Sunday, January 11, 2009

California State Worker Furloughs - Pre-Fallout Fallout

California state furlough information from the SacBee:

"Furlough announcement rattles many California state workers"

"State offices will shut two Fridays a month"

"Sacramento businesses brace for furloughed worker's absence"

Meanwhile, SEIU Local 1000 is already going to court to have the furlough and layoffs stopped.

Furloughs vs. Shutdown

When the furloughs were first announced, there was some confusion over whether they would be rotating furloughs, where employees would have to take two days per month off, but offices would stay open, or whether state offices would shut down entirely.

Personally, I agree with the shut down plan.

Shutting down an office entirely will save a lot more money than just the salaries of the employees for those two days.

Furloughs vs. Layoffs

I know that a lot of people are going to be hurt by the 10% income loss.

I'm not trying to say that it won't hurt or that it won't push a lot of families dangerously close to the edge.

Hell, it's not like state work pays that well to begin with.

I also know that part of the Executive Order was an order to initiate layoffs. It's unclear what percentage of staff will be laid off, but the order directed the least senior 20% to be placed on an SROA list. How many of those will actually end up laid off nobody knows at this point.

While furloughs are across the board, layoffs do not apply for special fund agencies - any agency that makes the majority of its own money. (I am extremely fortunate to work for a special fund agency.)

So, even though layoffs are, supposedly, on the horizon, it is nowhere near as bad as it looks, or as bad as it could be.

Frankly, it could be so much worse.

For one thing, it could be like many other companies in California and across the nation that are laying off large percentages of workers, or just plain closing up shop completely (sometimes, though, they're nice enough to tell their employees first).

For another thing, we're coming very close to a point where it would not be unlikely that state workers get paid in IOU's instead of cash money paychecks.

The union can scoff and gripe and go to court all it wants to, but if there is no money, there is no money.

I don't know about the rest of you, but my family can survive on 10% less a hell of a lot better than it can survive on an IOU. Even if Golden1 floats us the amount on loan until I get an actual paycheck.

Furloughs vs. the Economy

The truth that the people in charge seem not to notice or take seriously is that everything touches and affects everything else. State workers play a huge part in the Californian economy, especially in Sacramento.

So what will furloughs affect?

They are going to reduce spending, probably significantly, especially in the downtown Sacramento area.

You can expect that there will be downtown restaurants closing. Many of them get the bulk of their business during the lunch rush, or happy hour/dinner meetings. As state workers scale back spending, lunches out will probably be the first thing to go.

The "frivolous" expenditures will be the first to go. Movies, books, eating out, specialty coffee drinks, gym memberships.

Yes, this will affect business in the Sacramento region.

Also, it's going to affect sales tax revenue. Which means there will be less income for state and local governments.

So, yes... reducing the income of state workers reduces the amount of money that the state is paying out. But it also reduces the amount of money that state workers are spending, thus reducing the amount of money that the state (and counties and cities) is earning through taxes.

I have no idea how to figure out if the cut in output is worth the cut in income, but I'm sure there's a point at which they balance out. I think someone had better figure out what that point is before we get to it.

Finally

SEIU, stop going to court over every little thing. Are you serious? Do you have any idea how much money that costs both you and the state?

And so help me if you come to me for a dues increase when, in the last seven years, you haven't kept my medical from increasing and I've only gotten one cost of living increase.

You will have one pissed off fat dyke up your ass faster than you can say "Never mind!"

5 comments:

Wine Dog said...

Is it discussion when I prove you right?

http://richmondbizsense.com/small-biz/625-pasta-luna-joins-list-of-recent-restaurant-closings.html

dolphyngyrl said...

Anything that proves me right is fine with me. :)

Yulzopolis said...

Interesting blog. A Google search on "furlough versus layoff" brought me here!

Here in Colorado it looks like we're going to have furloughs too....3 days through June and 5 days next fiscal year. But I suppose furloughs are better than lay-offs...a 10% reduction in pay to everyone will have less of an impact than if 10% of payroll costs were cut through laying off 10% of workers. Sure it's tough, but compared with layoffs there will be less foreclosures and bankruptcies, and fewer people joining the ranks of the uninsured.

Of course, considering how messed up the California budget is, let's hope the the economy gets better somewhat soon...because otherwise furloughs will turn into even more lay-offs. (and here in Colorado we need you Californians to come ski and support our tax base!)

dolphyngyrl said...

Yulzopolis - I would gladly take furloughs over layoffs, and I wish our damn union would figure that out. Better we're all employed than only some of us.

Thanks for the comment!

DJ said...

I'd like to know why the "choices" are either furlough or layoffs? Why couldn't our unions say neither layoffs nor furloughs and have the Legislators figure out another solution. If State employees were the cause of this projected $43 billion deficit, I would be supportive of this. The reasons of why I am absolutely disgusted with this decision are many. (1) State employees are not the primary cause of the deficit. This was caused primarily by the Legislature who failed to serve the citizens of California by being fiscally responsible, which leads to...(2) The so-called "savings" from the furlough are a mere drop in the bucket at $1.3 billion vs. $43 billion. Why is the focus of furloughing State workers been so intense? Could it be that...(3) Former governor Pete Wilson is an advisor to Governor Schwarzenegger? If you recall back when Pete Wilson used to be governor, he was unsuccessful and very unpopular in attempting to raid State worker pension funds to resolve California's deficit at that time. Sounds like a personal vendetta to me. (4) Though I fully understand why some agencies are not subject to the furlough due to public safety issues, I CANNOT understand why the Legislature is exempt from the furlough. These so-called "public servants" still maintain their full pay, collect their generous per diem, have access to State cars, have their expenses paid, AND enjoy holidays with their family on our dime. Why should Californians tolerate such incompetence? If any one of us ever performed that way at our jobs, we would be in the unemployment lines in a heartbeat. (5) I firmly believe that until the budget gets done, the Capiol should be in lockdown mode. Legislators will be required to be in their respective chambers 24/7 WITHOUT pay or any other benefits or quirks until the budget is passed. Each day of delay would result in a loss in their salary and per diem. That money can be used to offset the deficit. If Legislators were faced with that kind of consequence, think of how quickly the budget can be passed. (6) Californians have been ignored, taken advantage of, taken for granted, and our needs being shoved aside in favor of special interest groups and the Legislators' personal agendas. We as Californians have the responsibility and the obligation to vote each and every single one of the Legislators out of office. Enough is enough!