reduced eligibility for parents enrolled in the CHIP program from 200 percent to 133 percent of the federal poverty line. It eliminated the eligibility of legal immigrant parents who have been in the United States for less than five years. Results? Approximately 50,700 low-income adults have lost their access to health care coverage.
• South Carolina got rid of its program that helped seniors pay for prescription drug costs not covered by Medicare part D.
• Washington will end most dental services for 105,000 people, maternity care for 65,000 people, and family planning for 43,000 people.
Meanwhile, we continue to have Republicans and some so-called Democrats worried more about the deficit and tax cuts for millionaires than the impact of job and program cuts on millions of people. Upsidedownism writ large.